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Q&a: Oscar Sañez, Ceo, Business Processing Association of the Philippines

August 13th, 2009 at 12:43pm Under intellectual property

SSON: Oscar, what is the purpose of BPA/P, and how does the Association operate to achieve that purpose?

Oscar Sañez: The Business Processing Association of the Philippines was created in 2004 by members of the BPO industry, in order to present a single face of the industry to the world. Prior to this, there were several organisations that had been representing various sectors in offshoring and outsourcing in the country. It was apparent that there was a strong need to have a single industry body representing all the interests of these organisations in terms both of marketing the industry externally, and internally to be able to address many of the common challenges and opportunities that the industry was facing at that time. So there was an effort to consolidate several of these small organisations, and a single umbrella organisation – BPA/P – was formed.

Quickly after that the BPA/P board elected to create a full-time management team to do a couple of things: one, to develop and own a strategic plan to guide the growth of the industry short- and long-term; and the second was to have a fully dedicated team to be the leaders responsible for getting all the stakeholders committed to executing the strategic plan as it was developed. This is now called the “roadmap” for the industry which BPA/P is leading and working on with all the stakeholders.

SSON: BPA/P is running a successful scholarship program for advanced post-graduate training. Can you tell us a little about this and why it will benefit foreign companies looking to source to the country?

OS: Basically the BPA/P roadmap covers three major subjects, of which talent development is one. The scholarship programme falls under the initiative of ensuring talent development sustainability over the next several years, and is a programme that we have created in partnership with the government. We found there was a significant segment of the graduate pool that needed some kind of a completion course or supplementary training programme to ensure that we have a large available pool of talent, particularly in a couple of areas: English-language proficiency; and IT proficiency.

The industry tested a training programme a year ago to supplement the recruitment programme that was already in place. We had a very good experience with supplementary programmes that were being run in vocational schools as well as in independent training companies that were members of BPA/P. We approached the government and asked for support so we could train a lot more young people into the programme and convert them into full-time hires. The government responded positively by providing a budget of close to $10million this year, to be able to train about 50,000 young people into the programme: of course we don’t foresee all of them passing the completion course but at least 40,000 should pass and therefore get recruited into our pool this year, so if we’re able to convert them into full-time employment that is at least 40,000 additional available to us.

SSON: You’ve mentioned a degree of official support there: how closely does BPA/P work with the Filipino government?

OS: We work very closely and very collaboratively with the government, particularly on three levels. One is with the educational agencies of government, and the scholarship programme is a good example of how we have collaborated with TESDA [Technical Education & Skills Development Authority] which is the vocational institute government body coordinating group which works with us in providing supplementary training for young people here.

Another agency that we work with is the Board of Investments, which is the government’s investment-promotion group, as well as the attached agency to that which is the Philippine Economic Zone Authority: the body which supervises the IT parks for setting up BPO sites in the country. What we have done with them is work together on streamlining our investment promotion processes, including trade missions abroad as well as with investors who come to the Philippines, so we have a simplified communication process – a one-stop-shop mechanism if you will – so that when investors come in we have the private sector (which is BPA/P) working closely with key representatives of the board of investors on our overall presentation of industry opportunities. This is done very well; we have received a lot of positive responses.

Then lastly we work with the Office of the President through the Commission of ICT. This is the government body that coordinates with various telecommunications and software companies to support the overall regional development of what the government calls the Cyber Corridor: the ICT infrastructure which links Manila with the rest of the key cities in the country. Part of what we have in the roadmap is a way in which we can accelerate the development of new sites for expansion of BPO companies outside Manila, and we’re able to work with various ICT bodies within local government councils outside Manila to prepare them for investment. These ICT councils have simplified for us the work in getting all the key stakeholders in one place; property developers, the telco companies in each region, local government units and academia are able to work together to create new sites for expansion – and get investors to consider these places as potential new sites. So we have worked very closely with government on this effort and it’s given us a lot of positive gains for investment promotion.

SSON: So significant collaboration with government – but BPA/P is a purely private-sector organisation?

