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NDAs, Contracts of Supply and Design Rights, Oh My!

Discussion in 'Legal' started by Zookes, May 31, 2012.

  1. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    Hello business forumites, I have a question about:

    1. The protection of intellectual property when dealing with business partners, in this case, manufacturers.

    2. The insurance against unsatisfactory results from said manufacturer.

    I will be commissioning a unit to be manufactured according to a design.

    Is an NDA or confidentiality agreement sufficient to protect that design regarding issue 1?
    Would it be wise to also file a design right, or would that be superfluous considering the former point?

    Could a contract of supply be utilised to serve issue 2?

    Thanks in advance answerers!
     
    Posted: May 31, 2012 By: Zookes Member since: May 7, 2012
    #1
  2. jules12345

    jules12345 UKBF Ace Free Member

    Posts: 1,082 Likes: 119
    A few questions...

    Are you assigning rights to the manufacturer ?

    Are you licensing the manufacturer to use your dsigns and/or sell them ?

    Are you wishing to solely stop the manufacturer from using your IP ?

    Your design is unregistered is this correct ?

    What is the IP exactly ?

    Regards
    Jules
     
    Last edited: Jun 4, 2012
    Posted: Jun 4, 2012 By: jules12345 Member since: Jun 11, 2009
    #2
  3. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    I simply wish a particular number of items to be manufactured according to a design.
    I intend to give the manufacturer the right to make only a very specific number of items exclusively for the purpose of supplying them to me.

    I am not licensing the manufacturer to use the design for any other purpose other than to supply me with units created from it, and certainly not to sell them.

    The manufacturer must 'use' my IP in a sense to perform the manufacture, however, they must keep it confidential, and use it only for the purpose of supplying me with units.

    It is at current unregistered.

    The intellectual property is a design; a bunch of data on a computer which can be used to generate a unit on a specific machine.

    Thank you for your contribution Jules.
     
    Posted: Jun 5, 2012 By: Zookes Member since: May 7, 2012
    #3
  4. Andrew46

    Andrew46 UKBF Regular Full Member

    Posts: 231 Likes: 45
    You require a type of manufacturing agreement with non-disclosure and non-circumvention provisions.
    Preferably include a warranty that the manufacturers are not already aware of the principles behind your design although obviously they could refuse if they do not know what the design is.
    If possible use "seeds" or redundant code in the IP to allow wrongful use or disclosure to be detected.
    The nature of your design is not clear to me but it sounds as though it is protected by copyright if anything (which is a non-registrable type of IP)rather than a design (of which there are 2 types, one registrable and one not).
     
    Posted: Jun 5, 2012 By: Andrew46 Member since: May 20, 2011
    #4
  5. jules12345

    jules12345 UKBF Ace Free Member

    Posts: 1,082 Likes: 119
    A - Get a deed of agreement signed by them etc..! Deeds are stronger legally.

    B - Don't get your design produced in China or any country outside the UK/EU - UK if possible.

    Probably as the poster above says but I've never heard of 'seeds' in such away personally.

    Put a warranty or indemnity in your deed.

    You'll need a sol to draw one up but the beauty is that the deed can be used over and over again each time you get some made by a supplier, inform your sol of this requirement.

    Regards
    Jules
     
    Posted: Jun 5, 2012 By: jules12345 Member since: Jun 11, 2009
    #5
  6. DaveDAC

    DaveDAC UKBF Newcomer Free Member

    Posts: 86 Likes: 24
    If we are talking about a design in the IP sense (ie a unique shape, form, look-and-feel etc for a product) you should consider registering the design. Once the product is manufactured and marketed, it is not just the manufacturer who may copy it. The manufacturing agreement will only protect you against the manufacturer.
     
    Posted: Jun 6, 2012 By: DaveDAC Member since: Jan 26, 2012
    #6
  7. jules12345

    jules12345 UKBF Ace Free Member

    Posts: 1,082 Likes: 119
    This is also good advice IMHO.!

    Regards
    Jules
     
    Posted: Jun 6, 2012 By: jules12345 Member since: Jun 11, 2009
    #7
  8. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    So, the recommendation as it stands is:
    -Deed of agreement with manufacturer including non-disclosure and non-circumvention provisions as well as a warranty or indemnity.
    -Design Registration (look and feel)

    I know design rights can be registered with the IPO, but can they be registered globally, like trademarks can via the Madrid protocol?

