Sending plans and designs to China: Yes, you can you protect them

designs.jpgClearly, if you make your living on your intellectual property as embedded in your plans, designs and specialized tooling and you do business internationally, you should be filing all your trademarks and patents in all jurisdictions where you make/sell products.   

But, this post looks to a more basic set of concerns on how to ensure that your long term ownership in plans, designs, molds and tools is also protected and under contract here in Mainland China.  For many companies pay their IP counsel lots of money, but forget the basics when it comes to where their molds/ tools are -- and who owns them.

Historically, a Chinese company would agree to make a run of, say, two million widgets, to your plans and designs, and no special contracts would be made out on who would be paying for all molds and tooling.  In many cases a contract would say, in English, that you would own the tooling after so many millions of pieces were run on those molds/tools.  Sound familiar?

In most cases, the foreigner would believe they owned all IP as embedded in those tools and leave it at that.  The problem is that you would be wrong to presume that.  In fact, if you do not explicitly contract and pay for those molds/ tools under separate contract -- you never did and may never own them.

Now, of course this is never a problem when we are all friends, business and cash flow are all good and the wheels just kept spinning 'round and 'round and everybody makes a buck or two.

But, when the economy chugs or churns, as it occasionally does, and has been doing for the last few years, then who paid for what, who owns what and how you can protect yourself become important issues.

And that's where folks doing business here in China often skin their own knees without meaning to.  So, how do you do this right?  Well, glad you asked...

1.  File your IP domestically and internationally (patent and trademark and copyright, as needed)

2.  Contract for mold manufacture to your specifications and pay for your tools in cash.  Do not roll it all up into one large manufacturing agreement or at best you will have clouded title to your own property you paid that IP counsel in the USA to protect for you.  Generally, these are 50% + 30% + 20%.  Half at contract signing, a third when the molds are delivered and the last bit within a month after you have approved the blanks, finish, etc.

3.  After your molds have been manufactured, blanks have been produced and have been deemed to meet your specification, then you take the next step and file a bailment agreement.  If you have ever parked your car in a paid parking garage you have used a bailment.  In short it means you own your car and the garage has an absolute obligation to give your car back when you pay the fee.  Same with your IP embedded in your molds/tooling.

4.  Without a mold / tooling contract followed by a bailment agreement -- if you ever have an issue of quality, want to change manufactures, or whatever -- you will not have a right to retake possession of your molds and tools.  Anyone out there ever have their molds hidden from them?

They are not yours if you did not pay for them.  And can prove it.  In Chinese.  Under valid tooling and bailment contracts.