Keywords: China manufacturing contract, China OEM agreement, China supplier agreement, manufacturing contract review, China supplier risk, China product manufacturing lawyer

Introduction

A foreign company may spend considerable time negotiating product specifications, prices and delivery schedules with a Chinese manufacturer. Yet the final contract may still be a short purchase order or a standard supplier agreement.

This can create significant legal and commercial risks.

A manufacturing relationship involves much more than the exchange of confidential information. It may involve product development, quality control, tooling, subcontracting, payment arrangements, intellectual property, delivery obligations and after-sales responsibilities.

An NDA can protect confidential information, but it cannot replace a properly structured manufacturing agreement.

Foreign buyers should ensure that the contract reflects the actual production arrangement and allocates the main risks before placing substantial orders.

1. Confirm the Correct Contracting Entity

One of the first issues is identifying the company that will actually be responsible for performing the contract.

A foreign buyer may negotiate with a trading company, while a separate factory manufactures the products. In other cases, a group of related companies may handle product development, production, inspection and export.

The buyer should verify:

• The full Chinese legal name of the contracting entity;

• Its unified social credit code;

• Its registered status and legal representative;

• Whether it owns or operates the relevant manufacturing facilities;

• Whether another entity will perform material parts of the contract;

• Whether the signatory is properly authorized.

If multiple entities are involved, the contract should clearly allocate their respective obligations.

Where commercially appropriate, the buyer may consider requiring the actual manufacturer to become a contracting party or provide an appropriate guarantee. Simply naming an affiliate in the agreement does not automatically make that affiliate liable.

2. Define the Products and Technical Specifications

A manufacturing contract should identify exactly what the supplier is required to produce.

The product description should not rely only on a general name or marketing description.

Relevant documents may include:

• Product specifications;

• Technical drawings;

• Bill of materials;

• Approved samples;

• Material and component requirements;

• Packaging specifications;

• Labelling requirements;

• Testing standards;

• Quality inspection criteria.

These documents should be identified as contractual attachments or otherwise incorporated into the agreement.

The parties should also establish a procedure for approving changes to specifications. A supplier should not be permitted to make material substitutions or production changes without the required approval.

3. Establish Clear Quality Control and Acceptance Procedures

Quality disputes frequently arise because the contract does not clearly explain how products will be inspected and accepted.

The agreement should address:

Inspection standards: Identify the applicable technical standards, sampling methods, testing requirements and acceptance criteria.

Inspection timing: Specify when inspections may take place, including pre-production, during production and before shipment.

Defective products: Define what happens if products fail inspection, including repair, replacement, rework, refund or other agreed remedies.

Hidden defects: Clarify whether acceptance or payment affects the buyer's right to raise claims for defects that could not reasonably have been identified during the initial inspection.

Inspection costs: Allocate the costs of routine inspections and additional inspections resulting from supplier non-compliance.

A clause stating that the buyer must accept products within a short period after delivery should be reviewed carefully. It should not unintentionally eliminate remedies for latent defects or other contractual breaches.

4. Structure Payment Around Production Milestones

Payment terms should reflect the commercial risks of the project.

For example, the parties may agree on:

• An initial deposit;

• A payment following approval of samples or tooling;

• A payment after completion of production;

• A balance payment after inspection or before shipment.

The appropriate structure depends on the transaction and the parties' bargaining positions.

The contract should specify the payment currency, bank account, payment deadlines, invoicing requirements and consequences of late payment.

Foreign buyers should also verify that payment is made to the correct contracting entity or an expressly authorized recipient. Changes to bank account details should be independently verified to reduce payment fraud risks.

5. Protect Moulds, Tooling and Buyer-Funded Equipment

Moulds and production tools can represent a substantial investment.

The contract should state whether the buyer or supplier owns each item, who pays for it and how it may be used.

Where the buyer funds a mould, the agreement should consider:

• A detailed description and identification number;

• Ownership and payment confirmation;

• Storage and maintenance responsibilities;

• Restrictions on use for other customers;

• Inspection and access rights;

• Insurance and damage responsibilities, where appropriate;

• Return or transfer procedures after termination.

The buyer should not assume that paying for a mould automatically guarantees immediate possession or unrestricted access. Those rights should be expressly documented.

6. Address Intellectual Property and Confidentiality

Manufacturing contracts should distinguish between the buyer's existing intellectual property and the supplier's pre-existing technology.

The agreement should address ownership and permitted use of:

• Product designs and drawings;

• CAD files and technical specifications;

• Samples and prototypes;

• Trademarks and packaging materials;

• Product modifications;

• Development results;

• Manufacturing know-how.

The supplier should only use the buyer's confidential materials for the authorized project.

The agreement should also address unauthorized production, excess quantities, copying, disclosure and use of project materials for other customers.

Where the parties need additional protection for customer relationships or introduced business opportunities, specific non-circumvention obligations may be included.

An NDA or NNN agreement can provide supplementary protection, but the main manufacturing contract should also contain appropriate IP and confidentiality provisions.

7. Control Subcontracting and Production Changes

Some manufacturers outsource parts of their production process.

Subcontracting may be commercially necessary, but it can affect quality, confidentiality and accountability.

The contract should identify whether subcontracting is permitted and whether prior approval is required for specified activities.

It should also require the supplier to ensure that approved subcontractors comply with relevant quality, confidentiality, IP and production obligations.

The main supplier should remain responsible for the performance of its contractual obligations, including work carried out by subcontractors, to the extent agreed in the contract.

8. Set Delivery Obligations and Delay Remedies

Delivery clauses should specify more than an estimated shipment date.

