Manufacturing organizations striving to succeed in the global marketplace often need to find development and production partners. Some need overseas partners to save production costs; others want to jump into the international trade market. But if these global agreements represent a path to optimized and profitable production, they can also present risks to a manufacturer’s intellectual property (IP).
The hard truth is that when manufacturing operations are outsourced to international partners, trade secrets can end up in the wrong hands. The news is full of headlines about patent infringement, copyright violations, and other instances of IP theft. However, numerous companies have successful global manufacturing partnerships. That’s because they used the right combination of IP protection strategies. Here’s a look at some of the ways your manufacturing business can protect itself on the global stage.
Do Your IP Due Diligence
Conducting thorough IP due diligence is critical before inking a manufacturing agreement with a global partner. Investigate a potential partner’s reputation and track record protecting IP agreements. If possible, extend this background check to an on-site visit so that you can assess their physical security and document handling procedures.
Hire an attorney experienced with IP and international law if you don’t already have one retained. Have them carefully review all contracts to identify potential conflicts or legal ambiguities. Pay close attention to the confidentiality clauses and licensing rights. These agreements can be tricky to get out of, so your attorney should ensure your company’s IP and legal rights will be protected.
Use Technology Transfer Agreements
A standard legal document in global manufacturing partnerships is the technology transfer agreement. This contract specifies which of your intellectual properties will be transferred to the manufacturing partner. It also defines ownership of existing IP and any that might be developed during the terms of the agreement. Confidentiality obligations and usage restrictions are typically covered, too.
It goes without saying that these are some of the most important terms between you and the international partner. Without a favorable agreement, your company might sign over its international distribution rights or even grant the partner an ownership stake in your IP. Utilize your legal counsel to ensure you have technology transfer agreements for all partners that are favorable to your company.
Deploy Trademark Protection Strategies
Most manufacturing organizations will take the time to register trademarks in their home country. However, international trademark registration is a must once you enter the global stage. File the necessary paperwork in all countries where your products will be manufactured or sold. Your IP lawyer can also help here by including contract clauses that prohibit the use of trademarks without written permission.
Pursue Legal Recourse Options When Necessary
Of course, trademarks won’t help if they’re not enforced. Always be on the lookout for counterfeit products appearing on the market, and take swift action against infringing parties. Filing lawsuits to seek injunctions gets more complicated when dealing with international jurisdictions. However, sometimes litigation is necessary to protect your IP and to establish your trademarks outside your company’s home country. Failure to pursue legal recourse when necessary only emboldens counterfeiters and other IP thieves.
Take Data Security Measures
Although the manufacturing space is often thought of in physical terms, there’s a lot that takes place in the digital realm. Important design documents, specifications, and other data related to your products are exchanged via email and in apps. This includes CAD and CAM files. Many manufacturers and contractors use product lifecycle management (PLM) systems that cover everything from a product’s initial design to its distribution.
Every bit of digital data represents a potential IP leak. Therefore, you and a potential partner must take data security measures to protect your interests. Standard cybersecurity practices like firewalls and intrusion detection systems should be in place. Evaluate the partner’s access controls to ensure sensitive data is limited to those who need it. Encrypted data transfers and storage add another layer of data protection.
Potential partners should also have a data breach response plan. Hopefully, it will never have to be used, but it’s important to be prepared. Having such a plan can minimize the damage that comes with data theft. A dedicated incident response team can work with law enforcement to find the hackers and maybe even stop your IP from widespread distribution.
Global Manufacturing Partnerships Can Work if You Protect Your IP
Global manufacturing partnerships are so common that they’ve almost become a necessity. These agreements help facilitate international trade while utilizing economies of scale to save manufacturing organizations significant money. You may be nervous about sharing your intellectual property with a foreign entity, but these relationships can work. By taking the steps discussed here, you can protect your IP while enjoying the benefits of a global partner.
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