Welcome back to Two Minutes To Launch.
My name is Terry, and today we're talking about the best ways to protect your intellectual property when working with a manufacturing partner in China.
I recently read a great article in Foreign Affairs magazine that talks about how China has gotten much better in recent years about protecting foreign intellectual property in their legal system.
That being said, this is still a very important topic, and there are several things you can and should do to protect yourselves, that I'll talk about today.
First is to create a scenario in which you will have legal recourse if something does go wrong.
So make sure you have a contract with very specific language around intellectual property and who owns what.
Also is your contract global versus regional in nature?
I've seen some companies feel like they had international protection when in fact, it only extended to the U.S.
So making sure that your IP protection claims extend geographically where you need them to.
And lastly, even if you're having a product manufactured in China, if you're able to sign a legal contract with an entity that is not China based, that is based outside of China, that's a very good start for IP protection.
The second issue I'll talk about today, and this is something that's very common but I don't see it getting a lot of attention.
A lot of companies, maybe startups or cash-strapped companies, when they're choosing a CM partner in China, quite often, part of that bid process will ask CMs to provide things at no cost.
Maybe it's engineering service is to get the product all the way to manufacturing or layout for PCB services or tooling, for example.
Now, you will typically be able to find a manufacturer that is willing to offer those services at no cost.
As long as you're working with that manufacturer and they're doing a good job producing units, the relationship might work out just fine.
The issue comes when you go to request those 3D files or Gerber files or tools that you didn't pay for upfront.
The typical response will be something along the lines of "Hey, this is our IP now. We completed this work and we're not going to send this to you."
Making sure, the lesson here is, pay for whatever it is that you want to own.
It's really, really important if you're asking for things for free.
That's really a situation that's not really an IP theft as much as it is an unintended giveaway of your IP to a manufacturing partner.
The last thing I'll talk about is a little bit more practical, product specific.
You can take the finished goods from your manufacturing partner in China just to make sure they have the right subset of your code to be able to test functionality and ensure quality.
But you could bring those finished goods in-house and do the final firmware programming in-house before you ship it to your customer.
Now this adds some operational complexity and some time and cost to your overall supply chain.
But, this conversation is about protecting intellectual property, and that's a very strong way to be able to do that.
Thanks again for watching. This has been 2 Minutes 2 Launch.
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- ZAKARIA, FAREED. “THE NEW CHINA SCARE.” FOREIGN AFFAIRS, 7 MAY 2020, WWW.FOREIGNAFFAIRS.COM/ARTICLES/CHINA/2019-12-06/NEW-CHINA-SCARE.