They should address:

• Production commencement;

• Production milestones;

• Completion dates;

• Shipment deadlines;

• Delivery location;

• Incoterms and the applicable version;

• Allocation of transportation and insurance responsibilities;

• Procedures for delay notification;

• Consequences of late delivery.

If the buyer needs products for a particular launch date or seasonal sales period, the contract should reflect the commercial importance of the deadline.

Liquidated damages for delay may be considered, but the amount and calculation method should be commercially reasonable and clearly drafted.

9. Make Termination Rights Practical

A manufacturing contract should specify when either party may terminate the relationship.

Relevant grounds may include:

• Material breach;

• Repeated quality failures;

• Persistent delivery delays;

• Unauthorized subcontracting;

• Unauthorized use of IP;

• Insolvency or serious operational disruption;

• Failure to cure a breach within an agreed period.

The agreement should also explain what happens after termination.

For example, the parties may need to address unfinished products, raw materials, buyer-owned tooling, outstanding payments, confidential information and the return of technical documents.

Without these provisions, terminating the contract may create additional disputes rather than resolving the existing problem.

10. Choose an Appropriate Governing Law and Dispute Resolution Mechanism

For foreign buyers working with Chinese manufacturers, the dispute resolution clause deserves particular attention.

The parties should consider:

• Whether Mainland Chinese law or another law will govern the contract;

• Whether disputes will be resolved by litigation or arbitration;

• The selected court or arbitration institution;

• The seat and language of arbitration, where applicable;

• The location of the supplier's assets and relevant evidence;

• The practical enforceability of the resulting decision.

If the supplier and its assets are located in Mainland China, a dispute resolution arrangement should be evaluated with Chinese enforcement procedures in mind.

The contract should also have a consistent and carefully reviewed Chinese-language version. Ambiguous translations can create avoidable disputes over the parties' obligations.

Conclusion

A China manufacturing contract should do more than record the product price and delivery date.

It should establish a workable framework covering the contracting entities, product specifications, quality control, payment, tooling, intellectual property, subcontracting, delivery, termination and dispute resolution.

An NDA protects confidential information, while an NNN agreement may provide additional protection against unauthorized use and circumvention. Neither document should be treated as a substitute for a properly drafted manufacturing agreement.

For foreign buyers, the objective is to create a contract that reflects how the project will actually operate and provides practical remedies if the supplier fails to perform.

Before placing a substantial order with a Chinese manufacturer, have the manufacturing agreement reviewed against the actual production and supply chain arrangements.

Keywords: China trademark registration, foreign brand China, China trademark protection, trademark filing China, China brand protection, China NNN agreement

Introduction

Entering the Chinese market involves more than finding a distributor or selecting a manufacturing partner. Foreign brands should also consider how their names, logos and product identities will be protected in China.

A foreign company may have used its brand internationally for years but still face obstacles when seeking trademark protection in Mainland China.

China operates a trademark registration system in which filing strategy and priority can be commercially important. A foreign registration does not automatically provide equivalent protection in China.

In addition, brand owners may need to share proposed names, logos, packaging designs and product plans with local agencies, designers, distributors and manufacturers before their Chinese trademark applications are filed.

This article outlines practical steps foreign businesses should consider when planning trademark protection in China.

1. Do Not Assume Overseas Trademark Rights Automatically Protect Your Brand in China

A trademark registration in the United States, the European Union or another jurisdiction does not, by itself, create a corresponding registration in Mainland China.

Foreign businesses should consider China as a separate trademark territory and assess whether they need to file directly in China or use the Madrid System for international registration.

The appropriate route depends on the company's existing trademark portfolio, filing priorities, target markets and long-term business plans.

A company planning to manufacture products in China for export may also have reasons to consider Chinese trademark protection, even if it does not yet intend to sell products to Chinese consumers.

2. Conduct a Trademark Search Before Investing in the Brand

Before committing to a Chinese brand name, foreign businesses should conduct an appropriate trademark search.

The search should consider:

• The English brand name;

• The proposed Chinese name;

• Chinese transliterations and translations;

• Relevant logo and graphic elements;

• Similar marks in the relevant goods and services classes;

• Potential conflicts with existing rights.

China uses a classification system covering different categories of goods and services. The correct classification strategy should reflect the company's actual products, planned business activities and reasonable expansion plans.

A search cannot guarantee registration. It is a risk assessment tool that helps identify potential conflicts before the company invests heavily in packaging, marketing and distribution.

3. Consider the Chinese Brand Name Early

Foreign companies sometimes focus only on their English trademark and postpone the decision about a Chinese name.

This may create commercial and legal difficulties.

A Chinese name may become important for product packaging, online stores, advertising, distributor communications and consumer recognition.

If a foreign brand does not select and protect an appropriate Chinese name, other parties may apply to register a similar or identical mark.

The company should consider the meaning, pronunciation, commercial suitability and registrability of its proposed Chinese name before using it extensively in the market.

4. Control the Disclosure of Unregistered Brand Materials

During the registration process, a foreign company may need to share brand information with:

• Chinese trademark agencies;

• Local designers;

• Packaging suppliers;

• Manufacturers;

• Distributors;

• Marketing service providers.

These parties may receive proposed brand names, logo files, packaging concepts and product launch information before the company has secured its Chinese trademark rights.

A carefully drafted NDA or other confidentiality arrangement may help restrict unauthorized disclosure and use.

For certain commercial relationships, additional non-use or non-circumvention obligations may be appropriate. For example, a manufacturer should not use a buyer's confidential branding materials for unauthorized production.

