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Potential IP Risks Of Offshoring Software and How To Protect Yourself

Tuesday 20 of February, 2018.
Reading Time: 2 minutes.
By Avantica


Importance of Intellectual Property

When you work in the software industry, you understand the incredible importance of Intellectual Property (IP). From the code itself to the ideas and solutions, it is important that your company, as the client, have full and exclusive ownership of your IP. 

You may have some doubts about how your IP will be protected when outsourcing some of your development to offshore companies . While there is often a risk, we are going to share tangible solutions to this problem. Your IP can, and should, still be protected, even when working with companies operating outside the United States.

Intellectual Property Infringement

When working with countries that don’t follow the U.S.’s strict IP infringement laws, infringement or IP theft can be a real risk. Countries like China are famous for creating software for a client, then turning around and selling it to other clients. You don’t want to invest in software that will just get stolen.

Solution: Look for outsourcing partnerships with countries that have a Free Trade Agreement. These legal agreements give much more protection to your IP, even though it is software created in another country. It also protects legal transfers of IP to clients in the U.S., something that isn’t necessarily protected without a Free Trade Agreement. You can rest easy knowing that there is more IP regulation and that infringement isn’t tolerated.

IP Laws Favor Different Parties In Different Countries

In the United States, the laws protecting IP favor the companies that instigate and fund it. In other countries, laws may favor the people who create the IP, even if they are not direct employees or representatives of the client for whom they are creating it. This means that you could potentially be at risk for losing ownership of your IP, at least in countries outside the United States.

Solution: Offshore and nearshore companies that have legal headquarters in the United States and write very clear contracts protecting IP are the best ways to avoid this risk. When companies are headquartered in the United States, they are legally obligated to follow their laws. And that improves protections for your IP.

IP Protection All The Way Down The Line

IP protection clauses between the provider and client are crucial, but there can still be wiggle room for risk. Perhaps the provider company is dedicated to protecting the integrity of the IP protection laws, but you might not be sure that everyone who works for them is on the same page. Are the engineers creating your software going to respect the ownership?

Solution: Look for providers who have strong agreements and contracts with their employees about IP protection as well as confidentiality. This will ensure you that all of your provider’s employees are dedicated to upholding the legal owner of your IP- you.

About Avantica

Avantica is dedicated to protecting IP and IP ownership. With our headquarters in the United States, we gladly follow the IP protection laws of that country. We also write strong protection clauses into our contracts so that there is no question who the IP belongs to at the end of the day. 

If you are looking for a software partner who will work towards your own business goals and success, then Avantica is your solution. We offer dedicated teams, team augmentation, and individual projects to our clients, and are constantly looking for the best methodologies in order to give you the best results.

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