OEM, short for original equipment manufacture or original equipment manufacturing, is most widely used by people who have developed their own product, and need manufacturers to have their product mass produced. For example, when the Apple company decides that they need to mass produce iPhones in China, they go to Foxconn, an OEM in China.
However, in real life manufacturing, especially when you are to hand over your product design details to some manufacturers overseas in countries like China, so your product can win the pricing competitive edges, you’re taking risks.
Intellectual property rights protection is one of the most concerned issues among all the others.
If you are going to or are already in the middle of work with an OEM overseas, especially in China, here are 4 tips that are going to ease your cooperation and help protect your product IP.
Register your IP
It’s utmost important that you consider registering your IP in the first step. Except for copyright, your IP registered in the US or in the European countries is not protected in China. So if you mainly manufacture in China, you’ll be no different to having no protection at all from the Chinese government.
Before you move on to register your product intellectual property, here are 3 concepts that you should be clear about:
Patents are the fruit of dedicated innovation and creation. If you are to find a Chinese OEM supplier for mass producing your product, you need to file a patent before any public disclosure of it. And if your product has a unique function or design, you may need to file a patent for the function or design as well. The possible problem would be that your patent is too technical and professional, so it may take the official quite some time before your patent is approved. Registering a patent is also quite costly.
Trademark, or TM, is used to trace the original source of a product. Compared with patents, trademarks are easier, faster and less expensive to register. And if you are to manufacture in China, trademark is a must. Different from the US, trademark registration in China adopts the first-to-register, instead of first-to-use policy. This means that if you failed to register your trademark before manufacturing in China, you might end up find your own brand registered by some squatters, and you can’t use it anymore unless you pay for it, your own brand. Or you just have to register a new brand trademark. Ridiculous as it is, you have to play by the book.
Copyright laws prevent the copying or unauthorized use of artwork or software. In China, your copyright is automatically protected via the Berne Convention. So you don’t need to worry too much about it.
To sum it up, patent your design or unique product function, and register your trademark before anyone else. Your IP rights should be under legal protection now.
Sign an NDA before actual cooperation
Compared with IP registration, an NDA could be a more complicated and expensive approach.
NDA, short for non-disclosure agreements, is a confidentiality agreement that restrict your OEMs from manufacturing, copying your product, and using your trademark. It also prevents your OEMs from sharing your product information with potential competitors and any third-party organization.
The NDA is usually signed before you engage with the OEM for further cooperation. And the manufactures won’t be able to give you quotes unless they have the product information.
So if you have multiple potential supplier options, you need to sign the NDA with all of them before you share any of your information. If you’re just a small organization, just the thought about the workload could eat you alive. First off, you’ll have to create an air-tight NDA to protect your rights while take into consideration that of your OEMs’.
You’ll have to convince the other party to sign the NDA. During the process, some of them might walk away from cooperating with you, while others would sign the agreement with you, but they can always find the alternative to copy your product later if they want to.
Headache, right? Is it worthy or not?
Well, it depends. If you have specified clear penalty in the NDA, like a certain amount of fine, your manufactures and/or suppliers will think twice before they steal or sell your IP.
Divide your assembly among different suppliers
It’s also quite commonly used when choosing an OEM manufacturer in China: you cooperate with one supplier for the mass production of a certain part, and a second one to produce another part. In this case, none of the supplier will have access to full product specification of your product. Thus protecting your IP rights.
However, the disadvantages are also obvious. It takes time for you to manage so many suppliers, not to mention their sub-tier suppliers. The final assembly could be a big problem if some parts of the product are of poor quality.
The money is, you need to lock yourself down to a trustworthy, reliable assembly supplier, but that could be quite a challenge, not to mention all the obstacles you have to overcome: languages, cultures, ways of communication…
This is where Insight Solutions Global chimes in to help. We can help you find the reliable, dedicated OEM, contract manufacturer, manage your whole supply chain, improve your supply chain management quality and many more. Just say it, and we’d be glad to help you out.
Leave us a comment, or just reach out. We’re all ears.