Pradeep Dabhade
Anagha Pathak
2395
Companies in India are looking at extensive outsourcing for the wide range of advantages it offers, like cut infrastructure costs, focus on core competencies, and/or obtain access to new, enhanced technologies. Outsourcing engagements require customers to share a high level of intellectual property, including know how, which risks theft or misappropriation of trade secrets, loss of IP rights, and reduced control of the outsourced function. Construction being a core design related field, it is established that development of new designs and related technologies is an integral part. Design is an ever evolving process and every design is unique. Hence, every project develops its own package, which is developed by the participants at different levels and phases of the project. Also, it is developed with available resources, but it produces a unique solution. Indian legislature must take steps and consider these design developments and the risks involved with it as part of a legal system.
KEYWORDS Outsourcing, intellectual property, trade secrets, new designs and related technologies, Indian legislature, legal system.
1. INTRODUCTION
During the project lifecycle of a particular project, there are many processes involved that are interdependent and interconnected. From the office to the site, there are many arenas involved.In such a case, outsourcing becomes a necessity, andnotmerelyatrend.Outsourcingmaybeevidentinconstructionindustryowingto
Absenceofprofessionals
Absenceoftoolsinhouse
Lack the budget and interest in hiring a full time employee to manage certain workflows like accounting, takeoff, compliance,etc.
LabourcostsbeinglowerincountrieslikeIndiaandChina
Outsourcing also has many legal implications. The most important sphere of knowledge when deciding whether to outsourceisthelegaldocumentationandotheraspectsrelatedtolawsandregulationsofthecountry.
Every country has different legal and regulatory requirements. Certain industries are regulated by federal and state laws,whilesomearedependentonmandatesaccordingtotheuniquefunction
In India, there is no law to specify and regulate outsourcing. However, the following laws are applicable in case of outsourcing
During the design and development phase of the project, it is critical to consider the legal and contractual implications involved. It is also important to note and understand that every country has its own legal and regulatory requirements Particularly in case of outsourcing, there are no generalized laws that govern outsourcing, only legal specifications and mandatesaccordingtotheuniquefunction.Fewmentionedbelowareapplicableinthepresentscenario
PROCESS IN INDIA
IMPLICATIONS
OF TRADE SECRETS IN OUTSOURCING CONSTRUCTION WORK
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National Regulations
Indianlawregulatesthetransactionswiththefollowinglaws
ContractAct1872(ICA)
IndianStampAct1899
ReliefAct1963(SRA).
ofCivilProcedure1909
andConciliationAct1996
ExchangeManagementAct1999(FEMA)
InformationTechnologyAct2000(ITA).
propertylaws Theintellectualproperty relatedprovisionsinoutsourcingcontractsaregovernedbythe CopyrightAct1957(CopyrightAct),TradeMarksAct1999(TradeMarksAct),IndianPatentsAct,1970(PatentsAct) andDesignsAct2000(DesignsAct).Indiadoesnothavealawontradesecrets.
Process of Outsourcing in the Construction Industry
To exploit and maintain a competitive advantage requires discipline, efficiency, adaptability, and a singularity of purpose. Global competition has forced managements to re define, refine, and focus intensely on their companies' core competencies. This emphasis on core competencies has led to increased interest in contracting non core support functions to outside organizations aprocessknownasoutsourcing(CrinoandDrnevich,1999:2)
Mariotti, (1999: 1) defined outsourcing as a strategic decision to obtain goods or services from independent organizations outside of a company's legal boundaries; to purchase goods or services instead of making or performing them. Construction companieshavealways subcontractedtogainaccesstoresources beyondtheirindividual reach whetheritis skills,people, technology,productsormaterials.
Quinn,(1999:1)madethisextreme remark: "Ifyouare notbest in worldindoing something,andaredoingit in house,you are giving up a competitive edge. You could outsource to the best in the world, up the value and lower the cost". When companies downsize by intelligent outsourcing, they eliminate their inefficient activities and those employees not adding valuetothecompany.
Construction
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The relationship between the construction project management company and the outsourcing partner should be based on mutualtrust.
partnershipisawell designedcontract.Thecontractshouldbeflexibleto ensurethatmarketinnovationevolvesintotangiblebenefitsforbothparties.
foundationofaneffective
A company should always be wary of sharing too much information pertinent to its core competencies with its outsourcing partners.Partnerscontributetoaprocessofmutualdisclosureandconsensualagreements,andcontinuetoevolveaworking relationshipbasedoncommongoals.
1.4. Intellectual Property Rights
Intellectual Property includes copyrights, trademarks, patents and now, increasingly gaining popularity, trade secrets, However,thereislegislationin placefor everything excepttrade secrets. Patentsrideonthe factthattheinventionis novel, uniqueandnon obviouswhilebeingusefulaswell.Copyrightsprotectmannerofexpressionbutnotcontentorideabutonce theideaismaterializedinaform,itisprotected.Disclosureoftradesecretswillharmtheownerofthetradesecretand killthe idea and essence of the trade secret thus making it difficult to gain protection the way patents and trademark/ copyrights enjoyprotection.Iftradesecretsareexposedtothepublic,theycanneverbeevoked.
CopyrightAct,1957 CopyrightreferstothelegalrightoftheownerofIP.Insimplerterms,copyrightistherighttocopy.This meansthattheoriginalcreatorsofproductsandanyonetheygiveauthorizationtoaretheonlyoneswiththeexclusiverightto reproducethework.
