7 Steps to Protect Your IP
January 25, 2022
One of the questions I am asked most often is how to protect Intellectual Property (IP) when manufacturing goods in China. This scrutiny is justified: nobody wants their idea stolen by their manufacturer and since China is the “supplier of the world,” it receives extra scrutiny. But let’s be clear: protecting your IP is something you should do in China as well as in every country in the world.
So, how does one go about protecting IP? It might seem a daunting endeavor, but there are a few actions you can take. And when implemented together, taking these steps can work very well.
1) Patent: You should have a patent in all the countries in which you plan to sell your product.
2) Copyright protection: Use this to protect your brand and content.
3) Confidentiality agreements* that are legally binding:
– NDA: Non-disclosure agreement
– NNN Agreement (Non-disclosure, Non-use, Non-circumvention): more comprehensive than a non-disclosure agreement.
4) Mold/Tooling agreement*: This protects your mold/tool once it is developed. There are two important points to include in the agreement:
– The supplier can only use the mold(s) to produce your orders.
– You have ownership of the mold; should you ever decide to move production to a new factory, the mold is yours to take with you.
5) Separate production: Spread the manufacturing of your product over several different factories, each bound by NNN agreements. Complete assembly by your team in the US, or in a separate, independent facility. This process prevents any one factory from having a complete understanding of your product.
6) Trust: Suppliers tend to want to protect your IP not just because of legalities: they are aware of their legal obligation, they understand the legal protection a patent provides, and do not want to impact their reputation with a lawsuit. But beyond that, your supplier has a commercial motive: They have a vested interest in protecting your IP because they want to retain you as a client.
7) Be the best: One of the best ways to protect your product and brand, and one that is sometimes overlooked, is to be the best in the market. By being innovative and constantly on the move seeking better outcomes. By making the best product, for the best price, the finest quality, and by providing stellar customer service. This develops brand loyalty, so even when someone knocks off your product there is a good chance your customers will stick by you because they love your product and what it does, or how it makes them feel.
*Putting formal agreements in place might require hiring professionals on the ground to help with content, translation, legal issues, and execution.
As you can see, what is not listed above is “defending your IP in court.” The legal route, suing for remedy or damages is always an option but should be a last resort. The above seven points are about prevention, a lawsuit is about a cure. It is often extremely costly, both in terms of time and money, and with scant rewards. In general, you want to avoid going to court, so focus on preventing that possibility instead.
Implementing all of the above steps together—one or two isn’t usually enough—can go a long way. So plan ahead, get the expertise and assistance you need to carry out each step, and remember that CPG is here to help!
By Laura Dow