OS: We are purely a private sector group consisting of BPO players themselves as well as key vendors in the industry. The support we’re getting from government is more for collaboration and coordination, as well as the scholarship support – which is not only financial support, but also the way by which we are able to distribute scholarship vouchers to young people: the government then reimburses them directly on those expenses.

SSON: Moving on: the BPO sector in the Philippines is a great success story – but it’s not all plain sailing. What do you see as being the biggest challenges to the sector and how do BPA/P and big industry players intend to overcome or avoid those challenges?

OS: OK. There are a couple of big ones as far as we’re concerned. Firstly, though we have been able to successfully promote the Filipino BPO industry because of our available talent and the quality of our talent, we’d like to be able to accelerate our growth and the big challenge for us is how fast we can make our talent available in front of us because of the remarkable growth-rates that we have seen and will continue to see over the next few years. There is a big, straining demand for talent and we would like to make sure that we’re able to sustain that talent both in terms of quantity and quality – and not only in Manila but outside as well. And the challenge lies in making sure the system is responsive enough to the demand.

Right now we do face competition from the growth of other sectors – for example tourism and medical services – and the demand from outside the Philippines for OFWs [overseas Filipino workers] is also increasing. So we’re competing in the universities for talent that is required by other countries poaching talent from the Philippines, and by other fast-growing sectors. So a challenge for us is ensuring that we’re able to promote career prospects for the industry in many of these universities.

The challenge also lies in increasing access to more universities beyond the traditional sources that we recruit from, as well as being able to tune the curriculum programmes of many of the universities to be more in line with the requirements of our industry; for example, ensuring that we do have high-quality English-language and IT proficiency programmes made available early on in the university years. This is why in BPA/P we do have a director who is devoted to talent development challenges; she leads university partnerships to ensure that we’re able to get universities to respond more closely to industry requirements, as well as developing new training standards and skills-assessment methodologies that we’d like to implement at university level, so that we are able to sharpen our recruitment much more. That is our biggest challenge.

Another area would be related to what I said earlier about assimilating new site development. Right now most of our BPO population – about 80 per cent of the activity – is in Metro Manila. We would certainly want to see a lot more activity happening in new cities. In the same way that India has created Bangalore and Hyderabad and Chennai, we certainly are looking forward to at least ten more cities outside of Manila and Cebu to be able to host new companies. This will create a lot of positives: one, we will be able to access more talent available in those places; and secondly we should be able to have a lot more support from a wider range of resources available to us, whether it’s local government units or chambers of commerce in those places, or universities and the academic sector. So we do face strong challenges but at the same time we know that because of our roadmap we’re already able to implement a lot of initiatives to be able to address them.

SSON: Conversely then, what do you see as being the biggest assets of the Philippines in terms of BPO and how does your organisation leverage those assets to expand and enhance the sector?

OS: Certainly the most important asset is people. We are hearing more often from our locators here that they’re discovering a lot more capability in the Philippines than we had seen initially. For example, we are already very well known for our voice services in BPO: the quality of English-language proficiency and of the Filipino customer service agents is very well talked-about in the industry now, and I think part of that is the training as well as the culture and the western orientation of the Filipino people. But we have seen a lot of growth beyond that: it’s been particularly very evident in areas such as finance outsourcing, IT, engineering services and creative arts – particularly in animation and gaming – and we are seeing double-digit growth as well in those sectors. The captive centres here (the HSBCs, the AIGs, the P&Gs, the Citigroups, the JP Morgans) are expanding over the next two years particularly in areas like finance and HR outsourcing. And this is already booking a lot of new office space, even in the Metro Manila area.

Another important asset for the country is the strong infrastructure, and a cost-model that is very sustainable. We’re able to sustain talent with the developing progress we have there in combination with the quality infrastructure we have in terms of telco, and new expanded office sites, and we’re able to at least maintain the cost model in a way that does not create unnecessary inflation in wages or in office-space rentals because we’re able to create more capacity. So the combination of talent and an attractive cost structure, as well as new opportunities we’re seeing in the other new sectors which I mentioned, are all strong points for the Philippines with huge potential for growth in the future.