TrademarksAct,1999 Amarkcapableof beingrepresentedgraphicallyandwhichiscapableofdistinguishingthegoodsor servicesofonepersonfromthoseofothers
Patents Act, 1970 An exclusive privilege given to the author by the State to prohibit anyone from utilizing, creating, and sellinganinventionforaspecifieddurationoftime
1.5. Need of the study
Indiadoesnothaveaspecifiedcodifiedlegislationtoprotecttradesecrets.Tradesecretsareconsideredwithintheframework of contract, competition and IP. Trade secrets can be protected by way of covenants, non disclosure agreements, other contractualmeans,actionagainstmisappropriationundercommonlaw,breachofconfidence,and/ortheft.
Intheconstructionindustry,wheretechnologicaladvancementsarefastpaced,theabsenceoflegislationfortradesecretscan giverisetomismanagement,failureofsmallbusinesses,andfinallyadisruptedeconomicalfabric.Intheeraofglobalization, manyconstructioncompaniesareoffshoringworkforvariousreasons,includingexpansionandcheaplabor.Inthiscase,the needforastrongerlegislationisevidentandofforemostconsideration.
As defined in the Black's Law Dictionary, "trade secret" is a "formula, process, device, or other business information that is keptconfidentialtomaintainanadvantageovercompetitors;informationincludingaformula,pattern,compilation,program, device,method,techniqueorprocess:
(1)Thatderivesindependenteconomicvalue,actualorpotential,fromnotbeinggenerallyknownorreadilyascertainableby otherswhocanobtaineconomicvaluefromitsdisclosureoruse,and;
(2)Thatisthesubjectofreasonableefforts,underthecircumstances,tomaintainitssecrecy."
1.6. Problem statement
The entire construction process is based on a unique design that has been developed as a customized solution. This design processisexecutedinstepswhereeverystephascertaindevelopmentsintermsofmaterialortechnology.Whenapartofthis process is outsourced, the developments are shared on a common database and are exposed to parties outside the core competencies.However,astheconstructionprocessisbasedonadesigndevelopedasanart,thissharingofinformation,and
a large
itunder
International
Volume:
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The questionnaires were based on the fact that businesses in the 21st century have nontraditional challenges and are in the middle of extreme technological advancement. Trade secrets and outsourcing, both are comparatively new developments in the construction sector. Hence, the open ended questions for Company A and Company B were basic questions about understandingtheintricaciesoftheexistinglegalsysteminIndia.Thequestionnairesfocusedonapprovalofnewpracticesin theconstructionsectorandthechallengesassociatedwiththem.
3. RESULTS AND ANALYSIS
3.1. Contract analysis out Company A and Company B
From the discussions with proprietors and consultants from Company A and Company B, it is observed that outsourcing models in India are typical and since projects are located outside the Indian legislature, IP rights is not a point of concern. However,incaseofprojectdelays,anddisputesatsitehaveanuneasyeffectonserviceprovidersinIndia. Theoutsourcingof any services, where employees of a third party supplier are deployed to provide services to a customer in its premises (or premisesunderthecustomer'ssupervisionandcontrol),isregulatedundertheContractLabour(Regulations andAbolition) Act1970(CLRA)whichmayalsogiverisetotheftofintellectualproperty.
3.2. Questionnaire
major points were included such as:
outsourcingbeenabeneficialmodel?
DoesoutsourcingandoffshoringaviableoptioninIndia?
Reason for increase in outsourcing in construction industry (cheap labour, competitive attitude, automation, global presence)
4. Which of the following acts are/should be part of an outsourcing contract (Copyrights Act, IP rights, Labour Acts, InformationtechnologyAct)
5. Whatarethepertinentrisksinvolvedwiththedesignprocessintheconstructionindustry (completionoftheproject, intellectualproperty,practicality,staff)
Which of these models will you prefer to use during outsourcing in the construction industry? (captive entity, bot, partnership,jointventure)
youawareofthetermtradesecrets?
youthinktradesecretscanbeapartoftheconstructionindustry
haveoutsourcedwork,doyouthinkyourdesignsmaybecopied?
youincludeanyclauseinyourcontracttoprotectyourdesign?
youfeeltheneedtosecrecyduringthedesigndevelopmentstage?
youfeeltheneedtosecrecyduringthedesignconstructionstage?
youevercomeacrosselementsofyourdesigninotherdesignersprojects?
youfeeltheneedtodefinethissecrecyintheformofanyIPright?
youcopyrightyourdesign?
youpatentyourdesign?
youthinkacustomizeddesignmaybeapartofIP?
thereariskfactorofleakageoftradesecretinvolvedwhen
anygoverningbodieshavetheauthoritytotakeactionfortheftofintellectualproperty?
Indianlegislaturehelp
withtheftof
designs?
not a term known widely amongst the construction industry
from
known only in terms of copyrights and patents, both of which are not a viable option for
have the
risks
are
adopted for its advantages and the financial stability
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CONCLUSION
There is a need to educate people about
that fall under the category. It is also a mandate to
the
process.
5. ACKNOWLEDGEMENTS
law,
playersareinvolved,asincaseofoutsourcingmodels.
maybeabletoprovethattheongoingdesignprocessisa tradesecretanditneedsprotection
would like to express my gratitude towards my external guide Adv. Pradeep Dabhade and internal guide, Prof. Anagha Pathak, for their expert guidance
I would like to thank my family and colleagues for their support
continuous
encouragement.Iamgratefultoallmyfriendsandacquaintanceswhohavecontributedtomystudy.
REFERENCES
ofoutsourcing
backofficepro.com
Narendran,Swarnima,SamsuddhaMajumder,Deepthi
AditiGoyal,AmulyaChinmaye,KartikeyKulshrestha,Anjana4.Ravi,ChetaSheth,SohailHafesjeeandHardeep SinghChawla 01 Jun 2021 Outsourcing:Indiaoverview
tradesecretsinIndia,1May2018,RNAtechnologiesandIPattorneys
tradesecretsinIndiaintheabsenceofaregime 9june2020,khuranaandkhurana.com
tradesecrets India