Upaid vs Satyam: new forgeries, NASSCOM in the picture

Two very interesting updates on the Upaid vs Satyam dispute, which demonstrate the premise that Sid Fernandes laid down in his guest post last week - that there must be "no surprises" in trial... No, the documents have not been de-sealed as yet, so we still don't know what is contained in the third amended complaint that was reported on some time ago.

However, I have news that almost a dozen fresh forgeries have allegedly emerged in Satyam's dealings over the past several years, which very likely places the Indian software giant in some difficulty. In view of this development, Upaid has filed an application to compel the deposition of at least four high-ranking Satyam officials, whom it believes have knowledge of facts relevant to this litigation. These include MD and co-founder B Rama Raju and CFO Srinivas Vadlamani. Satyam, on its part, has claimed thus far that these individuals are "totally irrelevant to Upaid's claims and Satyam's defences".

With this discovery of additional forgeries, Upaid speculates that it may mean either that forging documents to transfer IP title is a systemic problem in Satyam, or that the organisation has failed to maintain a tight rein on the proliferation of such forgery.

Regardless of what the plaintiff may allege, I would like to again draw readers' attentions to observations made repeatedly in earlier posts - that this case may have questioned the integrity of the Indian software outsourcing industry as a whole, and will very likely have fundamental repercussions on their dealings with clients in the future. Indeed, it may not be too presumptuous to speculate that extant Assignment Agreements (that transfer IP, and related rights) entered into by other companies may have already come under the scanner by other concerned clients. These clients depend heavily on the software development services offered by Indian outsourcing firms to develop their own IP portfolio, and in a sense, this case (even though trial is yet to begin) has probably been a wake-up call of sorts.

This brief commentary is closely related to the second update in this case: that NASSCOM, the Indian software industy's representative body entered the picture, with Upaid having sought its deposition in connection with this case. An application filed last month under the Hague Evidence Convention was granted by the Texas Court, which issued Letters Rogatory to take the written deposition of the National Association of Software and Services Companies (NASSCOM).

Clearly, this request comes in view of NASSCOM's unique position as the premier trade body and voice of the software and services industry in India. Specifically, Upaid appears to wish to clarify on issues relating to codes of conduct established by NASSCOM, and industry customs re protection and transfer of intellectual property that would have applied to Satyam at the time of its dealings with its UK client.

There are several questions that are fairly pointed in their reference: e.g., Upaid has asked NASSCOM about its Quality Forum that it advertises as a Forum within the organisation aimed to help Indian companies achieve next generation leadership in quality. Specifically, it asks if this Forum also assists companies like Satyam achieve best practices that meet strong IP protection requirements set by NASSCOM?

Not surprisingly, the questionnaire seeks answers in considerable detail about industry customs and practices regarding the sale and transfer of IP, including what I see as an insinuating question: "Is it industry custom and practice for NASSCOM member companies to execute on behalf of employees, assignments of the employee’s intellectual property rights with or without the employee’s knowledge and permission?"

While this deposition is sought specifically in reference to this case against Satyam alone, coming full circle, it is not too difficult to read into this a questioning of the practices of the Indian software industry in its entirety.