    Also, the manufacturing may well be taking place in the U.S.A. Jules; is this a liability?

    Thanks for all the wisdom so far chaps!
     
    Posted: Jun 8, 2012 By: Zookes Member since: May 7, 2012
    #8
  9. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    The situation has changed somewhat, the unit to be derived from the first manufacturer is to be sent to a second manufacturer, so will I need two separate deeds; one for the manufacturer dealing with the data, and one for the other dealing with the result and using it in another manufacturing process?

    Also, I will need to deal with a packing facility and distributors, would it be wise to craft an agreement for this interaction also?

    Thanks.
     
    Posted: Jun 13, 2012 By: Zookes Member since: May 7, 2012
    #9
  10. Andrew46

    Andrew46 UKBF Regular Full Member

    Posts: 231 Likes: 45
    I think it would be better if you could get the two manufacturers to enter into one agreement with you, in order to reduced the risk of one playing you off against the other in the event of a dispute.
    With regard to the packaging facility, a non-disclosure agreement should be sufficient, apart from whatever terms they use for their service, unless of course you have specific requirements.
    With distributors you need to develop a distribution agreement model; there are models depending on exactly what you require from the distributor.
    You refer to "deeds" because of the suggestion that they are somehow "stronger". Yes they are stronger in the sense that promises in a deed need not be supported by "consideration" (i.e. payment or a counter-promise) in order to be valid, unlike a simple contract. Also the limitation period for legal enforcement of a promise in a deed is generally 12 years rather than 6 for a simple contract. However deeds require certain formalities of execution and thus are not commonly used for commercial dealings ( except sale or lease of real estate and other formal legal transctions).
     
    Posted: Jun 13, 2012 By: Andrew46 Member since: May 20, 2011
    #10
  11. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    I see. This may be difficult to finagle, as I do not know whether I will remain in business with both of them indefinitely; one or both of them may end up no longer being a part of the process. Would this single agreement be reusable in the event that I drop one partner and select another?

    I likely only require packaging and delivery, so likely I am looking at some sort of 'fulfilment centre' or something very like it. Is a distribution agreement suitable for this sort of business arrangement?

    How onerous are these formalities? Does it require that all members trudge down to an office somewhere? If one of the manufacturers is located in the U.S.A. would a deed be infeasible?

    Thank you for your contribution Andrew64.
     
    Posted: Jun 13, 2012 By: Zookes Member since: May 7, 2012
    #11
  12. The Resolver

    The Resolver UKBF Ace Full Member

    Posts: 2,827 Likes: 917
    You don't need a Deed as there will be proper consideration. You need a separate contract with each manufacturer with the protections mentioned. But never rely on the Agreement itself. Think of who else will have access to the code and could breach your IPR, eg key staff etc. You may need to see the employment contracts to check they are protective and then have an agreement with the manufacturer requiring them to enforce. Beware if they 'employ' contractors. You need clauses that restrict the opportunity for IPR theft eg who accesses the code, where and how stored etc. These will not be found in standard Agreements.

    If one of the manufacturers is in the US then you have to consider the jurisdiction clause and any local laws that may protect them. Beware of inadvertently signing up to THEIR terms notwithstanding them signing your Agreement. Its all about timing and notice. Given the different jurisdictions , it is vital to have a comprehensive 'dispute resolution' clause that contains detailed steps to resolve any disputes that may arise (over quality , time to deliver as well as IPR breach) culminating in solutions such as mediation and arbitration undertaken online. I sit on a Brussels working group advising the EU over some forthcoming new laws over B2B online dispute resolution outside of the courts. Your matter is an interesting example throwing up unique issues but which wil be off wide impact (think of how many people instruct developers in distant countries using eLance and Peopleperhour etc) .
     
    Last edited: Jun 14, 2012
    Posted: Jun 14, 2012 By: The Resolver Member since: Mar 31, 2006
    #12
  13. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    An excellent contribution, I'm glad you stopped by Mr. Resolver. I hadn't considered that the contract should also include clauses to minimise the risk of theft.

    Excuse my ignorance on law, but the proper consideration will be on their part alone? If an agreement is drafted by myself, what consideration will I be obliged to offer, if any?

    Also, what is the risk involved with contractors specifically? Is it because they are not bound by the employment contract? Could there be a clause requiring contract workers to sign an agreement, or a clause that requires the manufacturer to make the employment status of those involved in the job clear and so on? Am I thinking of this in the wrong way?