SSON: Is it realistic to expect the Philippines to compete against bigger players (in particular, obviously, India) in outsourcing sectors other than BPO: KPO, LPO for example? And if so, what is required for the country to compete on those terms?

OS: Certainly we do recognise that India will continue to remain very very strong, particularly in areas like IT and software development. But certainly there are also niche areas that will continue to be providing growth opportunities for the Philippines. Voice and non-voice BPO will continue to be big. We certainly don’t think that we can beat India in the strong points that it has, but we see the opportunities around new niche areas like KPO, legal outsourcing, and engineering outsourcing – in which India will remain really huge but in which the Philippines will start gaining some foothold. We see great value in being number two or number three in those sectors; they’ll continue to be contributors for growth in terms of the kind of overall credibility and capability that the Philippines has in the BPO space. So there will be a place for the Philippines, a continued strong position moving forward.

SSON: To what extent have recent currency fluctuations impacted upon BPO in the Philippines, and how far can foreign companies looking to source to the country truly rely on the stability of the peso?

OS: We were seriously affected last year when we saw an 18.5 per cent currency appreciation. That affected us – particularly the small players who did not have a lot of financial leeway to be able to support that gap. But many of the big operators were actually able to improve and grow their operations because we saw a lot of room for improving operational efficiency here. The peso is largely going to stay within what you would call a single-digit fluctuation, given the kind of interventions we’re seeing currently in ensuring that there’s enough investment going on in the right places of the country.

We see that last year’s appreciation was more of a correction – one that is not going to affect us in terms of being an annual event. What we are seeing is that because of better projections around FDI and foreign remittances we’ll see a more stable peso over the next three, four, five years. Plus we’re more conscious now of making sure that our operational efficiencies are in place to be able to withstand fluctuations over the next few years.

SSON: Are you confident of the security of data and intellectual property rights in the Philippines?

OS: We are confident that we are addressing the issues of data privacy and intellectual property very well. For one, we have in place data privacy guidelines drawn up by industry in partnership with the Board of Investments; as well, the multinationals that are here are guided very much by US laws on data privacy and recognise the importance of these principles. The other thing is that BPA/P is leading a very active effort in partnering with Congress to pass a single Data Privacy Bill that supports the APEC Privacy Principles. This is at an intermediate stage of development already and we see the bill passing late this year or early next year. We are also actively communicating with all the key stakeholders on the APEC Privacy Principles to make sure that we support the principles and ensure that our people are trained and our contracts are safeguarded because of the kind of accountability and responsibility that we do have in processing data.

In terms of intellectual property we work closely with the BSA [Business Software Alliance] group to ensure that our member-companies sign off on the intellectual property rights agreements – and at the same time we are also working with government on strengthening the IP law, as well as on a new bill that will ensure a stronger penalty provision for intellectual property rights violations. So moving very actively in this area, we feel that this will all contribute to strengthening our data privacy and IP requirements.

SSON: Finally, what are your ambitions for BPA/P over the next ten years?

OS: We think that we will continue to see strong growth over the next ten years in a couple of areas. We’ll continue to be strong in the BPO space, both voice and non-voice. The other thing that is happening is that we still see growth in higher-value services and that we will play a very important role in supporting the requirements of not only the US market but even many of the European and Australian markets that today are still largely untapped. The good thing about the Philippines, like I said earlier, is that while we’re seeing dramatic growth at the moment we’re able to create a lot of continuous capacity. It is very important that we maintain our cost structure as well as our capacity model.

We’ve seen what has happened in India and that there is benefit in being number two, and because of India’s experience we are able to anticipate issues like overheating growth – issues that affect things like supply – and to anticipate the requirements of investors so we don’t get into an inflationary situation, whether it’s in one city or many cities in the Philippines. We know that there are still a lot of untapped niches, as well as the trend towards multi-sourcing that will allow the Philippines to participate in a lot more geographies as well as a lot more verticals and horizontals in the BPO space.