However, an NNN agreement is not a statutory prerequisite for trademark registration, nor does it replace trademark registration itself. It is a contractual risk-management tool that should be used where the cooperation justifies it.

Foreign businesses should also remember that trademark agencies are subject to legal and professional obligations. Contractual protection should complement, rather than replace, appropriate due diligence and supervision.

5. Understand the Filing Requirements for Foreign Applicants

Foreign applicants without a habitual residence or business establishment in Mainland China generally need to entrust a legally established Chinese trademark agency to handle their trademark registration and related matters.

The precise filing route and supporting documents should be confirmed with the selected agency under the applicable rules.

Depending on the applicant and filing circumstances, the process may involve:

• Applicant identity and corporate registration documents;

• Trademark representations;

• Specification of goods and services;

• A trademark agency appointment;

• Chinese-language application materials;

• Additional documents required for particular claims or procedures.

Foreign companies should not assume that every applicant must complete the same notarization or legalization process. Requirements should be checked against the applicant's circumstances and the current filing rules.

6. Monitor the Application and Respond to Official Actions

Filing an application does not mean that the trademark will automatically be registered.

The application may encounter examination issues, conflicts with earlier marks, objections or other procedural matters.

A foreign brand should arrange for a responsible person or service provider to monitor official communications and deadlines.

The company should also agree in advance who will handle:

• Office actions or examination issues;

• Refusals and review applications;

• Third-party oppositions;

• Subsequent changes to the applicant's details;

• Renewals and portfolio maintenance.

Trademark registration should be treated as an ongoing brand protection process rather than a one-time filing exercise.

7. Align Trademark Protection with Manufacturing and Distribution Contracts

Trademark rights should also be addressed in the company's commercial agreements.

A manufacturing contract should specify whether the factory may use the buyer's trademark and, if so, for which products, quantities and purposes.

It should address:

• Authorized use of logos and packaging designs;

• Restrictions on excess production;

• Treatment of rejected or defective products;

• Storage and disposal of branded packaging;

• Use of trademarks in marketing or factory portfolios;

• Prohibition on unauthorized trademark applications;

• Return or destruction of branded materials after termination.

A distributor agreement should separately address the distributor's permitted use of the brand and whether any local trademark filing or registration activity is authorized.

The foreign brand owner should generally retain control over its core trademarks and should avoid allowing a local business partner to register the brand in its own name without a carefully considered legal and commercial arrangement.

8. Be Aware of the 2027 Trademark Law Changes

China's revised Trademark Law was adopted on June 26, 2026 and is scheduled to take effect on January 1, 2027.

Foreign businesses planning a China trademark filing around this transition should ensure that their advice reflects the rules applicable on the relevant filing date.

The revised law introduces changes to the structure and content of China's trademark registration and protection framework. Businesses should not rely solely on older filing guides without checking whether the relevant provisions have changed.

Conclusion

China trademark protection should be part of a foreign brand's market-entry and manufacturing strategy.

Businesses should conduct trademark searches, consider Chinese-language brand names, select the appropriate filing route and monitor applications after filing. They should also protect brand materials when dealing with agencies, manufacturers and distributors.

An NDA or NNN agreement can help control how confidential brand information is used, but it cannot replace trademark registration or a well-designed IP strategy.

Planning to launch or manufacture a branded product in China? Consider reviewing your trademark position and supplier contracts before sharing brand assets or commencing production.

Keywords: China patent ownership dispute, Chinese supplier patent filing, China IP dispute, patent ownership China, OEM intellectual property protection, China NNN agreement

Introduction

A foreign company may share technical drawings, product specifications or engineering information with a Chinese business partner to develop a new product.

The parties may discuss a possible collaboration, commission a manufacturer to develop a prototype or enter into a technical cooperation arrangement.

A serious problem can arise when the foreign company later discovers that the Chinese partner has filed a patent application based on the technology shared during the cooperation.

The foreign company may believe that the partner has taken its technology and wrongfully claimed ownership. However, the appropriate legal response depends on the nature of the technology, the parties' agreement and the evidence available.

In particular, a patent ownership dispute should not automatically be treated as a patent invalidation case.

1. First Determine the Nature of the Dispute

Several different legal issues may arise from an unauthorized patent filing.

Patent ownership: The parties disagree about who is legally entitled to the patent application or resulting patent.

Inventorship: The application may identify the wrong inventor or omit a person who legally qualifies as an inventor.

Contractual breach: The Chinese partner may have violated an agreement prohibiting unauthorized use or filing of patent applications.

Trade secret misappropriation: The partner may have unlawfully acquired, disclosed or used technical information that qualifies for trade secret protection.

These claims may overlap, but they are not interchangeable. Each has different legal requirements and remedies.

2. Patent Ownership and Patent Invalidity Are Different Questions

A common reaction is to seek invalidation of the patent on the ground that the Chinese partner obtained the technology improperly.

However, an allegation that the patent applicant took another party's technology does not necessarily establish that the patent should be invalidated.

Patent invalidation proceedings generally examine whether the patent satisfies the statutory requirements for patentability and whether other legally recognized grounds for invalidation exist.

A dispute over who is entitled to the invention may instead need to be resolved through a civil action concerning patent application rights or patent ownership.

This distinction is commercially important.

If a party successfully challenges the patent's validity, the patent may be invalidated. That does not necessarily transfer ownership to the party that originally disclosed the technology.

By contrast, a successful ownership claim may provide a route to establish the rightful entitlement to the patent, subject to the applicable legal requirements and the circumstances of the case.

The appropriate strategy should therefore be considered before initiating proceedings.

