The Indian subsidiary of US firm Jolly, has said that an insider stole portions of the source code and confidential design documents relating to one of its key products from its research and development centre in Mumbai.
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The company has halted all development activities at the centre.
Jolly Technologies is a supplier of labeling and card software for the printing industry. It set up its research and development facility in Mumbai less than three months ago.
The company said that, according to a report from its branch in India, a recently hired software engineer used her Yahoo e-mail account 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, it said.
The majority of US-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 them nearly impossible to enforce, the company said.
Representatives of Jolly Technologies in Mumbai are working with local law enforcement authorities to act against the employee and to prevent such crimes from occurring again.
Jolly Technologies has decided to delay further recruitment and halt development activities in India until further safeguards are in place.
John Ribeiro writes for IDG News Service