How To Monitor Your Intellectual Property Rights?
Here is how we answered a question about how to monitor your intellectual property rights. As the answer is applicable to a wide range of products, I decided to blog about the Q&A.
Question about how to monitor your intellectual property rights:
What is a practical way to protect your intellectual property while keep an eye on our suppliers and the marketplace in general?
Mike’s Answer:
Thanks for your email. Before we discuss on how to monitor your intellectual property rights. Let me share with you that there are two practical ways to protect your intellectual property in China.
1. Compartmentalize
For example, let’s say that you’re in electronics, and you have some secret sauce, software that goes in some off-the-shelf hardware. Maybe you would have the hardware come from a traditional supplier, then perhaps a smaller or a secure partner, perhaps even back home or in China that would do the final insertion of the software onto the hardware.
This falls into the category of black box assembly and if you type that on Google, you’ll find some service providers that can help set up this third-party assembly. One of the advantages of having a third-party do the final assembly, not only to protect the intellectual property, basically they keep the sub-suppliers at arm’s length, so the sub-suppliers don’t see the finished product, they don’t see your secret sauce. But also, if a third-party is assembling the product, they should also do a quality check at the same time. If they’re touching it in order to put two parts together, they might as well make sure those are the right parts.
2. Own Tooling
For example, you have a proprietary product and it’s something highly customized, you want to own the tooling that’s used to make your product. So if, God forbid, that factory abuses your relationship or starts to knock off your product or sell it out the back door, you can legally with ease pull the tooling. But I just want remind you that owning the tooling is a physical way to control who can make your product.
Let’s discuss about how to monitor the intellectual property.
What I’m talking about here is physically monitoring and how to keep an eye on our suppliers and the marketplace in general?
a) Monitor What?
What are we monitoring? We want to see if our suppliers or the marketplace are making available the products that we believe are proprietary for us.
b) Monitor Where?
Now, where do you monitor it? Obviously, at the factory.
c) Monitor How?
One way is for the frequent audits and inspections to keep an eye on things. Other ways are a little bit more covert. For example, you can hire investigators that go to the factory. Some of them even will get hired as an employee, go into the factory, and keep an eye on things. An easier way might be to hire a third-party that kind of monitors what trucks are coming in and out of the factory and where they’re going to ensure that no knock-off parts are going out the back door.
Those are fairly expensive ways to monitor the factory, and might not be applicable for all of our audience members.
Thanks again for your email. Hope the ideas above are useful to your planning. Glad to help and make introductions if you like.
ABL Blog: Sr. Editor and Primary Content Creator: Michael J. Bellamy
Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses. Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.
A featured presenter on China issues at seminars, trade shows and corporate events across the globe.
Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/
Mike is the author of “The Essential Reference Guide to China Sourcing”
(available on Amazon).