3. Examine the Contractual Arrangements

The first documents to review should include:

• NDA or NNN agreements;

• OEM, ODM or manufacturing agreements;

• Product development agreements;

• Technical cooperation agreements;

• Emails and written project confirmations;

• Patent ownership and IP assignment clauses.

Look specifically for provisions addressing:

• Ownership of background technology;

• Ownership of newly developed inventions;

• Patent application rights;

• Restrictions on unauthorized patent filings;

• Permitted use of technical information;

• Disclosure to affiliates and subcontractors;

• Cooperation in patent registration and enforcement;

• Remedies for breach.

A general confidentiality clause may prohibit disclosure without clearly allocating patent rights.

For this reason, an agreement dealing with product development should contain express provisions on ownership and filing rights, rather than relying exclusively on an NDA.

4. Preserve Evidence of the Technology's Origin

Evidence is often decisive in a patent ownership dispute.

The foreign company should preserve materials showing the development history and disclosure process, including:

Original technical materials: Design files, engineering drawings, technical specifications, prototypes and earlier versions of the invention.

Disclosure records: Emails, file-sharing records, meeting minutes and delivery confirmations showing when the Chinese partner received the information.

Development records: Internal research notes, testing records, project plans and communications identifying the people involved in developing the technology.

Contractual records: Signed agreements, purchase orders, development instructions and written approvals.

Patent records: The Chinese patent application, filing date, applicant details, claims, description and prosecution history.

Where possible, preserve original electronic files and their metadata. A collection of undated screenshots may be insufficient to establish the full development history.

5. Consider the Appropriate Legal Remedies

Depending on the facts, possible remedies may include the following.

Patent ownership proceedings

If the dispute concerns entitlement to a patent application or patent, a civil action concerning patent application rights or patent ownership may be appropriate.

The claimant will need to establish the relevant technical contribution, contractual allocation or other legal basis for the claimed entitlement.

Contractual claims

If the Chinese partner has breached an NNN agreement, development agreement or manufacturing contract, the foreign company may claim contractual remedies.

The precise claim will depend on the wording of the agreement, the conduct involved and the evidence of loss.

Trade secret claims

If the technical information satisfies the legal requirements for trade secret protection and has been unlawfully acquired, disclosed or used, the foreign company may consider a trade secret claim under China's Anti-Unfair Competition Law.

A trade secret claim requires more than showing that the information was confidential. The claimant should be prepared to establish the relevant information's commercial value, non-public nature and confidentiality measures, together with the alleged infringement.

Patent invalidation proceedings

If there is an independent statutory ground for invalidation—for example, relevant prior art or another defect affecting patentability—an invalidation proceeding may be considered.

It should not be used as a substitute for an ownership claim where the real dispute concerns who owns the invention.

6. Consider Interim Protection and Patent Status

A dispute may become more difficult if the patent application or patent is transferred, abandoned or otherwise dealt with while proceedings are pending.

Depending on the procedural posture and legal requirements, the claimant should consider whether interim measures or other procedural steps are available to preserve the relevant rights.

The patent's current status, ownership records and prosecution history should be checked promptly.

The availability of a particular preservation measure should be assessed case by case. It should not be assumed that filing a lawsuit automatically prevents the other party from dealing with the patent.

7. Prevention Is Better Than Litigation

Foreign businesses should take several steps before sharing technical information with a Chinese partner.

1. Sign an appropriately drafted NDA or NNN agreement before disclosure.

2. Execute a development or manufacturing agreement that clearly allocates patent application rights and ownership of project results.

3. Identify background IP contributed by each party.

4. Record the transfer of drawings, samples and technical materials.

5. Retain original development files and version histories.

6. Conduct proportionate checks of the partner's patent filing activities where relevant.

7. Review the legal identity of the entity receiving the technical information.

For important technology, it may also be appropriate to assess whether patent protection should be sought before disclosure, taking account of confidentiality and filing strategy.

Conclusion

When a Chinese business partner files a patent based on technology received from a foreign company, the first step should be to identify the actual legal dispute.

An ownership dispute, an inventorship issue, a contractual breach and a trade secret claim require different legal analysis. Patent invalidation is not necessarily the correct or most beneficial remedy.

Foreign businesses should preserve development evidence, review the contractual allocation of IP rights and obtain China-specific legal advice before choosing a litigation strategy.

If you discover that a Chinese supplier or development partner has filed a patent involving your technology, act promptly to preserve evidence and assess the available remedies.

Keywords: China manufacturing IP ownership, OEM intellectual property, ODM intellectual property, China product design protection, mould ownership, China technology development agreement

Introduction

A foreign company may invest months in developing a product before approaching a Chinese manufacturer.

It may provide sketches, CAD files, prototypes, engineering specifications and branding materials. The manufacturer may then modify the design, improve the production process or develop additional technical solutions.

When the project becomes commercially successful, an important question may arise: who owns the intellectual property?

The answer is not necessarily the party that paid for the project, supplied the original concept or holds the manufacturing contract.

Different types of intellectual property may be governed by different rules. The parties should therefore address ownership and permitted use before product development begins.

1. Identify the Different Types of IP Involved

A manufacturing project may involve several categories of intellectual property.

Product designs and drawings

These may include CAD files, engineering drawings, product appearance designs, technical diagrams and design specifications.

Depending on their nature and originality, certain materials may be protected by copyright, patent or other applicable legal regimes.

Technical information and know-how

Manufacturing processes, formulas, technical parameters and non-public engineering information may qualify for trade secret protection if the applicable legal requirements are satisfied.

Moulds and tooling

Moulds, dies, fixtures and production tools are physical assets. Their ownership is not automatically the same as ownership of the design or technical information embodied in them.

