Protection of a company’s Intellectual property (IP) can be a concern for companies that are about to engage in a project together with an offshore company. Questions about IP often come up early when starting up the development of a new software product, and for good reasons. Business ethics, contracts and third-party protection services are three important protecting mechanisms used to secure your IP and this article concerns all of these.

Before selecting and working with an outsourcing software development team, organizations and individuals should conduct thorough research and due diligence, in order to ensure that the outsourcing company is reputable.  Trusting a company’s goodwill alone is not recommended and there are a variety of tools that can be used to protect IP in this situation.

What should be your concern when it comes to intellectual property?

Culture and work ethics are important, and honest companies might unintentionally leak IP unless necessary precautions are taken. Here below e are some of the areas where risk needs to be mitigated as a software product development company.

• Risk of employees stealing your code and use it for other projects.
• The risk that your outsourcing provider does not have sufficient network protection, infrastructure protection and, building/office protection leading to unauthorized disclosure of code to others in case of system/facility breach.
• License, patent, and trademark risk leading to other companies copying your business.

For startup businesses, IP is of special concern, especially if they ever intend to raise money by selling shares to external investment companies. Even with a small chance of IP being leaked, and if not all expected protecting mechanisms are in place, the door for some investment opportunities will be closed.

Sign a non-disclosure agreement

When working with an outsourcing software development team, organizations and individuals should use a non-disclosure agreement (NDA) to protect their IP. An NDA is a legally binding contract that prohibits the team from disclosing or using the IP without permission, and that specifies the rights and obligations of both parties with respect to the IP.

An NDA should be the first contract to be signed between a software development service provider and a client. Such an agreement should be in place before any real discussions about the scope of work of the project are started.

Work-for-hire agreement

When working with an outsourcing software development team, organizations and individuals should use a work-for-hire agreement. A work-for-hire agreement is a legally binding contract that specifies that the team is creating the software product as a work-for-hire and that the IP belongs to the organization or individual, and not to the team developing the product.

Require that an in-house IP security policy is in-place

To prevent intellectual property from leaking out of a company, it is important that the offshore company has a security policy in place, and a well-formulated employment contract or supplementary contracts covering and protecting the integrity of the company’s confidential information, including the IP of the employer’s clients.

Use encryption and security measures

When working with an outsourcing software development team, organizations and individuals should use encryption and security measures to protect their IP. This involves using secure and encrypted communication channels, such as VPN and TLS, and using secure and encrypted storage and backup systems, such as cloud storage and backup.

Be the owner of your own collaboration tools and source control systems as well as test and deployment infrastructure.

Often the process and the material used in a software development project are of equal value to the actual software product. Consider things like online documentation using project management tools like Atlassian Confluence, and systems for keeping backlogs, roadmaps, and development tasks in a tool like Atlassian Jira.

It is highly recommended that clients provide their own subscriptions for all these necessary services used during development, from project management tools to source control systems. This also includes the actual test environment that hosts the actual application.

This way the owner of the product will be able to control access to code and documentation, and also doesn’t have to be concerned about information going missing when the software development contract with the outsourcing company ends.

Regularly monitor and audit the work of the outsourcing software development team

In 2023, organizations and individuals should regularly monitor and audit the work of the outsourcing software development team, in order to ensure that the team is following the agreed-upon terms and conditions and that they are not using or disclosing the IP without permission. At HQS we encourage our clients to engage with external companies to provide code reviews, teams, and system audits.

Use a third-party IP protection service

Organizations and individuals can use a third-party IP protection service to protect their IP when working with an outsourcing software development team. This means all types for patents, patent applications, trademarks and copyrights.

Patent

A patent is a form of legal protection granted to inventors for their original inventions. In most countries, a patent gives the inventor the exclusive rights to prevent others from making, using, or selling the invention without their consent for some time, usually 20 years.

What is worth noticing is that the invention is protected during the period the patent is pending, from the day of filing. This can be very useful for software startup businesses that are currently working on developing a product. With a pending patent, the product can be developed without concerns about someone stealing your idea.

A patent, once granted and during the application period, your competitors are prevented from making, using, and selling a product based on your invention. Applying for a patent can be a lengthy process, and there are lawyers specialized in this area. The fees involved can be high, and unless your product is really unique the chance of getting a patent approved is not always great.

Trademark

Trademarks are protected by law, and the owner of the trademark has the exclusive right to use the mark in connection with their goods or services and to prevent others from using similar marks. Trademarks help to prevent consumers from being confused and protect the reputation of the trademark owner’s brand.

Trademark protection can be obtained by registering your trademark with the appropriate government agency. In the United States, for example, you can register your trademark with the United State Patent And Trademark Office (USPTO).

Copyright

Trademarks and copyright are both types of intellectual property protection, but they serve different purposes and protect different things.

Copyright is a legal protection that applies to creative works. Trademark on the other hand, is a legal protection that applies to words, phrases, symbols and design that are used to identify and distinguish the goods or services of one company from those of another.

In the US you can register your copyright with the United States Copyright Office (USCO).

How does Hire Quality Software protect their client’s intellectual property?

We at Hire Quality Software give our client’s confidentiality and intellectual property our highest priority, for the simple reason that our reputation and our clientele selection depend on it.

To us, it makes no difference if you represent a multinational company, or a startup company just getting started. Our principles and ethics still apply. Also, we recognize that it is not your responsibility alone to make sure that all contracts are in place to protect your IP, but our responsibility as well as a reputable consultant business.

As a general rule. We think that companies interested in hiring external remote teams are better off contracting highly reputable companies, like Hire Quality Software than individual freelancers. There are many reasons for this but one of the more important reasons is to protect their intellectual property.