Basics of Manufacturing Non-disclosure Agreements in China

Page 1. ContractsIn today’s blog post we are going to take a closer look at different contracts and agreements that help European companies to protect their precious IP in China. In particular, you will learn more about non-disclosure agreements and non-use, non-disclosure and non-circumvention agreements. 

Introduction: contracts in China

Many SMEs view Chinese manufacturers as cheap, technically-skilled, attractive options for manufacturing their products and as such pursue partnerships with them. While Chinese manufacturers can be the key to the products needed to give your company worldwide reach, China—like all countries—can be home to unscrupulous merchants with a taste for IP theft. As such, tailoring contracts to suit your intellectual property rights (IPR) is an important way to ensure that your company’s specific intellectual property assets are adequately protected when dealing with Chinese manufacturers. In particular, this article will address use of so-called NDAs (non-disclosure agreements) and NNNs (non-use, non-disclosure, and non-circumvention agreements) to protect an SME’s trade secrets—“any non-public technical or business information with commercial value that is guarded by confidentiality measures.”

What are NDAs and NNNs?

At its core, a non-disclosure agreement (NDA) between an SME and a Chinese manufacturer is an agreement which states that once the SME reveals its trade secrets to the Chinese manufacturer, the manufacturer will refrain from disclosing those secrets to anyone else. Once a secret loses its secrecy—once it is revealed to the public—it no longer has any kind of legal protection and, most likely, will lose its economic value. That is why NDAs are go-to contracts for any SME which seeks to use a Chinese manufacturer. Otherwise, the manufacturer could reveal the SME’s trade secrets, making those secrets impossible to protect and capitalise on. Continue reading “Basics of Manufacturing Non-disclosure Agreements in China” »

Champagne or Sparkling Wine? Geographic Indications Protection in China

Photo Andrea Parrish GeyerAs the food and beverage market offers many business opportunities to European SMEs as Chinese consumers are looking for healthy quality products, we have dedicated today’s blog post to geographical indications protection in China. Registering geographical indications in China offers another layer of protection to SMEs that are producing European high-quality products associated with certain regions or production methods.

What is a Geographic Indication (GI)?

“Champagne”, “Bordeaux”, “Parma Ham”, “Parmesan”. Each of these products, associated with certain regions, are renowned and trusted for their nature, quality and authenticity. As a consumer, you are probably more familiar with “Scotch”, “Cognac” and “Bavarian beer” than unnamed brands claiming to use the same ingredients. A GI is therefore a labelling that identifies a good as originating in a specific territory, region or locality, where characteristics of the good are associated with its place of origin.

GIs are protected by World Trade Organization (WTO) signatories, including all 28 European Union (EU) Member States (MS) and China – since 2001. This is designed to prevent unfair competition and to protect consumers from purchasing goods that misleadingly claim to be from a particular place.

Made in China?

China’s middle class is growing; as has its appetite for imported – predominantly Western – products. Younger generations spend significantly less time cooking than their parents and are increasingly quality- and status-conscious. In addition, food safety concerns in recent years have encouraged Chinese shoppers to more carefully consider the origin of the products that they consume. Purchasing patterns have therefore experienced a significant shift. Regarding food, large numbers of Chinese people are purchasing brands that are recognised for their quality and food safety standards – this has stimulated a rise in sales of Western goods. Similarly, while sales of traditional alcoholic drinks, like baijiu, still dominate in many places, individuals in wealthy Tier 1 cities are increasingly opting for higher-end Western wines, beers and spirits.[1]  Continue reading “Champagne or Sparkling Wine? Geographic Indications Protection in China” »

The Next Vintage: The Future of Wine Anti-Counterfeiting; Advice from our Experts

Corks smallToday’s blog post will sum up our Wine series that we have been running for the past couple of weeks and discusses the future of IP protection in the wine industry.

Wine counterfeiting in China is at a critical stage for the European wine industry. In recent years we have had a taste of what Chinese consumption means to the European producers, with over a quarter of a billion litres of European wine consumed annually by what represents only a fraction of the potential market in China. As the market moves from commodity and gift wines to drinking ‘table’ wine, so do the counterfeiters, flooding supermarkets and restaurants with wines bearing (often validly registered) appellation marks which have no connection to the liquid inside the bottle.

