China NNN Agreements are Absolutely Necessary
When your company does business with a Chinese company there is always a risk that your Chinese partner will use information you give it to compete against you. See It’s Perfectly Legal for Your Chinese Manufacturer to Copy Your Products.
To prevent this scenario, a China Non-Disclosure, Non-Use, Non-Circumvention (NNN) Agreement is a crucial tool. These agreements go beyond standard NDAs to safeguard your intellectual property (IP) and business concepts when working with Chinese companies. See NDAs Do NOT Work for China but NNN Agreements Do
China NNN Agreements: The Ten Most Common Questions our Clients Ask
To describe protecting intellectual property (IP) from China as challenging would be an understatement. In this post, we’ll address the top ten questions our China IP lawyers get regarding China NNN Agreements. Our goal with this post is to shed light on this crucial legal document and its critical role in protecting IP against China.
1. What is a China NNN Agreement?
A China NNN Agreement is a Non-Use, Non-Disclosure, and Non-Circumvention agreement that protects foreign companies that do business with Chinese companies. These agreements ensure that your intellectual property and business concepts are securely safeguarded. My law firm has been drafting 5-10 China NNN Agreements every month since around 2000, mostly for manufacturing and technology companies
2. How Do NNN Agreements Differ from Standard NDAs?
China NNN Agreements extend beyond conventional NDAs, which predominantly guard trade secrets. The expansive protective umbrella of an NNN Agreement safeguards against the competitive usage of your information and bars entities from directly accessing your resources or clients, even if the information doesn’t qualify as a trade secret. The NNN Agreements my law firm drafts specify what is entitled to protection and contractually requires the Chinese company to protect that. It also prohibits the Chinese company from competing with our client and from going around our client to do business with our client’s customers or contacts.
3. Why Specify Chinese as the Official Language in NNN Agreements?
Utilizing Chinese as the governing language in your NNN Agreement amplifies its enforceability in Chinese courts and ensures that the Chinese courts’ interpretations of that agreement are consistent with your intentions. For more on why your NNN Agreement should be in Chinese, and what other provisions will strengthen your China NNN Agreement, check out Drafting China Contracts That Work.
4. Why Does my NNN Agreement Have No Set Term?
The absence of a set term in the NNN Agreements we draft is to ensure everlasting protection of your confidential information. It prohibits your Chinese counterparty from ever using your sensitive information detrimentally.
5. Are China NNN Agreements Enforceable?
When crafted effectively, with clarity in damages for breach and adherence to Chinese legal frameworks, NNN Agreements can be effectively enforced in China, serving as a potent deterrent against violation of terms. See China NNN Agreements and How to Give Them Real Teeth.
6. How Are Damages Assessed and Enforced in an NNN Agreement Breach?
NNN Agreements typically specify a predetermined monetary amount as damages per breach, providing a straightforward pathway for enforcement and potential asset seizure pursuant to Chinese law. See China Contract Damages Done Right.
7. How Can Foreign Businesses Ensure Their NNN Agreements Are Effective?
Employing the expertise of seasoned, China-focused legal professionals to draft and steer you through the NNN Agreement process will ensure that your business’s interests are protected within China’s legal and commercial landscapes.
8. What are the Signing Requirements for a China NNN Agreement?
Notarization of a China NNN Agreement is rarely done, and not required. It can, however, be beneficial to have your Chinese counterparty apply its company chop to your NNN Agreement. It is also critical that the lawyer you are using to draft your China NNN Agreement make sure that the name of your Chinese counterparty is accurately reflected in the NNN Agreement in the Chinese language. It is also a good idea to make sure that your Chinese counterparty is actually licensed/authorized by the Chinese government to provide you with the goods or services for which you need the NNN Agreement. The best way to protect your IP from China is by only revealing your IP to a legitimate company.
9. What Kind of Information Can Be Protected Under a China NNN Agreement?
The protective ambit of NNN Agreements in China can encompass a wide spectrum of information, ranging from trade secrets, business methodologies, client lists, to proprietary processes, ensuring they are not utilized to your disadvantage.
10. Can China NNN Agreements Protect IP Across Various Jurisdictions?
Though a China NNN Agreement provides robust IP protection within China, safeguarding IP in other countries usually requires crafting jurisdiction-specific agreements that adhere to local legal and commercial norms. We commonly draft NNN Agreements for countries other than China, but those agreements usually do not work for China, nor are they intended to.
Conclusion and a Free Contract Review
By understanding China NNN agreements and consulting with legal professionals, you can ensure your intellectual property is protected and your business thrives in the Chinese market. Don’t let your innovative ideas become your Chinese counterparty’s profit source. Secure your competitive edge with a well-crafted China NNN Agreement.
For decades, our law firm has offered complimentary reviews of existing NDA/NNN agreements with Chinese partners. This commitment stems from the fact that so many such agreements contain vulnerabilities. By identifying these potential weaknesses, we can help businesses assess their risk and make informed decisions. If you’re considering the strength of your current agreement or contemplating a new venture in China, we invite you to reach out to us for a free consultation. Contact us by clicking here. Let’s ensure your intellectual property receives the strongest protection possible with a meticulously crafted China-centric NNN Agreement.”
