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Intellectual Property & Overseas Manufacturing

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 occurs when business share practices. Moreover, it happens through staff transfers from multinational corporations to local China companies. This is common among factories with joint ventures and/or through supply chain partnerships.

It’s always a solid practice to work closely with any manufacturing partner. You’ll want 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 a reasonable requirement. Also, we require those persons to sign nondisclosure restrictions very similar to 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.

Strategy 1

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.

Strategy 2

If you are manufacturing in China on your own, take extreme security steps. You’ll want to carefully protect all your sensitive data and share it with only those who absolutely need access. That requires the full cooperation of your Chinese manufacturer. However, make sure their cooperation is part of each reached agreement between your company and all those you partner with.

Strategy 3

Compartmentalize research and development. Copying many products requires access to detailed designs. However, when you limit those details to the best of your legal ability, you reduce the chances of theft. Likewise, it’s harder for others to copy information when there are research requirements from multiple facilities in order to complete a product.

Working with An Experienced Manufacturing Liaison

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 ’70s during the Nixon administration.  We always take the proper steps to ensure your intellectual property has protection.  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. It’s the best way to see if overseas manufacturing is the right option for you financially and logistically.

By |2019-05-29T12:40:01-05:00February 13th, 2018|Chinese Manufacturing|

About the Author:

Avatar for Mike Stewart
Mike Stewart joined ITI in 2002 and is Vice President of Business Development. He has a BA in Business and Journalism from SFA University. Before joining ITI Mike sold, installed, and trained businesses in comprehensive business computer systems in the medical and automotive industries and served as Executive Vice President of a video news magazine production company.