Trademarks and branding

Brand names, logos, product labels and packaging may involve trademark, copyright and other intellectual property rights.

New technical developments

An OEM or ODM project may produce new inventions, technical improvements or product modifications. These should be addressed separately from the parties' pre-existing IP.

2. Distinguish Background IP from Project Results

A useful starting point is to divide the relevant intellectual property into two categories.

Background IP refers to technology, designs, software, technical know-how and other rights that a party owned or controlled before the project, or developed independently outside the project.

Project results refer to materials, designs, inventions or technical developments created specifically during the cooperation.

The agreement should identify the background IP contributed by each party and establish who owns or may use the project results.

This is particularly important where a manufacturer contributes its own engineering knowledge or modifies the buyer's original design.

Without clear contractual provisions, the parties may later disagree about whether an improvement belongs to the buyer, the manufacturer or both.

3. Do Not Assume Payment Automatically Transfers IP Ownership

One of the most common mistakes in manufacturing projects is assuming that payment for product development automatically transfers all related intellectual property rights.

That assumption may be incorrect.

For example, under the default rules in China's Civil Code, the right to apply for a patent for an invention completed through commissioned development generally belongs to the research and development party, unless otherwise provided by law or agreed by the parties.

For cooperative development, the default allocation may be different.

The parties should therefore expressly address patent application rights, patent ownership, technical secret rights and the right to commercialize development results.

A payment clause alone may not achieve the intended allocation.

4. Address Product Drawings, CAD Files and Source Materials

The contract should specify:

• Which drawings and technical files the buyer owns;

• Whether the manufacturer may modify those materials;

• Whether the buyer is entitled to receive editable source files;

• Whether the manufacturer may retain copies;

• Whether modified files may be used for other customers;

• Whether the manufacturer must return or delete materials after termination.

The parties should also distinguish ownership of a physical sample from ownership of the design embodied in that sample.

A buyer may own the prototype it paid for without necessarily owning every underlying technical element created by the manufacturer.

5. Treat Mould Ownership as a Separate Issue

Mould ownership is a frequent source of disputes.

A buyer may pay for a mould but later discover that the manufacturer refuses to release it, claims ownership or continues using it for other orders.

A mould clause should specify:

• The identity and description of the mould;

• The party responsible for payment;

• The intended owner;

• The location of storage;

• The permitted production purpose;

• Maintenance and repair responsibilities;

• Access and inspection arrangements;

• Transfer and return procedures;

• Consequences of unauthorized use.

The contract should also consider whether the mould is dedicated to one buyer or may be used for multiple customers.

6. Prevent Unauthorized Patent Applications

A further risk arises where a supplier or development partner files a patent application based on technical information received from the foreign buyer.

A confidentiality clause alone may not adequately resolve the resulting ownership dispute.

The cooperation agreement should expressly prohibit unauthorized filing of patent applications based on the other party's confidential technical materials or project results.

It should also specify:

• Who has the right to file patent applications;

• Who will be named as applicant and inventor, as required by law;

• Who pays filing and maintenance costs;

• Who controls prosecution and enforcement;

• How improvements will be allocated;

• What cooperation is required if a filing is made without authorization.

The parties should not attempt to contractually misidentify inventors. Inventorship and ownership are separate legal questions and should be handled in accordance with applicable law.

7. Keep Evidence of the Development Process

If a dispute arises, the parties may need to establish the origin of a design or technical solution.

Useful records include:

• Original design files and version histories;

• Emails transmitting technical materials;

• Project specifications;

• Development milestones;

• Prototype delivery records;

• Meeting minutes;

• Payment records;

• Written approvals of design changes;

• Patent filing records.

The foreign company should retain original versions of its files and document when each version was disclosed to the Chinese partner.

Conclusion

IP ownership in a China manufacturing project should never be left to assumptions.

A well-structured agreement should distinguish background IP, project deliverables, technical improvements, physical tooling and commercial rights. It should also address patent filings, licensing, permitted use and the return of materials.

For OEM and ODM projects, an NNN agreement is useful for controlling disclosure and use of confidential information, but it should be supported by a clear development and IP ownership framework.

If your Chinese manufacturer is involved in product design or engineering development, clarify IP ownership before the development work begins—not after the product reaches the market.

Keywords: China trade secret protection, China manufacturing, supplier confidentiality, China NNN agreement, OEM supplier, manufacturing supply chain

Introduction

A manufacturing project rarely involves only one factory.

A product may pass through several parties before it reaches the market: a product designer, a mould manufacturer, a component supplier, an assembly factory, a packaging supplier and a logistics provider.

Each party may receive information necessary to perform its part of the project. That information may include technical drawings, product specifications, material requirements, pricing structures, production methods, customer details and launch plans.

This creates a significant challenge for foreign businesses: confidential information may be exposed to multiple independent companies, each operating under different internal controls.

A confidentiality clause in a general supply agreement is useful, but it may not be enough. Effective protection requires a combination of contractual obligations, information management and evidence preservation.

1. Identify What Actually Needs Protection

Not every business document qualifies as a trade secret under Chinese law.

Under China's Anti-Unfair Competition Law, trade secret protection generally concerns technical, business or other commercial information that is not generally known, has commercial value and has been subject to corresponding confidentiality measures.

In a manufacturing context, potentially protectable information may include:

• Non-public product drawings and CAD files;

• Manufacturing processes and technical parameters;

• Product formulas and material compositions;

• Unpublished product specifications;

• Supplier and customer information;

• Non-public pricing and cost structures;

• Production methods and quality-control procedures.

