NDA is not enough protection when buying from China. Learn what is better.

Mike’s Answer: 

Thanks for your email.   There are two aspects I would like to address regarding protection of your Copyright in China.

1. NDA vs NNN
2. Essential protection beyond the NDA/NNN

You mentioned you wished to use a NDA.  Have you heard about the NNN?

NNN stands for “Non-disclosure, Non-compete, Non-circumvention” and is a more robust version of the traditional NDA (Non-Disclosure Agreement)”. 

Simply put, the NDA is a promise that “they won’t tell anybody outside their organization about the idea”.  The NNN adds more layers of protection because it makes them promise to not only keep it a secret but also not develop the idea in house. 

So technically, under an NDA, a company could copy your idea, make the product in-house and sell it to your competition as long as they did it inside their organization rather than telling somebody outside about it.  For those reasons an NNN is better than the NDA as the NNN specifically addresses not only secrecy but also non-compete and non-circumvention.

Most professional lawyers dealing with China have moved from the NDA to the NNN in the past decade.  If a supplier fights the terms of the NNN, that’s a big red flag that they may have a hidden agenda.

However, a NNN is more effective in China when complimented by two items:

a) Register your IP in China.

Get that copyright owned in China by you, before any other entity (in China or elsewhere) gets to Beijing first with the registration paperwork. 

Remember China is first to register rather than first to market.  With Chinese suppliers facing a shrinking market due to Covid and Ukraine supply chains, it has become a common tactic for Chinese suppliers to register the IP “for you” without telling you the moment they see it during the RFP, even before the production starts. That way you can’t legally move production to a new supplier in China or elsewhere.  It also allows them to change pricing as they see fit.    

Here is a whitepaper I wrote on the subject for your general reference:  https://www.asiabridgelaw.com/2019/11/copyrights-in-china-protecting-your-intellectual-property-ip/.     

When shopping around for an IP lawyer in China, be careful because there are “scammers” who advertise low rates or even “DIY” portals, but then they disappear with the initial payment. 

Another scam the online IP portals have is to provide fake IP registration paperwork then disappear never having registered the IP in the first place. Nasty.   

Also, when comparing rates from legit IP registration agents, make sure it's apples to apples. All the steps are outlined at https://www.asiabridgelaw.com/copyright-registration/ so you can compare multiple quotes for IP work.    

Bottom line…registering a copyright or two will probably cost well under 1000 bucks, it’s easy and fast, so it’s money well spent, IMHO.

b) Monitor the supplier and marketplace to ensure the IPR is respected in China

Tips on how to conduct the monitoring on a budget are available here: 
https://www.asiabridgelaw.com/2020/01/monitor-your-intellectual-property-rights-in-china/

Thanks again for your email.  Hope the ideas above are useful to your planning.  Glad to help and make introductions if you like.