Source code stolen from U.S. software company in India

Jolly Technologies blamed an insider for the theft

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

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

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

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

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, Calif.-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.

The company said it has decided to delay further recruitment and halt development activities in India until better legal safeguards are in place.

Copyright © 2004 IDG Communications, Inc.

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