A company should distinguish between information that is legally capable of qualifying as a trade secret and information that is merely commercially sensitive.

This distinction matters because a trade secret claim requires evidence of the relevant legal elements. A contractual confidentiality claim, on the other hand, depends on the obligations actually agreed between the parties.

The two forms of protection may overlap, but they are not identical.

2. Why Manufacturing Suppliers Create Particular Risks

Manufacturers often need access to detailed technical information to produce a product.

The risk is not limited to unauthorized disclosure. A supplier may retain product files after the project ends, reuse a customer's specifications for another order, manufacture additional units without authorization or transfer technical materials to a subcontractor.

These activities may occur without the information being publicly disclosed.

For this reason, a manufacturing agreement should address both confidentiality and permitted use.

A clause stating that the supplier must not disclose confidential information may not clearly prohibit the supplier from using the same information internally or for another customer.

The contract should expressly state that information supplied for a particular project may only be used to perform that project, subject to clearly defined exceptions.

3. Six Contractual Protections Worth Considering

3.1 A workable definition of confidential information

The agreement should identify the information requiring protection. Relevant categories may include drawings, prototypes, specifications, samples, production data, cost information and customer details.

It should also address information disclosed orally, electronically or through physical samples.

3.2 Purpose limitation and non-use

The supplier should be permitted to use the information only to perform the agreed project.

The clause should address unauthorized copying, modification, production, commercial exploitation and disclosure to other customers.

3.3 Controls over employees and subcontractors

A supplier may involve employees, affiliates or subcontractors in production.

The contract should require the supplier to disclose or obtain approval for relevant subcontracting arrangements, restrict access to those who need the information and ensure that personnel receiving the information are subject to appropriate confidentiality obligations.

3.4 Return and destruction of materials

At the end of the project, the supplier should return or destroy specified materials, subject to any legally required retention and clearly defined archival exceptions.

The contract may also require written confirmation of completion.

3.5 Ownership and permitted use of tooling

Moulds, dies, jigs, fixtures and other production tools should be addressed separately.

The agreement should identify who owns each item, who may access it, where it may be stored, whether it may be used for other customers and how it must be returned when the project ends.

3.6 Remedies for breach

The agreement should specify available contractual remedies, including cessation of unauthorized use, return of materials, damages and reasonable enforcement costs where legally recoverable.

A liquidated damages clause may help establish a contractual remedy, but it should be drafted with reference to the transaction and foreseeable loss. It is not a guarantee that the agreed amount will automatically be awarded in full.

4. Contractual Protection Must Be Supported by Operational Controls

A contract cannot prevent every leak by itself.

Foreign buyers should consider implementing practical controls such as:

• Providing only the technical information necessary for each production stage;

• Using project-specific file access permissions;

• Marking sensitive documents as confidential;

• Maintaining records of when and to whom materials were disclosed;

• Recording sample and prototype transfers;

• Reviewing subcontractor access;

• Maintaining version histories for technical files;

• Conducting proportionate supplier audits where contractually agreed.

For particularly sensitive manufacturing projects, buyers may also consider production traceability arrangements or access to agreed production records.

However, audit rights and production-system access should be designed around the actual manufacturing process. A buyer should not assume that it has an unrestricted right to inspect a supplier's premises or internal systems unless the contract clearly provides for it.

5. Joint Development Requires a Separate IP Framework

When a supplier participates in product design or engineering development, the parties may create new technical results.

The contract should distinguish:

• Background IP: technology, designs and materials owned or controlled by a party before the project;

• Project deliverables: drawings, prototypes, specifications and other materials created for the project;

• Improvements: modifications or developments made during the cooperation;

• Third-party materials: components, software or technology owned by others.

The parties should specify ownership, permitted use, licensing rights, filing responsibilities and the right to commercialize the results.

Under China's Civil Code, commissioned and cooperative development arrangements have specific default rules concerning patent application rights and technical secret results. Those rules may not reflect the commercial allocation intended by the parties. Express contractual provisions are therefore important.

6. Build Evidence Before a Dispute Arises

If a supplier misuses confidential information, the buyer may need to prove what was disclosed, when it was disclosed, who received it and what restrictions applied.

Useful records may include:

• Signed agreements and amendments;

• Emails and project communications;

• File transfer records;

• Drawing and specification versions;

• Sample delivery records;

• Meeting minutes;

• Supplier production records;

• Evidence of unauthorized products or sales.

Businesses should preserve original records and avoid relying solely on screenshots or informal summaries.

Conclusion

Trade secret protection in a manufacturing supply chain is not simply a matter of signing a confidentiality agreement.

Foreign businesses should combine appropriately drafted NDAs or NNN-style obligations with manufacturing contract provisions, access controls, subcontractor management and reliable evidence records.

The objective is to ensure that every supply chain participant understands what information it may receive, how it may use that information and what it must do when the cooperation ends.

Planning to share product designs or technical information with a Chinese manufacturer? Reviewing the contractual and operational protection before disclosure can reduce avoidable disputes later.

Keywords: China OEM NNN agreement, ODM agreement China, China manufacturer agreement, non-use clause, non-circumvention, China supplier contract

Introduction

OEM and ODM projects often require a foreign buyer to share commercially valuable information with a Chinese manufacturer.

The buyer may provide product concepts, drawings, samples, technical specifications, packaging designs and target pricing. In an ODM project, the manufacturer may also contribute engineering work, product modifications or manufacturing know-how.

This creates a more complex relationship than an ordinary purchase of finished goods. The parties need to protect their respective interests while allowing the project to proceed.

An NNN agreement can provide an important layer of protection, but it should be drafted around the actual manufacturing arrangement. A generic document with broad restrictions may create uncertainty without adequately addressing the risks.