Why Outsourcing to Vietnam is a Sound Business Decision

August 10th, 2009 at 12:41pm Under intellectual property

1. Overview

This document lays out the business case for meeting your company’s software development needs by outsourcing to Vietnam. It first outlines factors to consider in deciding which offshore locations to outsource to. Then it considers those factors one at a time for Vietnam, concluding that the country is a promising offshore location for outsourced software development and for business’ other IT needs.

2. Factors to Consider Regarding the Offshore Provider’s Location

In this section, we present a simple and straightforward framework for understanding the advantages and disadvantages of various offshore locations for your outsourced projects and business functions. This list of factors focuses on the most important and relevant factors, without becoming overly complex by listing unimportant minutiae.

The main factors that should be considered are as follows:

3. The Benefits of Outsourcing to Vietnam

As stated in the introduction, this section will evaluate Vietnam as an outsourcing destination against each of the factors listed in the preceding section.

4. Who outsources to Vietnam?

Many Japanese companies are choosing to outsource much of their IT work to Vietnam. According to a November 2006 article in GlobalServices, “Vietnam: Capitalizing on the China-Japan,” by the year 2010 as much as 10% of Japan’s software outsourcing may be sent to Vietnam.

Intel is also heavily reliant on Vietnam to meet its outsourcing needs. In October of 2006, Intel Capital, the unit involved in venture capital for the Intel Corporation, announced a $3.5 million investment in FPT, Vietnam’s largest software company, located in Hanoi. Earlier in that same year, the company said that it was going to build a factory for chip assembly and testing with a price tag of $300 million (San Jose Mercury News, “Intel Invests in Vietnam Software Company, October 24, 2006).

Other companies that have chosen to outsource to Vietnam include Nortel Networks, Bayer, Sony, Cisco, and Anheuser Bush (source: CIO.com, “Outsourcing to Vietnam”).

5. Vietnam Is an Excellent Outsourcing Destination

For all the reasons described above, Vietnam is clearly an excellent choice for meeting any business’ outsourcing needs. Here is a quantitative summary of the advantages of working with offshore providers located in Vietnam.

Contact:

Ms. Doanh Nguyen: Sales

Email: sales@blueball.com.vn

Sales Representative

International Marketing Department

Blue Ball Co. Ltd.

www.blueballgroup.com

Thailand

252/94 Muang Thai – Phatra Complex

Tower 2, 17th floor, Ratchadapisek Rd.

Huay Kwang, Bangkok, Thailand Tel: +66 2 6932940

Fax: +66 2 6932941

Vietnam

Quang Trung Software City Ground Floor, Anna Building District 12, Ho Chi Minh City Tel: +84 8 4371032 Fax: +84 8 4371033

Avoid the Outosurcing Pitfalls

August 9th, 2009 at 06:41am Under intellectual property

TABLE OF CONTENTS? Ignoring the risks? Communication is crucial? Adopt a flexible management? Good quality versus good price? Don’t forget security? Keep in mind the geopolitical and economic issues

Ignoring the risksIn stead of introduction, ignoring the risks and pitfalls is actually the first and most common mistake in outsourcing. Ignoring to prepare for outsourcing, failing to consider and understand the full impact of outsourcing on your company results and the actual expectations and goals in this project is the major pitfall before even engaging into outsourcing.Tips that may help:? Set objectives and strategies for outsourcing? Find support and build commitment from within your own company for the outsourcing project; make sure you have the right people to drive the outsourcing effort? Define the requirements, set realistic expectations, make sure your organization understands them? Estimate risks, costs, and changes from current business model or be prepared to take them into account? Thoroughly evaluate vendors? Have an exit plan before you enter the outsourcing deal. Don’t try to micromanage the outsourcing provider, let him choose the resources, manage the output, not the input. Set targets and measure results. If you are asking for CVs, people and generally input, you are not managing the right thing.

