Outsourcing your production to China can offer considerable benefits, such as decreased production costs and manpower requirements.
However, many Western companies that don’t know how to protect their ideas and designs when searching for a manufacturing partner in China can risk compromising their quality and facing IP leakage or other unexpected consequences.
To help you make an informed decision and ensure a strong partnership that benefits both parties in the long term, we have put together this guide on the five most common mistakes to avoid when searching for an IP protective manufacturing partner in China. Read on to learn more!
1. Not Defining and Registering Your IP
Before choosing a manufacturing partner in China, it is essential to define and register intellectual property (IP) in your home country. Typically, intellectual property consists of different forms of assets, including trademarks, patents, and copyrights.
A trademark can be a word, phrase, symbol, design, or a combination of these elements that distinguish a specific item from the rest. For example, the Coca-Cola Company has registered its Coca-Cola® trademark in both standard character format and special form formats.
A patent is an exclusive right granted for an invention, which could be a design, process, improvement, or physical invention such as the new machine. Typically, there are three types of patents:
- Design patents
- Plant patents
- Utility patents
A copyright is a collection of rights that automatically vest to someone who creates an original work of authorship. The most common copyrights include:
- Literary works
- Musical works
- Dramatic works
- Pictorial, graphic, and sculptural works
- Architectural works
2. Not Knowing Your Rights Under Chinese Law
Having a good understanding of your rights and the legal protections available is an essential part of securing your intellectual property (IP) when moving your production to China. This is because registering your IP in your homeland won’t provide the same protection when you begin to produce in another country as the regulations of IP laws vary from nation to nation. In this case, you should register your IP in China and become knowledgeable of your IP rights according to Chinese laws and regulations.
Depending on the type of IP protection you need, it is important to know which laws apply to you and your product. For example, if you are looking for patent protection in China, you must register your patent with the Chinese Patent Office and make sure it complies with all applicable regulations.
For the best protection against potential IP infringement, you can consider employing a dependable legal service provider in China. Their knowledgeable attorneys, fluent in both Mandarin and English, will guide you through the entire process.
3. Not Conducting Proper Due diligence
Before making a commitment to any manufacturing company in China, don’t forget due diligence. When searching for an IP protective manufacturing partner in China, you should ask yourself the following questions:
- Are they capable of manufacturing my product?
- What are their past experiences with similar projects?
- Are their employees familiar with IP protection?
- Can they guarantee the security of my IP?
It’s also important to read reviews from previous customers. By doing so, you can find such information by posting questions on Quora.
Additionally, don’t forget to confirm that your chosen manufacturing partner has the right certifications and qualifications, as well as industry standard procedures in place to ensure your IP is adequately protected.
4. Not Having an Enforceable Contract
Before developing an IP protective agreement with a manufacturer in China, you should first identify and clearly communicate your IP expectations. Without a well-defined IP strategy, you are unable to effectively protect your assets when you enter into a manufacturing partnership in China.
After ensuring a potential supplier is able to satisfy your requirements, be sure to record every term in a formal, legally-binding agreement. An enforceable contract should specify all the rights, responsibilities, and obligations of both parties and be written in accordance with Chinese law in both Chinese and English to protect your IP rights. It should clearly lay out the procedures for IP protection and enforcement, as well as any disputes that may arise. This contract should also include the terms and conditions of any transfer of IP, including licensing, confidentiality, and non-disclosure agreements.
By having a comprehensive and enforceable contract in place, you can ensure that your IP is properly protected and secure.
5. Not Monitoring Your IP
The last and most common mistake that many Western companies make when moving their production projects to China is that they don’t constantly monitor their IP.
It is important to keep track of what happens to your intellectual property once it is in the hands of your manufacturing partner in China. This includes tracking where your products are manufactured, as well as ensuring that proper IP protection measures are in place to prevent any unauthorized use or theft.
It is important to also ensure that any changes made to the design of your products are reported back to you and approved by you before they are released for production. Without this level of monitoring, you may find that your IP is infringed upon without your knowledge and be unable to take action.
Partner with an Experienced Manufacturer in China
Even if you have a well-established strategy to safeguard your IP, you still need to be careful when selecting the right manufacturing company in China. This is a vital step that should not be made in haste, as many factors should be evaluated thoughtfully.
With Shield Works on board, you can have your production outsourced to China smoothly while keeping your intellectual property safe and secure, which can help you get the best results from your investment.
Founded in 2020, we are an offshoot of the British-owned and managed C2W Group located in the South China Greater Bay Area offering IP protective contract manufacturing services. We have a team of bilingual engineers on the ground to offer tailor-made services to meet your requirements. Get the ball rolling by contacting us today to go over the specifics and see how we can support you.