1. Start by Identifying the Project and the Parties

Before drafting the substantive obligations, identify the actual entities involved.

A foreign buyer may negotiate with a trading company while production is performed by a separate factory. A product development company may prepare the drawings, while another entity manufactures the goods.

The agreement should identify:

• The entity disclosing the information;

• The entity receiving the information;

• The actual manufacturer, if different;

• Any approved subcontractors or affiliates;

• The project and product categories covered.

Where more than one Chinese entity receives confidential information or performs material parts of the project, consider whether each entity should sign the agreement directly.

A signature from the trading company alone may not adequately bind a separate factory that is not a party to the contract.

2. Define the Confidential Information by Reference to the Project

An NNN agreement should identify the types of information that the buyer intends to protect.

For OEM and ODM projects, this may include:

• Product drawings and CAD files;

• Product specifications and technical parameters;

• Samples, prototypes and reference products;

• Mould and tooling designs;

• Material compositions and component configurations;

• Product testing results;

• Packaging and branding materials;

• Cost structures, quotations and purchasing plans;

• Customer, distributor and sales-channel information.

The agreement should also clarify whether information disclosed before signing is covered.

A definition that includes every item "related to the parties' business" may be unnecessarily broad. A more practical approach is to identify relevant categories and connect them to the specified project.

3. Draft Non-Use Obligations Carefully

For many OEM and ODM projects, the most important protection is not merely preventing disclosure. It is preventing unauthorized use.

A manufacturer should only use the buyer's confidential information for the agreed project and within the scope of the buyer's authorization.

The agreement may prohibit the manufacturer from:

• Using the buyer's drawings to manufacture products for another customer;

• Using proprietary specifications to develop competing products;

• Reproducing prototypes or samples for unauthorized commercial purposes;

• Using the buyer's moulds or tooling for unrelated orders;

• Transferring technical materials to an unauthorized third party.

However, the clause should not claim ownership over the manufacturer's entire manufacturing capability.

A supplier may already possess general engineering skills, standard production methods, existing components or independently developed technology. Those rights should be distinguished from the buyer's proprietary materials.

The contract should also explain how independently developed products and pre-existing technology will be treated.

4. Address Similar Products Without Overreaching

A common negotiation issue is whether the manufacturer may produce products that are similar to the buyer's product.

A broad restriction prohibiting the manufacturer from producing any similar product may be commercially difficult to accept and legally uncertain.

Instead, consider identifying the specific elements that must not be copied or reused, such as:

• Proprietary product geometry or dimensions;

• Original technical drawings;

• Unique product configurations;

• Buyer-funded moulds and tooling;

• Non-public technical specifications;

• Distinctive product features developed specifically for the project.

The contract should distinguish between copying protected project materials and independently manufacturing products that happen to fall within the same general product category.

5. Make Non-Circumvention Project-Specific

Non-circumvention is relevant where the buyer introduces commercial relationships or opportunities to the manufacturer.

For example, the buyer may introduce a specific distributor, retailer or brand owner to a factory. The manufacturer should not use that introduction to bypass the buyer in relation to the protected transaction.

The clause should specify:

1. Which customers, suppliers or business opportunities are protected;

2. What type of direct or indirect dealing is restricted;

3. Whether the restriction applies to affiliates or related entities;

4. How long the restriction lasts;

5. Which transactions fall within the restriction.

It may also be appropriate to exclude relationships that the manufacturer can demonstrate existed independently before the introduction.

This makes the clause more precise and reduces disputes over legitimate pre-existing business relationships.

6. Deal with Moulds, Samples and Production Tools Separately

Moulds and tooling are often among the most valuable assets in an OEM project.

The manufacturing agreement should specify:

• Ownership of each mould or tool;

• Who pays for its design and production;

• Where it will be stored;

• Who may access or use it;

• Whether maintenance costs are included;

• Whether the manufacturer may use it for other customers;

• What happens when the project ends.

The NNN agreement can support these protections by restricting unauthorized use and disclosure, but it should not replace detailed ownership and production arrangements in the main manufacturing contract.

7. Control Subcontracting and Information Transfers

A manufacturer may outsource mould production, component processing, surface treatment, assembly or packaging.

If the buyer's confidential information is transferred to subcontractors, the buyer should know who receives it and for what purpose.

The contract may require prior written approval for specified subcontracting activities, impose equivalent confidentiality and non-use obligations on subcontractors and make the main supplier responsible for breaches within the agreed contractual framework.

The parties should also establish a practical process for approving changes to production sites or subcontractors.

8. Consider Chinese Law, Language and Dispute Resolution

If the Chinese counterparty operates primarily in Mainland China, the agreement should be prepared with Chinese enforcement in mind.

Important considerations include:

• A clearly identified Chinese contracting entity;

• Accurate Chinese legal names and registration details;

• A complete Chinese-language version;

• A clear governing law clause;

• A workable dispute resolution mechanism;

• Proper execution by authorized representatives and, where appropriate, company chops;

• Consistency between the NNN agreement and the main manufacturing contract.

A bilingual agreement should state how inconsistencies between the language versions will be resolved.

The parties should also consider whether the selected court or arbitration institution is appropriate for the dispute and the location of relevant evidence and assets.

Conclusion

An effective NNN agreement for an OEM or ODM project should be built around the actual product, information flow and supplier structure.

The key is to protect the buyer's proprietary information and commercial relationships without claiming rights over the manufacturer's legitimate background technology or ordinary business activities.