Chinese palates are at a crucial developmental stage, and exposure to poor quality counterfeits of European wine not only damages profits, but also poisons the reputation of European producers in the Chinese marketplace. Competition with domestic producers is already fierce, and Europe’s wine industry can no longer afford to stand by and let this threat go unchallenged.

As we saw in our ‘Terroir IPR’ articles, producers do not stand alone in the fight against counterfeiting, and national agencies such as INAO, as well as regional regulatory bodies such as the CIVB are in working to register GIs and combat the most obvious fraudsters. These two organisations are a minority however, and their pockets alone are not deep enough to fund a comprehensive campaign. Without support of more organisations, and ultimately the producers they serve, they can only do so much to slow the poisonous effects of counterfeiting in China. Continue reading “The Next Vintage: The Future of Wine Anti-Counterfeiting; Advice from our Experts” »

Terroir IPR Part 1: Geographical Indications and IP Protection for Your Appellation of Origin

Quote

The wine industry is characterised by a wide variety of producers, often very much linked to specific grapes, blends and terrains. The European Union has put in place a system of Geographical Indications (GIs), that are used to distinguish the origin of goods, often also linked to the quality and reputation of a purple-grapes-vineyard-napa-valley-napa-vineyard-45209specific product. In China, a large market for European wines, these GIs are as important, and once registered they are protected as trademarks. Nonetheless, as with trade marks, it is important to monitor the market for infringement of GIs and act against illegitimate users of your collective mark.
Wine has been classified by region for almost the entirety of its long and varied history, the Ancient Greeks stamped amphorae with the seal of the region they came from, and references to wine, identified by region are found throughout the Bible and other religious texts. Whilst this tradition of geographical identification continued throughout Antiquity and the Middle Ages, it was only in 1716, with the introduction of the Chianti region in Italy, protected by edict of the then Grand Duke of Tuscany.

Today, the concepts of appellation and terroir have spread around the world. France protects over 300 Appellation d’Origine Contrôlée (AOC)[1], and Italy over 400 Denominazione di Origine Controllata e Garantita (DOCG) and Denominazione di Origine Controllata (DOC) wines[2]. With similar systems and numerous varieties are grown and protected throughout Europe and the rest of the world, appellation of origin plays an important role in the classification of wines, as well as consumer decision making. As a result, the protection of the integrity of this classification system is of paramount importance to producers, distributors, retailers, and of course, consumers.

Protection of the appellation of origin of a product falls to the legal principles associated with so called Geographical Indications (GIs). Similar to trade marks, GIs are distinctive signs used to distinguish the origin of goods, thereby enabling consumers to accurately associate a particular quality or reputation with the products in question.

GIs differ from trade marks however in that rather than protecting a single producer’s rights, they protect a whole class, based on their geographical location and the production methods used. GIs therefore ‘belong to all those resident producers who comply with the specific by-laws and regulations set to ensure that the consumer ‘link’ between the quality /reputation of a product and its place of origin is maintained.[3]

Continue reading “Terroir IPR Part 1: Geographical Indications and IP Protection for Your Appellation of Origin” »

Bodega Branding: The How, What, When, and Why of Wine IPR Protection

Quote

In our last article we sang a song of growth and prosperity for the wine industry in China, fuelled by the staggering figures of industry growth and Chinese wine consumption in recent years. This was tempered somewhat by the somewhat tragic tales of the relatively unimpeded development of a parasitic counterfeiting industry which continues to sap the profits of wine producers, damage reputations, and in some cases harm consumers in the process1. 

Today however we’ll be striking a more positive note, and looking at how producers and distributors can utilise the established IPR protection framework maintained by the People’s Republic of China and defend the reputation of their products. 

Traditional Anti-Counterfeiting Measures 

Tamper proof seals, holograms, and other authentication technologies have long been used by vintners to identify the authenticity of their products to their consumers. Unfortunately, counterfeiters have been working almost as long to develop copies of these so-called preventative measures, and as a result they have done little more than slow the progress of counterfeiters in copying new products. 

In fact, even if consumers have the inclination or opportunity to check these identifiers, the sophistication of counterfeiters has now reached the point where even the producers themselves have difficulty in identifying fakes, and are forced to rely on laboratory testing to identify counterfeits2. 

Producers and distributors can no longer rely on traditional, physical measures alone to combat counterfeiting, and must also take advantage of the other tools at their disposal. 

Continue reading “Bodega Branding: The How, What, When, and Why of Wine IPR Protection” »