Source code stolen from US software company in India

Jolly Technologies, a division of U.S. company Jolly Inc., reported Wednesday that an insider stole portions of the source code and confidential design documents relating to one of its key products, at its research and development centre in Mumbai. The company has as a result halted all development activities at the centre.

Jolly Technologies is a vendor of labeling and card software for the printing industry. It set up its research and development facility in Mumbai less than three months ago, according to a press release from the parent company.

The company said in the release that according to a report obtained from its branch in India, a recently hired software engineer used her Yahoo Inc. e-mail account, which now allows 100MB of free storage space, to upload and ship the copied files out of the research facility. After detecting the theft, the company is trying to prevent the employee from further distributing the source code and other confidential information, the company said.

The vast majority of U.S.-based software companies require their employees to sign an employment agreement that prohibits them from carrying, or transferring in any way, the company’s source code out of a development facility.

Though the Indian branch of Jolly Technologies requires employees to sign a similar employment agreement, the sluggish Indian legal system and the absence of intellectual property laws make it nearly impossible to enforce such agreements, the company said.

Representatives of San Carlos, California-based Jolly Technologies in Mumbai are working closely with local law enforcement authorities, seeking their assistance in taking corrective action against the employee and to prevent such crimes from occurring again.

Whether Jolly or other companies will succeed in changing the fundamentals of the legal system in India is hard to say, but at this stage, Jolly Technologies has decided to delay further recruitment and halt development activities in India until further safeguards are in place, the release added.

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