Communication is crucial

Care for diversity and cultureOne of the most common pitfalls that you will meet in outsourcing is the poor level of communication. Bad communication between parties is surely a success-killer for your outsourced business.Often, this is related to the cultural differences that appear in an outsourcing process since the inner nature of this process implies working with people from various countries and different cultural and professional backgrounds.While cultural gaps may seem a soft science, dramatic differences can quickly erode an otherwise successful offshore outsourcing relationship. Assuming the cultural differences do not exist in the business community and that all professionals are the same around the globe is a crucial mistake. This can lead to misunderstanding of commitments, plans, schedules or status reports or even soft and sensitive issues like tensions in the outsourced team inflicted through culturally insensitive comments or actions. Explain the requirements and then ask questions that would prove that the requirements have been properly understood. Refrain using more colloquial English, use simple, business English. Put in charge of the outsourced project someone that has multicultural experience, someone that has successfully worked with people remotely.DO’s? Make sure that, when you start the outsourcing relationship, you dedicate the right people and resources on both ends? Make sure your contact person has very good communication skills ? Define as much as possible the expectations, document them and set clear performance metrics, set clear targets.? Be prepared to change, allow flexibility to your contract. Be prepared to renegotiate the outsourcing contract once the outsourcer partner better understands your business.

Outsourcing introduces misunderstandings during communications and translations between languages, and varied cultures and contract structures. Company executives must see these implications and consciously evaluate mitigation strategies.Setting the sceneDerived from communication is also setting the expectations. Setting the expectations is one of the most important steps to undertake at the beginning of the outsourcing relationship. If the goals are not mutually understood and shared, both parties will demand something else from one another and therefore success can fade between different expectations. This can be mitigated by explaining as much as possible the expectations, documenting them and measuring some clear targets.Tips that may help? Use a single communications channel. It’s important to establish change information with the provider via one-to-one channel, between the project manager from their side and your dedicated person from your side. Initial specifications are never perfect and you can overcome the problem with continuous feedback.? Listen to them. If you hire them for expertise you lack, don’t pretend you know it all. Listen to what they say.? Share your knowledge. Send over one or two members of your staff to join the development team for a while. This will help everyone better understand your corporate structure and standards.? Know the project manager. The project manager in charge with the outsourced project has to have a very clear understanding of cultural differences. Ideally, he has travelled widely and lived in several countries so he knows why people act as they do.? Treat your partner as long-term partner. If you plan to address an outsourced team, plan a long-term relationship.You will need to closely review the project and monitor progress often.

Adopt a flexible management

DON’Ts? Not considering the full impact of an outsourcing agreement on a company’s financial condition.? Lack of incentives for provider continuous improvement.? Lack of a contingency plan for major disruptions at the service provider.? Expecting too much from a provider in the early months after go-live.? Neglecting to “flex” the outsource relationship as outsource requirements evolve.DON’Ts? Disregard the full impact of an outsourcing agreement on your company’s financial condition.? Lack of incentives for provider continuous improvement.? Lack of a contingency plan for major disruptions at the service provider.? Expecting too much from a provider in the early stages of the outsourcing go-live.? Neglecting to “flex” the outsource relationship as outsource requirements evolve.The outsourcing relation does not manage by itself. It must be managed permanently, adjusted and evaluated regularly. Changes must be applied; contracting terms must be reviewed, etc. And, most important, these activities will carry added costs on your end.Make sure you avoid this compelling issue: being rigid in scope of work. Especially when dealing with a project that involves R&D, flexibility is an imperative. You must be ready to change and adjust according to the findings in the process.You might need extra resources to dedicate to your project, so make sure you have provisions in your budget for this. A way out is available on both ends. Businesses are constantly identifying new strategic initiatives. If a third-party IT provider can’t accommodate new goals, the customer company might want out of the contract.However, be prepared to have an exit plan; it might cost more than you estimate, but less than proceeding with an unsuccessful partnership.When implementing outsourcing, make sure you’re establishing a relationship that has sufficient flexibility to deal with business fluctuations. You must have a realistic timeline for the outsource process and estimate correctly the time required to negotiate a service agreement.Remember to get the operational issues resolved in the service agreement before moving into legal aspects and financial terms of agreement.

