A British company, a professional distributor of mountain bicycles and strollers, approached our team with a unique challenge. They had developed new mechanisms and desired to incorporate them into their bicycles manufactured in China. However, they were concerned that the Chinese manufacturer might plagiarize their ideas. These new designs represent their intellectual property and offer a potential competitive advantage in the market. So, they sought guidance on how to ensure that the Chinese manufacturer exclusively produces these components for them and prevents the manufacturer from using the innovations for other clients.
Our legal team advised them to take the following steps:
1. Applying for Patents in China: The first and most crucial step was to file for patents in China to protect their innovative bicycle components and mechanisms. Patent protection in the country where manufacturing takes place is vital because it grants the company the legal rights to prevent others from making, using, selling, or importing their patented inventions within Chinese territory. This safeguards the British company’s innovations from unauthorized use by Chinese producers or any other entities in China. If they had already applied for a patent in the UK, and the application date falls within one year of the Chinese application, they can enjoy priority rights for the patent.
2. Confidentiality Agreement: Simultaneously, a confidentiality agreement was established. This agreement functions as a safeguard against any unauthorized disclosure or use of the British company’s proprietary information by the Chinese supplier. It outlines the terms and conditions under which confidential information can be shared, ensuring that the supplier does not use the designs and mechanisms for other clients or purposes. This legal document establishes a contractual obligation for the Chinese supplier to protect the intellectual property and maintain the confidentiality of the designs.
3. Liability for Breach of Agreement: The confidentiality agreement typically includes clauses that detail the consequences or liability in the event of a breach. This may involve financial penalties, legal actions, or other remedies to compensate the British company for any harm caused by the unauthorized disclosure or use of their intellectual property. The existence of such an agreement not only deters the supplier from breaching it but also provides a clear legal path for the British company to seek redress in case of a breach.
By combining patent protection with a confidentiality agreement, the British company is adopting a comprehensive approach to safeguard their intellectual property. The patent provides a strong legal foundation for protecting their innovations in China, while the confidentiality agreement adds an extra layer of protection by establishing contractual obligations. This dual strategy is an effective way to secure their rights and minimize the risk of their designs and mechanisms being used for other purposes by the Chinese producer or any other third parties. It ensures that the British company’s intellectual property remains a valuable asset for their business in both the UK and China.