Protecting your intellectual property (IP) when engaging with Chinese manufacturers is crucial. An effective way to achieve this is by signing an enforceable NNN (Non-Disclosure, Non-Use, Non-Circumvention) agreement. This guide outlines the key steps and considerations to ensure your NNN agreement is robust and legally binding.
The following is the template (click here to download the PDF) of NNN agreement for our clients:
Understanding NNN Agreements
An NNN agreement is designed to:
- Non-Disclosure: Prevent the manufacturer from sharing your confidential information with third parties.
- Non-Use: Prohibit the manufacturer from using your IP for any purpose other than the agreed-upon production.
- Non-Circumvention: Stop the manufacturer from bypassing you to engage with your clients or markets directly or indirectly.
This comprehensive approach offers more protection than a standard Non-Disclosure Agreement (NDA), which may not address unauthorized use or circumvention.
Key Components of an Enforceable NNN Agreement
To ensure your NNN agreement is effective, include the following elements:
- Clear Definitions: Precisely define what constitutes confidential information.
- Duration: Specify the time period during which the agreement is enforceable, including post-contractual obligations.
- Non-Disclosure, Non-Use, and Non-Circumvention Clauses: Clearly state the prohibitions on disclosure, use, and circumvention of your IP.
- Liability for Subcontractors: Ensure that the same obligations also bind any subcontractors engaged by the manufacturer.
- Ownership of Improvements: Establish that any improvements or modifications to your product remain your property.
- Breach Penalties: Define the consequences and penalties for any breaches of the agreement.
- Governing Law: Specify that the agreement is governed by Chinese law to facilitate enforcement.
- Dispute Resolution: Determine the jurisdiction and method for resolving disputes, such as arbitration (check out the list of arbitrational institutions) in a Chinese legal setting.
Steps to Execute an Effective NNN Agreement
- Information Gathering: Collect all necessary details about both parties and the scope of the project.
- Drafting and Revision: Create a tailored agreement that reflects the specific nature of your collaboration and revise it as needed.
- Due Diligence: Conduct a thorough background check on the manufacturer to assess their reliability and compliance history.
- Execution: Ensure that the agreement is properly signed and sealed by authorized representatives of both parties to make it legally binding.
Maintaining the Validity of Your NNN Agreement
Be aware that the NNN agreement may become invalid if:
- Your design or product becomes publicly available, as it is no longer considered confidential.
- Third parties who are not bound by the agreement gain access to your IP.
To enhance protection, consider filing for patents or trademarks in China, which provide legal recognition and protection of your IP.
Additional Measures to Protect Your IP
Beyond the NNN agreement, implement the following strategies:
- Intellectual Property Registration: File for patents, designs, or trademarks in China to legally protect your IP against third-party infringements.
- Comprehensive Manufacturing Agreements: Include non-use clauses in your manufacturing contracts to ensure that your IP is protected throughout the production process.
Please do not hesitate to reach out to us if you are preparing to draft or sign an NNN agreement with the Chinese manufacturers.
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