Good quality versus good priceIt is well known that one of the benefits of outsourcing are cost savings. But more important than these, are the benefits related to improved quality and operational expertise.This is directly connected to the contracting the service with a Service Level Agreement (SLA). In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. But it may also be lower quality through design to match the lower price.Therefore, if you want good quality don’t negotiate on price but make sure that quality can be provided given the price. In any moment in time, from price, quality and development time, you can only have two of them.Even though the price for good quality and rapid development might be lower by outsourcing than the price on your local market, it will still be higher than the price you would get from comparable outsourcers playing on the same market.Make sure you send the right signals, if you want to squeeze the maximum out of your outsourcing partner don’t nickel and dime him, reward the right behavior. Rewarding the right behavior is very important as it will align your goals with the goals of the outsourcing partner. If the ultimate goal is to keep the costs low, then reward the partner for not going over the budget and coming up with more cost effective solutions. If your ultimate goal is quality, the set a maximum number of defects that the final product should have and reward the partner based on this goal’s achievement. On the other hand if you want speed, then make sure you reward the completion of tasks in time and bonuses for delivering them ahead of time, know that your outsourcing partner will have to motivate it’s employees and push them to the max, so make sure you reward him as well.Do not consider outsourcing only for labor arbitrage. On the long run, greater benefits of outsourcing reside on economies of scale and specialization beyond cost savings with the right mature partner for outsourcing.

Don’t forget securityBefore outsourcing, an organization is responsible for the actions of all their staff and liable for their actions.When these same people are transferred to an outsourcer they may not change desk but their legal status has changed. They no-longer are directly employed or responsible to the organization. This causes legal, security and compliance issues that need to be addressed through the contract between the client and the suppliers. This is one of the most complex areas of outsourcing and usually requires a specialist third party adviser. One of the first things you have to make sure of is whether the employees of the outsourcer have a non compete, non disclosure agreement signed with the outsourcer.For instance, standards of privacy are often looser in some countries than in others. This more relaxed attitude toward privacy could have serious consequences when it comes to protecting corporate data, experts on the panel warned.Companies that outsource operations overseas are advised to train local staff to adhere to the company’s global privacy standards and to check into the risk of government interception of sensitive confidential information. There are a few questions you should ask in order to evaluate the risks in terms of security, such as: What is the infrastructure for security of the outsourcer? Do they have an admins/security specialist? Are they PCI compatible? Maybe? The outsourcer can be the weakest link if you need to be either PCI or SOX compliant. How is your (your customers’) data protected?You must put security issues at the top of the talking points list when you begin negotiating with offshore outsourcers. This might even require information security staff to be at the table in both operations and strategic planning functions. The most significant security issues revolve around the protection of data in one manner or another.Tips that may help1. Get Your House in Order – Before going outside, make sure your own house is in order. Have a realistic security policy that includes data classification and that distinguishes common from sensitive data, as well as how each type of data should be handled.2. Choose Vendors Carefully – Make sure the service provider you use has strict security policies too, starting with the hiring process. This rule applies to all types of vendors, but especially to offshore companies.3. Understand the Privacy and Intellectual Property Mindset – Many countries have very laxintellectual property protection laws. Make sure that the vendor you chose is willing to abide by your privacy and intellectual property policies since a misunderstanding can be costly.DO’s? Initiate an agreement with a service provider that allows flexibility for the future? Have a realistic timeline for any of the steps of the outsource process, including start-up? Fully define an employee transition plan? Do proper planning concerning information systems and interfacing with the service provider? Do enough technology development before implementation4. Use Protection – You can address the two issues above with a combination of database monitoring gateways and application layer firewalls. These devices have the ability to enforce usage policies as well as prevent privilege abuse and vulnerability exploitation.5. Monitor Traffic – Make sure the service provider monitors outbound Internet traffic and emails for potential information leaks.Keep in mind the geopolitical and economic issues In connection with the previous mentioned cultural gap and security factors, there are some other few risks you should observe before getting into an outsourcing business relation.

