ACID's latest article from the IP Doctor, Niall Head-Rapson of McDaniel & Co., covers business relationships
In the latest article IP Doctor Niall Head-Rapson, of ACID Accredited Law Firm McDaniel & Co, looks at issues associated with UK companies who wish to work with non-EU manufacturers and agents. General rules apply to all working relationships whether at home or abroad. Firstly - ensure that you have the correct legal agreements in place. Secondly - research the prospective business/agent thoroughly. Thirdly - become familiar with the design laws which operate in the particular territory that you want to work within.
What do I need to have in place to work with a foreign manufacturer?
A written agreement that sets out the terms clearly is essential. You need to document important information such as the price to be paid, delivery times for goods, quality control and design approval. You should also look at who takes the risk of delivering the goods to you.
Not only do you need a clear agreement but you need it with someone reputable. Try and find out who they may deal with in your sector and do a little research. It would be good to ask if you can have a chat with a couple of their clients. If you can, make sure the customers are local to you (i.e. your country) so that you can check the references you are given.
There are also some practical steps you can take. Is the manufacturer financially sound? You don’t want them to go bust with your products undelivered. Ask around, perhaps do an internet search to see if there are any good or bad things being said about the manufacturer.
A good, long term relationship works for both sides and becomes more productive the longer it is in place because it will become mutually important to maintain.
I would like to sell my product in America but I understand the design laws are different there?
America does not have the versions of unregistered design rights that are available in the UK and the EU. Therefore if you have a product that is industrially produced you will not have any protection in America for acts taking place there. American law can also differ from state to state.
Americans can rely on copyright but this may not be available to Europeans for items which attract Design Right over here. It is possible to seek an American Design Patent which is granted on the ornamental design of a functional item. Design Patents are a similar concept to a registered design and will protect you for shapes. They are generally valid for up to 20 years from the date of filing.
Don’t forget to communicate your IP policy on your website and on your marketing material. A simple statement such as, “All intellectual property rights are and will remain the property of (insert your name). Any infringements will be taken seriously.” By including this statement you are ensuring that all with whom you deal will know that you value the intellectual property you create.
I want to work with a foreign agent but do not know if the contract should be drawn up under UK law or Chinese law?
Preferably UK law because if it is in Chinese law you will need to seek advice from a Chinese lawyer over its interpretation and any disputes will need to be heard in Chinese courts. This could prove expensive for you as you will need Chinese lawyers to interpret the contract for you. It is easier if the contract is under the law of your residence as your local lawyer will be able to advise you and if there is a dispute, your local lawyer will be able to guide you through the process. The China/Britain http://www.cbbc.org website has some very useful tips on helping you do business with China.
I have a registered design in the UK. Do I need to have one in China where it will be manufactured?
Your UK registration is territorially limited to acts within the UK. Therefore if any copies are made in China your UK registration will be of no effect unless those copies are then imported into the UK when the registration will bite. It is possible to obtain a Chinese registration however enforcing this could be costly and difficult. It could make more sense to have a strict agreement in place with the manufacturer and obtain an EU registration which would cover all of the EU. This would mean if any copies were made in China and then brought into anywhere in the EU, you could act.
My design has been copied by a foreign manufacturer but I can’t afford to take action in China and would not know where to start?
This could prove costly and expensive. As most copies made in China are for importation into the EU and the UK it could be better to go after those who are having the copies made and then importing them. This could be a UK company rather than the Chinese factory. Often the first instance of market entry for new products is a trade event/exhibition. Due diligence in checking exhibitions for potential copies is an effective way of identifying these and taking action. ACID has had many instances of being able to offer advice at trade fairs and its Accredited law firms have been able to act quickly and effectively when knock offs are discovered.
This article was first published 1.5.10