NNN Agreement: How To Protect Your Intellectual Property in China?

Securing your intellectual property is a  great concern nowadays. If you are working with manufacturers in China, you should be knowledgeable about the implemented and most used agreement in the country – the NNN agreement. But what’s this agreement all about, and how your business will benefit from it. Let us give you an overview of this controversial law among companies and China manufacturers.

 

What is China Tripple N Agreement?

China NNN (Non-Use, Non-Disclosure, Non-Circumvention) Agreement can be compared with Western countries’ NDA  (Non-Disclosure Agreement). NNN agreement is designed to protect individual property and confidentiality when working with manufacturers in China.

• Non- Use 

This section in the agreement means that a Chinese factory that you’re working with agrees by a written contract that they wouldn’t use your idea, concept or product in a way that will compete with you. Moreover, it ensures that the factory cannot sell your idea or product to competitors and other competitions.

 

• Non- Disclosure

The non-disclosure category of this agreement prohibits disclosure of confidential information to the public or third parties. It should clearly state who is allowed to view and use the protected information within a group.

If there is infringement by any group member, the party that signed the contract and made the disclosure should be liable; thus, it should be clearly stated on the created NNN agreement.

 

• Non-Circumvention

This element of the agreement prevents the other party from making or producing your product idea and selling them to your potential customers at a lower price.

NDA and China NNN agreements could be the same in some ways, but the latter is effective if you want to secure your product and ideas. Most companies rely on NDA when dealing with Chinese manufacturers. NDA works if you’re going to safeguard your new product development in China.

If you’re intrigued with the Non-Disclosure Agreement (NDA), here’s an insightful blog that tackles this topic.

 

NNN Agreement Traps and Solutions

While NNN Agreement is deemed one of the best ways to protect your intellectual properties in China, there are still many pitfalls that can affect its implementation. Check out these traps and be guided with the solutions provided.

Problem #1: Avoiding the Chinese Language

Using English translation can cause delays in enforcing your NNN Agreement. Both parties can have a different translation for a particular term, which can cause significant problems. Delays caused by avoiding using Chines language as the official language of the agreement can give opportunities for other parties to breach the contract.

Solution:

Have a draft of your NNN Agreement in Chinese to avoid delays. If the agreement is written in foreign English, Chinese manufacturers wouldn’t fully understand the full obligations of your NNN. In addition, Chinese judges who will witness the agreement would need to order a translation of the agreement, making the process longer. Thus, making an effort to make the copy in the Chinese language would make the work less. However, you can still keep a copy of the English translation with you.

 

Problem # 2: Neglecting Chinese Laws

The truth is; China does not respect a foreign governing choice of law in an agreement. It will still apply to Chinese civil law no matter what. However, it can apply foreign law if there’s any foreign element involved. This will be applicable if you’re an American-based company. But, this does not apply to Sino-foreign joint venture companies, which only require Chinese law.

Solution:

The court will ask parties to prove the foreign law that applies to every detail of the agreement, requiring a decision. Neglecting to adopt the Chinese law will be both time-consuming and expensive. Therefore, it is critical to use the country’s law to use the NNN Agreement.

 

Problem # 3: Not Labelling Confidentials

Not labelling important information can cause disputes between manufacturers and businesses. This is a simple practice that companies usually overlook. Furthermore, it can cause leaks of private information that would affect and create disadvantages for your business.

Solution:

When dealing with Chinese manufacturers, do not forget to label/ mark all your company’s confidential information as ‘CONFIDENTIAL‘. This will help create awareness among Chinese manufacturers’ employees to handle properly and take care of your important details.

 

Aside from the NDA and NNN Agreement, you should be aware of brand authorization and patents in China.

Brand Authorization Letter is one of the requirements asked when manufacturing promotional products for business in China. It is crucial to allow brands to export products from China and import them into the market. Consequently, custom departments need this letter to avoid counterfeits and protect your brand.

 

A patent is essential to safeguard your product or invention. Moreover, it will give you the right to stop others from copying, producing and selling your product or idea.

 

In Conclusion,

China is one of the most popular countries when it comes to manufacturing products. Compared with other countries, sourcing products in China requires a cheap labour force, competitive pricing, and a wide variety of products to choose from; thus, many companies are encouraged to deal with China manufacturers.

Therefore, if you are one of them, always ensure that you have created an effective NNN Agreement before making transactions with manufacturers. Avoid falling into the traps of the agreement and find the right solution to avoid problems and delays. In that way, you can ensure that your product and ideas are always protected.

 

How Can ODM Help?

The ODM Group is a pioneer sourcing company in Asia. Since 2003, we have partnered with local and international businesses in producing custom promotional giveaways, top-rated POS display units, curating brand packaging designs and manufacturing gift with purchase merchandise. Our experienced team of in-house product designers, Mindsparkz, can design the perfect branding tool for you.

Feel free to contact us if you have any queries, and we will be glad to assist you. The team is guided by the NDA and NNN Agreement so you can ensure the safety of your products and businesses. Let’s help you turn your ideas into life!

 

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