You have a product or are in the process of developing one that is your own intellectual property. You’ve manufactured it under your close supervision till now or you’re looking for an OEM partner to tie up with to leverage the lower costs of production they may be able to achieve. There’s only one thing stopping you – you’re worried that the product you’ve put all your head and heart into is going to have 10 odd knock offs available on Alibaba or eBay if you end up out sourcing your manufacturing. If this sounds like you, listen up! You’re not alone. IP theft is a concern for not only you, but several small businesses and start ups.
What is intellectual property and how do you protect it?
Intellectual property refers to the creation of ideas or concepts by a person or company – such as trademarks, patents, copyrights and business secrets.
In reference to the manufacturing of your hardware products – everything from the conceptual idea, to the engineering drawings to the logos and packaging are referred to as intellectual property in this case.
So let’s dig right into it.
First of all, you’ll want to make sure you’re partnering with the right contract manufacturer for your project. This is no easy task by any feat. Lucky for you, we’ve framed up a great guide on How to Find A Manufacturer For Your Hardware Products. However, this is only solves part of your problem. The wider challenge is to ensure there are preventative measures that are in places should things ever get out of hand.
- Sign a Non-Disclosure Agreement (NDA)
Wikipedia frames up an excellent definition for what an NDA is.
“A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA) or secrecy agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties.”
If your product is unique, it is more than likely that your chosen manufacturer will ask you to share engineering drawings or samples so that they may evaluate the product to be able to quote you accurately.
While an NDA may not necessarily be the easiest to enforce in a country or legal system which is unknown to you, it does create a sense of security for you (the buyer), and clarifies your intent to the supplier for ensuring there is confidentiality for product/conversation in question. We will explain more on this later.
- Register Your Patent/Trademark/Copyrights
Reality is an NDA is never going to be a fool proof way to prevent manufacturers/suppliers from misusing your intellectual property. On a bad day, things do go wrong and when this happens it is likely that the person or company that has leaked your IP, will likely do so knowingly and under the belief that you do not have the resources and capacity to follow up with legal action.
Your strongest and most powerful option is to register patents, trademarks and copyrights in your target selling markets. For example, if you intend on selling your hardware product primarily in United States and United Kingdom, you would need to ensure that your intellectual property is registered with the relevant authorities in these countries.
What this does is it prevents the manufacturer/supplier or any other party who manages to get their hands on your IP from selling it legally in your target markets. Yes, there is always going to be a likelihood that counterfeit or knock-off products find their way onto the grey market through backdoor channels – however you will be able to take legal action relatively easier having the right legal tools in place.
- Spread Your Risk
Lastly, a common tactic many small businesses and start ups employ is reducing their risk by spreading their production across multiple manufacturers/suppliers. For example, if you have a product that is an assembly of several parts – one option may be that you break up the production of this by assigning different manufacturers for each component, and ultimately assemble the final product yourself.
Ofcourse there are ramifications for this; you may struggle to ensure the product quality and visual appearance is standardised across the multiple suppliers. There is also a likelihood that your costs may shoot up for the same product given that each manufacturer needs to take into account their fixed costs for each manufacturing run.
Ultimately this is a choice you will need to make – but nonetheless, it stands as an option.
So to summarise – we’ve covered what intellectual property is and why it’s important to understand your rights. The pros and cons of NDAs and why you should not take them for granted. Protecting your brand, and right to sell your IP in your own target markets. Lastly, mitigants you can take to spread your risk.
At the end of the day, there will always be a greater risk associated with contract manufacturing over manufacturing in house, but with the correct precautionary steps taken and a carefully drawn up risk management plan, you can be sure to avoid landing yourself in trouble.
Delware are OEM Hardware Manufacturers who have been in the game for over 3 decades. While we do not manufacture everything in house (which is something we are open about with our customers), we do have the networks, resources, experience and capability to deliver top quality custom manufactured products for our customers, fast and to their expectations.
Respected as one of the top precision turned parts manufacturers in India, Delware have a strict intellectual property policy where we take the privacy of our customers very seriously. This is why you will find no mention of who our customers are on our website or otherwise – another reason why we are regarded so highly in the field of contract manufacturing, and why our customers often prefer us over our China custom manufacturing competition.
If you’re in the market for an OEM Hardware Manufacturer or custom manufacturing & engineering services who will respect your rights and look after your needs, let us show you why we are the right contract manufacturer to help take your project to the next level.
Reach us via our contact us page or message us on Live Chat to get the dialogue started for your contract manufacturing needs today.