Ok, full disclosure, my father never said this one but I feel it is important enough to make up! Intellectual Property is important especially when manufacturing in China and a strategy, no matter how small, is needed. Working in China for 20 years, I will admit they have come a long way in just the last 5 years. But they are still not there. 15 years ago it was a crapshoot (no pun intended), now you have more options at your disposal.
Part of the problem is again Chinese culture. They believed “ideas” are not owned by a person or company – I used past tense because it has slowly changed. They now realize this can protect their interests as well while they are developing products and ideas. I think the first line of defense is a serious, strong, reputable factory relationship. This can cure a lot of headaches. But it takes diligent, hard work to get there. Simple strong NDA’s and contracts for them to sign, multiple trips to China to build relationship and disclosure on the full game plan so they can see it is in their best interest to follow your plan so they will win. The more complex and conservative plan is to break the manufacturing up to contract manufacturers. This still takes a strong factory relationship to put all the ingredients together, but it is less risky. I know some companies have their components built to spec, consolidated and shipped to USA where they do final assembly here. If there is 1 process in your product that is the “main” ingredient, look to keep that here, have the rest built in China and add the part in USA.
As far as government, you can hire a representative in mainland China that can apply for the patents, trademarks and other with the Chinese offices. This includes border registration and enforcement so export inspectors are aware of your IP and can stop counterfeiting. I also utilize my resources on the ground and in the factories to keep a watchful eye. If I have a resource in silicone who deals with all the major players in silicone, he has access to all the factories and relationships and can see what is coming down the pipeline. If necessary he can inform the factories of patents and let them know there will be a problem.
Real World Example: Had a client who came to us after his patented hardware IP was being compromised. Turns out the factory was making suggestions on improvements, which a good factory will do. Well, this factory then thought this new improvement was owned my them! They went and applied for EU, Japan and Chinese patents on their behalf! You can imagine the shock when the client went to apply for the patents only to find their factory had beaten them. A strong way to combat this would have been simple, strong contract signed by factory on behalf of factory and personnel. Armed with this you can appeal to patent offices with signed documentation. You can’t stop bad things from happening, but you can be prepared and armed.
Summary: A strategy, no matter how small, needs to be in place. Use your smarts and tools to be prepared and don’t take shortcuts on trust alone.
Posted by Joel Buckley
Specialized in product development, sourcing, marketing and branding