Security Tips When Outsourcing Software Development

Developing software is an investment of both time and money. Many companies outsource their software development hoping to accelerate the development process by using a team of highly experienced professionals, while saving money not having to house and hire new employees.

At the same time, outsourcing software development to a team comes with intellectual property risks that need to be addressed when making a partnering decision. Many companies have tight contracts that protect themselves when engaging in a business relationship. However, in a foreign country the legitimacy of such a contract may become questionable, especially in regards to intellectual property law.

Intellectual Property is Complicated

Laws on intellectual property are written with the intention of protecting businesses from unauthorized duplication, change and sale of protected intellectual property, like their ideas. In many countries, writing a law is a reactionary step, which can be problematic for defining subject matter [intellectual property] that is consistently innovating itself.[1] This makes interpretation of the intellectual property laws difficult for lawyers and judges.[2]

Adding to the complexity, countries have different perspectives on enforcing and interpreting intellectual property laws. This means that businesses need to protect themselves with clear contracts and agreements that specifically outline the handling of intellectual properties. These protection can come in the form of Non-Disclosure Agreements.

Non-Disclosure Agreements

All companies that outsource their software development should have a Non-Disclosure Agreement within their contract. When both parties agree to a Non-Disclosure Agreement, they are agreeing to do their part in keeping information confidential.[3] This information can be a sales plan, a list of clients, or a manufacturing process. Parties that breach this agreement are subject to legal recourse for any damages caused by the leak.[4]

For a Non-Disclosure Agreement to be valid, it is important that all parties understand what it is that they are agreeing to.[5] The United States is explicit in enforcing contracts only if the parties willingly agree and understand their terms and conditions.[6] When outsourcing to another country, most companies seek the help of a native lawyer who understands the language and customs of both parties to ensure that the agreement is legitimate.

While signing a Non-Disclosure Agreement is binding, interpretation and enforcement is dependent on how the country treats intellectual property. To settle inconsistencies between trading countries, organizations are created to oversee international trade agreements. For businesses in the United States, two major organizations that influence international trade agreements are WIPO and NAFTA.[7]


WIPO and NAFTA are regulatory organizations that act as agents for businesses to enforce their international contracts and agreements. While WIPO has a larger scope of countries, NAFTA has tighter regulations on its members.

World Intellectual Property Organization (WIPO)

Members of WIPO agree to allow WIPO’s policies to supersede their own. However, WIPO has limited power by allowing countries to process and enforce laws using their own native systems and interpretations.[8] This can be concerning for countries looking to outsource their software development given the complexity of intellectual property laws.

For example, India has vague laws on what is deemed an invention, a critical component in its copyright laws. Under Section 3 of the Indian Patent Act of 1970, “A mathematical or business method or a computer programme per se or algorithms” are not considered inventions.[9] The interpretation of Section 3, Indian Patent Act of 1970 is then placed heavily on the courts to decide whether or not the software is protected based on its use of an algorithm form.[10]

North American Free Trade Agreement (NAFTA)

Companies from the United States, Canada, and Mexico are protected under the North American Free Trade Agreement.[11] The Agreement created a trilateral rules-based trade block to standardize tariffs and trade laws between these countries for more fluid commerce. NAFTA supersedes all previous trade agreements and policies, making it one of the farthest reaching international agreements of its kind.[12]

Under NAFTA, the United States, Canada, and Mexico all agree to adopt the United States’ trade and commerce laws as a legal minimum.[13] NAFTA also requires that member countries use many of the same law enforcement and civil action policies that are similar to those found in the United States, such as the seizure of pirated products at the border and the payment of punitive damages against those found guilty of buying, selling, or producing pirated goods.[14]

Software Development in Mexico

Tiempo Development has development centers in Guadalajara, Hermosillo, and Monterrey, Mexico. As border countries, the United States and Mexico have a long history of positive trade relations between investors that are partnering with the skilled workforce in Mexico. Tiempo Development takes additional steps to ensure that Intellectual Property has stringent protection, backed by Non-Disclosure Agreements. For more information on Tiempo Development’s strategy to bring you safe high-quality software, read our whitepaper about the Tiempo Quality System (TQS).

[1] Henry O. WIPO National Workshop For Judges. World Intellectual Property Organization.

[2] Ibid.

[3] Rich S. Nondisclosure Agreements. NOLO.

[4] Ibid.

[5] Ibid.

[6] Alan, Robert, Anne B. Contract Law in the United States: An Overview. The University of Texas at Austin School of Law.

[7] Henry O. WIPO National Workshop for Judges. World Intellectual Property Organization.

[8] Henry O. WIPO National Workshop For Judges. World Intellectual Property Organization.

[9] Sudhir K. Software Patents in India. Legal Resources.

[10] Ibid.

[11] North American Free Trade Agreement (NAFTA). Office of the United States Trade Representative.

[12] Ibid.

[13] Frank S. “NAFTA’s Intellectual Property Provisions”. Dr.Dobb’s.

[14] Rodolpho, Chung-Pok Leung. A Comparative Analysis of Intellectual Property Law in the United States and Mexico, and the Free Trade Agreement. Maryland Journal of International Law.