China and The Internet of Things: Do You Really Own “Your” IoT Product?

#News(General) [ via IoTForIndiaGroup ]

See China Product Development Agreements, for pretty much everything you need to know about China product development agreements (https://www.chinalawblog.com/2016/02/china-product-development-agreements.html).

The Chinese manufacturer usually would perform the product development work at its own expense, with the implied agreement being that it would be the exclusive manufacturer of the product. This co-development process typically used the same lazy “purchase order only” approach from stage one. This approach then led to the many issues we see today that make answering the “who owns what IP” question so difficult. To do the co-development process properly, the parties must define their relationship with three agreements: 1) an NNN Agreement, (https://www.chinalawblog.com/2016/02/china-nnn-agreements.html) 2) a Product Development Agreement (https://www.chinalawblog.com/2016/02/china-product-development-agreements.html) and 3) an OEM Agreement.

(https://www.chinalawblog.com/2017/08/china-manufacturing-agreements-the-questions-we-ask.html)When these agreements do not exist, a standard set of issues arises: Who owns the product design? Who owns the molds and other tooling? Who owns the manufacturing know-how and similar trade secrets? If the buyer decides has the product made by a different Chinese factory, what compensation is owed to the Chinese manufacturer that co-developed the product? What are the Chinese manufacturer’s obligations to comply with the foreign buyer’s price and quantity requirements? If the Chinese manufacturer terminates its relationship with the foreign buyer and manufacturers the product under its own trademark/logo, is this a violation of any agreement between the parties? Absent clear written agreements, none of these questions have clear answers. In these unclear situations, the Chinese factory will nearly always be in a much stronger position than the foreign buyer and the Chinese factory will typically prevail in any IP dispute.

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