    Regarding the protection of code: it is likely that I will have two manufacturers, one that deals with data, and the other that deals with a master created from that data (as well as the final product); would I be able to craft an agreement that works equally well if the IP is a physical object or data?

    I am particularly interested in what you say about quality and time to deliver; these sound similar (to my ears anyway) to a contract of supply. Could this agreement contain clauses that allow me to demand samples and prototypes prior to full production and to ensure a reasonable level of quality control on their part?

    My thanks.
     
    Last edited: Jun 14, 2012
    Posted: Jun 14, 2012 By: Zookes Member since: May 7, 2012
    #13
  14. The Resolver

    The Resolver UKBF Ace Full Member

    Posts: 2,827 Likes: 917
    You offer the payment to them for what they do.

    If you have a clause that says they cannot allow in contractors then if they breach that and , as a result, code is copied, you have a claim against the manufacturer for breach of the term as well as a claim against the contractor who took it (who may be harder to trace). At least by giving yourself a claim against the manufacturer you can recover some of the losses by withholding monies.

    Yes the Agreement should be clear as to who can work on the job and their status. As best as can be doe they should also sign restrictions.

    IP does not apply to physical objects. There would need to be different clauses for physical items and IPR but one agreement could cover both with certain clauses simply not applying to each of the manufacturers.

    Well yes that is what a manufacturer is doing supplying a service and thus it can have terms about prototypes and the approval process etc as well as certain elements of a SLA would be found here as well. Would you like me to give you a quote for what such might cost?
     
    Last edited: Jun 14, 2012
    Posted: Jun 14, 2012 By: The Resolver Member since: Mar 31, 2006
    #14
  15. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    Sure, why not. What exactly would this document be called, seeing as it seems to have clauses of many different goals?
     
    Posted: Jun 15, 2012 By: Zookes Member since: May 7, 2012
    #15
  16. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    Actually, it has occurred to me that I will need to discuss my IP in some detail with potential business partners. It's not reasonable to get them to sign a contract dealing with all sorts of security measures just for the purposes of me judging their merits, surely?

    Might there be a more straightforward NDA for those I am having a dialogue with, but no IP or property will be changing hands?

    Also, I will be making use of a logistics service which will likely be international in scale; they will be handling the finished product and packaging it. The contract we have been discussing will likely not be suitable for such an operation, will it?
     
    Posted: Jun 16, 2012 By: Zookes Member since: May 7, 2012
    #16
  17. jules12345

    jules12345 UKBF Ace Free Member

    Posts: 1,082 Likes: 119
    With IP get a deed...!

    Regards
    Jules
     
    Posted: Jun 17, 2012 By: jules12345 Member since: Jun 11, 2009
    #17
  18. jules12345

    jules12345 UKBF Ace Free Member

    Posts: 1,082 Likes: 119
    Are so used in IP..!

    Property law is property law ...!

    Regards
    Jules
     
    Last edited: Jun 18, 2012
    Posted: Jun 18, 2012 By: jules12345 Member since: Jun 11, 2009
    #18
  19. Zookes

    Zookes UKBF Newcomer Free Member

    Posts: 9 Likes: 0
    Thank you for your contribution Jules.

    I must confess though, little understanding has been brought to me by your posts. Do you mean to say that while I have a choice to have a contract or a deed, a deed has advantages over the latter? I should say that I am very much working in a business environment, so ease of execution is important to me as I am sure it will be important to my business partners.

    Also, I have been lead to believe IP law has some differences to property law in general, I would not like to have protection that can be contravened on a technicality.

    Also, may I refer you to post 16 of this thread on the topic of NDAs for discussion purposes prior to undertaking business? I cannot see why someone would agree to such a strict contract if they were not certain to be getting some business out of it.
     
    Posted: Jun 18, 2012 By: Zookes Member since: May 7, 2012
    #19
  20. The Resolver

    The Resolver UKBF Ace Full Member

    Posts: 2,827 Likes: 917
    A Deed is not necessary in a case like this where there is fill consideration, ie things being given by each party to the other.The extended time limits are not likely to be of much relevance since they run from breach not inception.

    The agreement has no special title save , I suppose, an ' Agreement to Manufacture' .

    Yes a separate and short NDA can be drawn up for enquirers.
     
    Posted: Jun 18, 2012 By: The Resolver Member since: Mar 31, 2006
    #20