IP protection for manufacturing in China: the basics
Posted by Renaud Anjoran on Sat, Nov 20, 2010
Most importers know that intellectual property (IP) is not respected the same way in China and in their country. But what exactly are the dangers for manufacturing in China, and what can be done about it?
Register your trademark in China
You have your own brand and you don't intend to sell anything in China, so why bother about this? Here is why:
Registration can protect your future access to the Chinese market, prevent the export of counterfeit goods from China, and prevent a competitor from registering your mark in China, which would prohibit you from exporting your own product from China.
Do not give sensitive information in full
Do not give a Chinese supplier all the information he needs to steal your IP and/or contact your customers directly.
If you teach a factory how to make a complex or original product, if you ask them to take care of the packing and the labeling, and if you let them ship directly to your customer's warehouse, you are taking very high risks.
The key is to decompose these sensitive activities, so that different parties (that cannot find each other) complete different steps.
Get all the IP generated during development
This might seem surprising, but in many cases Chinese suppliers end up controlling most of a product's IP (designs, molds and tooling, technical blueprints, source of components...) which the importer does not have in his possession!
Chinese factories will do all they can to increase the hassle for your to switch to another supplier. They are often dishonest and unpleasant regarding these issues.
For example, if your supplier agrees to pay for custom-made molds himself, he will not give them back to you down the road... whether you got his agreement about it by email or not!
Contracts reduce risks of trade secret violations
If you are still concerned about IP protection, an enforceable contract (drafted in Chinese by a specialized lawyer) can help you.
But most small factories would refuse to sign it, and many trading companies that might accept it cannot control what the manufacturer really does. There is no perfect solution...