For many projects, the best approach is to use an NNN agreement together with a detailed OEM or ODM manufacturing agreement. The former addresses information use and commercial relationships; the latter deals with product specifications, quality, delivery, tooling, IP ownership and contractual remedies.

Before sending drawings, samples or product specifications to a Chinese manufacturer, review the agreement and the actual production structure together.

Keywords: China NDA, China NNN agreement, non-disclosure agreement China, non-use agreement, non-circumvention agreement, China manufacturing legal protection

Introduction

When a foreign company begins working with a Chinese manufacturer, supplier, trading company or product development partner, one of the first legal documents it may be asked to sign is a Non-Disclosure Agreement (NDA).

An NDA is an important starting point. However, confidentiality alone may not address every risk arising from a China-related business relationship.

For example, a manufacturer may keep a buyer's product drawings confidential but use the technical information to develop products for another customer. A trading company may not disclose a buyer's supplier information but may approach the same factory directly and bypass the buyer in future transactions.

These situations involve more than disclosure. They concern how information and commercial resources may be used.

This is why foreign businesses often consider an agreement containing Non-Disclosure, Non-Use and Non-Circumvention obligations, commonly referred to as an NNN agreement.

The important question is not whether an NNN agreement is always better than an NDA. It is whether the agreement addresses the actual risks of the proposed cooperation.

1. What Does an NDA Actually Protect?

An NDA primarily establishes confidentiality obligations between the parties.

Depending on its wording, it may require the receiving party to:

• Keep confidential information from being disclosed to unauthorized third parties;

• Use the information only for an agreed business purpose;

• Restrict access to employees and contractors who need the information;

• Take reasonable measures to prevent unauthorized disclosure;

• Return or destroy confidential materials after the cooperation ends.

For a simple commercial discussion, these protections may be sufficient.

For example, a buyer who shares product catalogues, preliminary quotations and general purchasing requirements with a potential supplier may only need a carefully drafted NDA.

However, the title of a document does not determine its legal effect. An NDA can also contain non-use and non-circumvention obligations. Conversely, a document titled "NNN Agreement" may provide inadequate protection if its operative clauses are vague.

2. What Additional Protection Does an NNN Agreement Provide?

The term NNN generally refers to three categories of contractual obligations.

Non-Disclosure

The receiving party must not disclose confidential information without authorization.

In a manufacturing project, this may cover product drawings, technical specifications, samples, pricing information, customer identities, product roadmaps and manufacturing processes.

Non-Use

The receiving party must not use the disclosed information beyond the purpose authorized by the disclosing party.

For example, a manufacturer receiving a customer's CAD files to prepare a prototype should not use those files to manufacture products for another customer or develop a competing product without authorization.

The restriction should be tied to identifiable information and a defined business purpose. It should not automatically prevent the manufacturer from using its own pre-existing technology, general manufacturing experience or independently developed solutions.

Non-Circumvention

The receiving party must not bypass the other party in relation to specifically protected business opportunities or commercial relationships.

For example, a supplier introduced to a buyer's designated customer should not use that introduction to negotiate directly with the customer for the purpose of excluding the buyer from the transaction.

A non-circumvention clause should identify the protected customers, suppliers, projects or business opportunities, together with the relevant duration and scope of the restriction.

A blanket prohibition on contacting any customer or supplier associated with the other party may be difficult to justify and may create unnecessary commercial restrictions.

3. Which Agreement Is Appropriate for Different Business Scenarios?

The appropriate contractual protection depends on the nature of the cooperation.

Ordinary purchasing: A well-drafted NDA may be sufficient where the parties exchange only routine quotations, product catalogues and purchasing information.

Supplier or customer introductions: Non-circumvention obligations may be important where one party introduces specific customers, manufacturers, distributors or commercial opportunities.

OEM and ODM manufacturing: Non-use obligations are particularly relevant where the buyer provides proprietary designs, drawings, samples, mould specifications or product development materials.

Joint product development: An NDA or NNN agreement should be accompanied by clear provisions dealing with background intellectual property, newly developed results, improvements and ownership of deliverables.

4. Key Issues to Review Before Signing

Regardless of the document's title, foreign businesses should review the following matters.

First, define confidential information. Identify the categories of information requiring protection. Consider including technical documents, samples, product specifications, customer information, pricing and business plans.

Second, define permitted use. State the specific project or purpose for which the information may be used. Avoid broad language that could create uncertainty.

Third, identify protected business relationships. If non-circumvention is required, specify the relevant customers, suppliers, projects or opportunities.

Fourth, preserve legitimate pre-existing rights. The agreement should distinguish the disclosing party's proprietary information from the receiving party's background technology, independently developed materials and publicly available information.

Fifth, review the duration and remedies. Confidentiality, non-use and non-circumvention obligations may require different durations. Liquidated damages should be proportionate to the transaction and foreseeable risks.

Finally, consider enforceability in China. If the Chinese counterparty and its assets are located in Mainland China, the governing law, dispute resolution mechanism, Chinese-language wording and identification of the contracting entity deserve particular attention.

Conclusion

An NDA is not automatically inadequate for doing business in China, and an NNN agreement is not automatically enforceable simply because it contains three categories of obligations.

The real task is to identify what the parties are sharing, what risks may arise from the cooperation and what restrictions are reasonably necessary.

For foreign businesses working with Chinese manufacturers, the best agreement is not necessarily the longest or most restrictive one. It is the agreement that clearly protects the relevant information and commercial relationships without unnecessarily restricting legitimate business activities.

Need help reviewing an NDA or preparing an NNN agreement for a China manufacturing project? Obtain legal advice before disclosing sensitive product information or entering into substantive cooperation.