In Brief

Outsourcer Beware

India, eager to preserve its outsourcing industry, is scrambling to demonstrate that it takes foreign intellectual property seriously.

By John Ribeiro

October 01, 2004 — CSO — IP THEFT India, eager to preserve its outsourcing industry, is scrambling to demonstrate that it takes foreign intellectual property seriously. But just because the country has established intellectual property laws, does not mean that the laws will be enforced.

That's what Sandeep Jolly, president of labeling software maker Jolly Technologies in San Carlos, Calif., realized after he discovered on July 19 that an employee at his three-month-old software development center in Mumbai had allegedly uploaded and shipped files that contained some source code and design documents for a key product to her personal Yahoo e-mail account.

"The Mumbai police are not even registering the crime," says Jolly, adding that he has tried but failed to get authorities to investigate.

Mumbai police say their preliminary investigations suggest that there is no evidence of a source-code theft, and that Jolly did not have adequate security systems in place. Jolly has not cooperated in the investigations, says Anami Roy, Mumbai's commissioner of police.

On Aug. 19, Jolly Technologies filed a writ petition before the Bombay High Court in Mumbai to ask the court to direct the Mumbai police to register the offense and start an investigation. Jolly also tried to get Yahoo to block the former employee's e-mail account, but to do that requires an order from the Indian authorities.

"We were misled by the lawyers we consulted with before opening the facility," says Jolly. "We were told that there are patent, copyright and IP protection laws in India. They failed to mention that the laws are impossible to enforce."

IP theft is not unusual in India, and the cops do investigate. Two years ago, the FBI and India's Central Bureau of Investigation ran a sting operation that snared a former worker for an outsourcing company for doing business with design software maker SolidWorks. We wrote about the risks of outsourcing last November. For a refresher, read Big Savings, Big Risk.