Intellectual Property Issues in Outsourcing

As outsourcing business processes become an increasingly popular and even necessary means to manage business development, companies are often finding themselves at crossroads when it comes to entrusting their Intellectual Property to a third party.

Sharing sensitive company information and assets with third party outsourcing providers can generate unease for businesses. Intellectual Property needs to be protected so that Trade Secrets, Copyrights, Patents, IT, and Trademarks are secure, and businesses can verify that critical information is legally accounted for, updated, compliant, and properly protected by appropriate policies and procedures. Successfully handling potential issues and following legal guidelines is critical to ensuring that Intellectual Property remains secure.

Types of Intellectual Property

Intellectual Property includes the work, brand, products and services, logo, audio and visual property. The most common concerns when outsourcing to a third party is vulnerability due to insufficient or negligible data security practices and murky contractual agreements that can lead to stolen ideas. Intellectual Property is subject to change depending on the country or region, but are grouped into four categories:

  • Trade Secrets: Though stealing trade secrets is prohibited, companies can’t register trade secrets with the government. Judiciary practitioners often deal with trade secrets and attempt to protect them with licensing agreements, non-disclosure agreements, confidentiality agreements, and non-competition agreements.
  • Copyrights: Includes original forms of authorship that are captured in a medium where it can be appropriated, such as song lyrics, audio files, literature, technical designs, or artistic pieces.
  • Patents: These are engaged for development or improvement of inventions, such as machines, products, or methodologies. The three main types of patents include Utility, Design, and Plant, and extend to Reissue Patents, Statutory Invention, and Defensive Publications in certain conditions.
  • Trademarks: The forms of expression that represent a company, brand, or product, like the Nike “swoosh” symbol for example. Trademarks and Tradenames must be registered with a patent office for the owner to have exclusive access.

Dealing with Potential Intellectual Property Issues

Entrusting your Intellectual Property to an outsourcing agency does not have to be a cause for concern when the right types of diligent, protective practices and mediums are enforced.

Examining the outsourcing provider’s reputation, and financial, human, and technical resources are important, as is taking practical precautionary measures. The Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) enforces procedures and resolution of international legal agreements and can guide organizations in their outsourcing arrangements.

Data Security

Protecting Intellectual Property is reliant on a secure network and strong technological, physical, and administrative shields. The diversity of digital sources also increases the potential for Intellectual Property theft, so businesses should assess safety levels of interaction.

Confidentiality Clause

A contract that administers the nature of the outsourcing relationship, particularly because laws affecting intellectual property vary by state or country. This may include a representation that any non-compete provisions aren’t being violated by contracting third party services, and an indemnification provision to prevent violating legalese.

Invention Assignment Agreement

A contract that protects Intellectual Property that is newly created or produced during the outsourcing arrangement. This transfers Intellectual Property ownership and relinquishes all rights to the business instead of the outsourcing provider.

Further Protective Measures

Protecting your Intellectual Property contractually is another way to avoid theft, or litigation in case of a dispute later on. Outsourcing agreements should include:

  • Outsourcing agencies should guarantee capability of performing the desired work.
  • Disclosure and approval of outsourcing provider are required before engaging any supplemental subcontractors or non-signatories to conduct work.
  • Business should include an existing IP inventory as a contract Exhibit to prevent the outsourcing agency from pleading ignorance in the future.
  • A provision is indicating which countries are negotiating the contract.
  • Depending on the circumstance, an arbitration clause should be included.
  • Termination conditions need to be defined, including who owns what information, and who it needs to be returned to.
  • Retrieve a buy-in from the outsourcing agency that facilitates the transfer of IP back to your business following outsourcing arrangement dissolution.
  • Include Data Privacy/Security Agreements.

Transparent Data Protection and Legal Frameworks

Back Office Pro (BOP) takes all legal and practical measures to secure and protect valuable company information, ideas, and Intellectual Property. As a reputable global outsourcing provider for over ten years, BOP has established relationships with the clientele built on trust and grounded in aggressive data security practices and legal frameworks. For more information on our engagement model and pricing structure, contact us today.

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