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What Is a Nnn Agreement

Unlike a typical confidentiality agreement, an NNN agreement protects your company more comprehensively in your dealings with your Chinese counterparts. This forces them to keep your confidential information secret. This requires that they do not use your information themselves. And that requires that they don`t walk around you with their own products or help others walk around you. Also, make sure you own or control the intellectual property developed by the manufacturer for your products. While your manufacturer may bring a lot of “substantive IP” to the relationship (and so may you), there may be additional IP developed by the manufacturer specifically for your product or as part of the agreement. In addition, there could be additional intellectual property that is being developed jointly. Be sure to specify who owns and/or controls this new IP address. For more information on what it takes to design a contract that works for China, see Contracting in China: A Contract Worth the Paper It`s Written on. – Do not limit your ability to enforce your NNN agreement to the signatory party alone.

You will often work with other companies, contractors and agents who must also be subject to your agreement, either directly or through damages imposed on your counterparty if their additional parties violate the agreement. If your goal is to manufacture your new product or simply check the quality of the treatment with a supplier, your legal agreements should be strong enough to have “teeth” when needed, but not so strict that suppliers refuse to sign. When the latter happens, you are still at the beginning because you are not able to meet your needs and get started. The first step in manufacturing in China is to find a good factory to manufacture your product. To protect your product at this early stage, you should require the Chinese side to enter into an appropriate agreement before disclosing any information. This agreement must follow three basic rules: First, do not use an American-style NDA (Non-Disclosure) agreement. Second, use a written NNN (Non-Disclosure, Non-Use, Non-Circumvention) agreement to address the specifics of OEM manufacturing in China. Third, draft the NNN agreement so that it is enforceable in China. The non-use clause of an NNN agreement means that the company with which you sign the contract cannot use the product for purposes other than the use agreed in the contract.

This ensures that they don`t use your product or idea to compete with you. You cannot sell your product to your competitors or competitors. NDA agreements focus on the protection of trade secrets. For a trade secret to be a protectable asset, the information must remain secret. For this reason, NDA agreements are designed to prevent the disclosure of a trade secret to the public. NDA agreements are therefore narrowly aimed at preventing classified information from reaching the public. Since U.S. companies have generally focused on maintaining their national IP portfolio, they naturally tend to believe that they can rely on a single NDA agreement written in English, governed by U.S. law and enforceable exclusively in a U.S. city and state.

But for the following two reasons, this type of NDA is worthless in China. NNN agreements often mention that the owner can bring an action for damages in the event of a breach. An example of this would be something like: an effective agreement for research, obtaining general offers and launching early negotiations with a Chinese manufacturer is a non-disclosure, non-use and circumvention agreement (NNN). The non-circumvention provisions of the agreement prohibit the Chinese manufacturer from copying your product, bypassing your business, and selling the product directly to your own customers. “The supplier is permanently bound by the agreement.” – Your agreement cannot create a “forum shopping” in the wrong Chinese jurisdiction, usually when the Chinese counterpart is registered or doing business. The NNN Agreement contains not only confidentiality provisions, but also provisions prohibiting a Chinese manufacturer from misusing confidential information it has received as a result of its employment relationship with you. Based on your signature on the document, this means that you accept all changes, whether you are aware of them or not. Most legal agreements have a set period of time around which they end, so including a clause that doesn`t end is likely to be a sticking point. .

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