Geopolitical risksIt is related to the host country. Most important factor is political stability and legal environment. Managers should carefully examine the latest political situation of the host country before making their decision. The political situation of most of the host countries is stable nowadays. That is why pre-outsourcing analysis first includes the legal factor. Here the main factors that have to be evaluated are intellectual assets privileges enforcement, industry laws, customs regime, license and “trade exit” conditions.. While analyzing geopolitical risk one should remember such things as – level of political stability in the host country, legal environment, level of government regulations and support, requirements for vendors etc.Intellectual Property Protect ion (IPP)A very important question as offshore outsourcing almost always means the creation and/or maintenance of intellectual property. Often, developing countries do not have the best reputation to protect intellectual property.It is very important to learn about the IPP law in the target country before the start of an offshore outsourcing operation.

ConclusionThe majority of problems with outsourcing deals are caused by poor communication and lack of effort early in the process.As with any relationship, communication and understanding of mutual expectations is key to the ongoing health of the relationship.Customer executives considering an outsourcing need to understand what they are trying to achieve and be willing to put the effort in up front to increase the likelihood of getting what they want.

What Legal Options Are Available To Companies Outsourcing Software For Protecting Intellectual Property?

July 15th, 2009 at 04:25am Under intellectual property

What legal avenues for protecting intellectual property are available to US companies who are outsourcing software to countries like China, India, Russia and the Ukraine?
Right now I have standard NDA and licensing agreements with my US based contractors, which have some enforcement and damages clauses but how do these hold up with in other countries? What do I need to do to protect my source code from appearing out on the internet somewhere?

Intellectual Property- Its Meaning and Development in India

July 11th, 2009 at 12:41am Under intellectual property

“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it.” Thomas Jefferson.

Intellectual Property Rights (IPR) is the privileges given to the owners of works that are created with the help of individual intelligence. These creations can be in the business, technical, fictional and arty domains and can have various forms comprising, of scripts, inventions, software, a suite or a trade name.

The term “intellectual property” was introduced in the case of Davoll et al. v. Brown in October 1845 in the Massachusetts Circuit Court. In this Justice Charles L. Woodbury held that “only in this way can we protect intellectual property, the labors of the mind, productions and interests as much a man’s own…as the wheat he cultivates, or the flocks he rears.” Section 1 of the French law of 1791 also stated that “All new discoveries are the property of the author; to assure the inventor the property and temporary enjoyment of his discovery, there shall be delivered to him a patent for five, ten or fifteen years.

The basic purpose of IPR is to guard the rights of an author for his work and simultaneously permit the general public to view his creativity. IPR law also puts time limits on the rights given to these authors so that a balance is maintained. Intellectual property, like any other form of property can become a material of trade, can be owned, sold as well as bought. This type of property is gradually becoming important for ensuring competition in a knowledge based economy.

Intellectual property is divided into the following categories:

 Copyright

 Patents

 Trade Marks

 Design Rights

 Passing off

 The law of Confidential information Copyrights, are mainly issued for the protection of original expressions of art, literature, music, drama etc. – for example, Pepsi has a copyright on the phrase “Yeh Dil Maange More” Patents are the rights granted to the inventor on new inventions which are not common – for example, Graham Bell got a patent on his invention of the telephone. Trademarks are mainly issued for protection of the make or the brand name and symbol that may be used by the brand owner-for example, the name ‘Coca Cola’ is a sheltered trademark and only the makers can use it.Design is issued for the protection of artistic or visual features in products – for example, a toothbrush with large bristles can get a legal protection for its unique design. Confidential information and trade secrets can also be protected by imposing restrictions on the physical use of that information and also imposing contractual obligations upon the persons dealing with that information – for example, the formula for making Coca Cola has been kept secret in this manner.

