Intellectual property protection is a big concern for many US-based companies, especially those who may be initially considering overseas manufacturing. Companies from around the world have been manufacturing in China for many years with no intellectual property issues. Some however, have not been so fortunate. While it is impossible to guarantee a company’s intellectual property rights will not be violated, there are strategies as well as tactical procedures that can be put into action to minimize the threat when taking advantage of the benefits of overseas manufacturing.
How is the IP Threat an Issue in China?
IP leakage most often occur when business practices are shared or through staff transfers from multinational corporations to local China companies as joint ventures and/or supply chain partners.
It is always a solid practice to work closely with any manufacturing partner to make it clear verbally and contractually that protecting intellectual property is a high priority. ITI Manufacturing has an attorney on retainer in China for that very reason. This legal council is responsible for drafting our Non-Disclosure Non-Compete agreements in Chinese. We hold and maintain our client’s confidential information in strictest confidence for the sole and exclusive benefit of our clients. We carefully restrict access to confidential information to employees, factories, and all parties as is reasonably required and require those persons to sign nondisclosure restrictions at least as protective as those we use for our own information.
Exploring Strategies to Avoid Intellectual Property Theft
There are well-recognized strategies employed by U.S. companies partnering with Chinese concerns to reduce the potential of intellectual property theft. While not all are appropriate for every organization, there are a few that will work in most cases.
- Consider patenting products in China as well as the USA. While that will not be a magic bullet it will provide legal footing within China’s legal system adding a layer of protection.
- If you are manufacturing in China on your own, take extreme security steps. All sensitive data should be carefully protected with only those who absolutely need the materials given access. That requires the cooperation of your Chinese manufacturer but should be a part of any agreements reached with the partners used.
- Compartmentalize research and development. Copying many products requires access to detailed designs. When those details are limited, and multiple facilities’ research is required to complete a product, there is a reduced chance of all the elements being obtained by anyone seeking to copy the item.
There are other ways to reduce the potential of intellectual property theft related specifically to the types of products and the partnerships developed. It makes good business sense to work closely with an organization that has a proven track record of success with overseas manufacturing in China. ITI Manufacturing has been working in China on behalf of American companies since the early 70’s during the Nixon administration. We always take the proper steps to ensure your intellectual property is protected. If you have questions about how we help companies navigate through the ins and outs of China manufacturing, contact us at 888-574-6823.
Also contact us at ITI Manufacturing for a free, no obligation quote to see if overseas manufacturing is the right option for you financially and logistically.