There are various organizations that are working towards the protection of intellectual property. Some of them are as follows:

(a) World Intellectual Property Organization (WIPO) Geneva which sanctions various treaties in the field of intellectual property.

(b) Paris Convention for the Protection of Industrial Property (relating to patents, trademarks, designs, etc.) of 1883.

(c) Berne Convention for the Protection of Literary and Artistic Works (relating to copyright) of 1886.

(d) Patent Cooperation Treaty (PCT) through which patents can be obtained in different countries by filing a single application.

(e) World Trade Organization (WTO), which contains the Trade Related Aspects of Intellectual Property (TRIPS). This agreement creates an obligation on all the members to recognize intellectual property rights in their country.

In India the Department of Industrial Policy & Promotion is the supreme authority for all matters concerning WIPO. There have been remarkable developments in the field of intellectual property in India which is evident from the statistics shown below:

(a) In the year 1999-2000 there were merely 4824 application for patents that were filed whereas in 2006-2007 a total of 28,882 applications have been filed.

(b) There were merely 2824 applications examined in the year 1999-2000 whereas in 2006-2007 the number has gone up to 14,119 in 2006-07.

(c) There was a backlog of 5 lakh cases which has been brought down to zero now.

(d) The process of renewal of Trademarks certificates is now being done instantly and new applications are examined within a week.

(e) In 1999-2000, 8,010 registrations of trademarks were done which has increased to 109,361 now that is almost 13 times of the earlier figure.

(f) In the last four years there were 3.38 lakh trademark certificates issued, however in the last 64 years there were merely 1.65 lakh marks were registered.

(g) There have been 39 Geographical Indications products registrations since September, 2003. These include Darjeeling Tea, Pochanpally Ikat, Chaddar, Mysore Silk, Chanderi Saree, Kullu Shawl, Solapur Bidriware, etc.

(h) In the field of designs also the filing of applications has increased from 2874 to 5372 in 2006-07. The number of examined applications has also gone up to 5179 in 2006-07. The registrations in designs have also gone up to 4431 in 2006-07.

Current developments in the Intellectual property in India

(a) Establishment of NIIPM

The Government has already approved the proposal for establishment of a National Institute for Intellectual Property Management (NIIPM) at Nagpur. The Institute will perform training, education and research in this field.

(b) Modernization of the IP Offices

To provide additional employees, establish a higher level of computer network to support on-line processing, strengthen the data base and novelty search facilities, to make the people aware of generation activities, and to provide an access to international treaties/conventions easily the government is planning to modernize the IP offices. This proposal will be taken up in the 11th five year plan.

(c) Madrid Protocol on Trademarks

Madrid Protocol, administered by WIPO, is an uncomplicated, facilitative and lucrative system for the registration of International Trademarks. If India becomes a member of this then the Indian companies will have an advantage of registering their trademarks in all the countries which are the members of this protocol by filing a single application. The amendment of the Trade Marks Act is in progress so that our country can be a member of this protocol.

(d) International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA)

ISA and IPEA’s provide search reports on uniqueness and examination reports on patentability of various inventions. In India a scheme is under consideration to get recognition for the Indian Patent Office as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) under the Patent Co-operation Treaty.

(d) Mashelkar Committee

The Indian government has established a group of technical experts to examine the following patent law issues:

(a) Whether it would be compatible to the TRIPS agreement to limit the grant of patent for pharmaceutical substances only to a new chemical entity or to a new medical entity.

(b) Whether it would be compatible to the TRIPS agreement to exclude micro-organisms from patenting.

The bottom-line is that India is one of the most responsible members of the WTO. Besides creating waves in the global software industry India has framed stringent laws for the protection of IPR in the country. Bill Gates, the chief executive officer of Microsoft Corporation, has rated India as one of the strongest pedestals for software development. It is evident from this statement that if a person like Bill Gates who is so much aware of the IPR issues can designate India as one of the upcoming destinations for the software development then the foreign companies should not worry about the protection of their intellectual property rights while investing in India.