The China NNN Agreement that Wasn’t

Introduction to NNN Agreements and Our Pioneering Role

Our law firm was among the first to emphasize the importance of securing a China-centric NNN Agreement before sharing confidential information with Chinese manufacturers. We have consistently emphasized the value of NNN Agreements in the decades since. See, e.g., China NNN Agreements and China NNN Agreements Up Close.

The Rising Challenges with NNN Agreements

However, the issue now is the emergence of numerous other law firms, including some fake and/or dishonest practitioners, promoting NNN Agreements too.

This has led to a proliferation of NNN Agreements, many of which are so inadequately drafted that they offer no real value or were unnecessary from the start. Our China dispute resolution lawyers see these bad agreements constantly when companies come to us after having had their IP stolen. We often find ourselves explaining that their protection needs either don’t align with what an NNN Agreement offers or that their current NNN Agreement is inadequate.

Real-World Consultations and the Need for a Bespoke China IP Strategy

a. Many Companies Overestimate Their Need for NNN Agreements

Many companies seek NNN Agreements when alternative strategies may be more appropriate. Today alone (and it’s not even yet noon here), I advised three companies against using NNN Agreements. One company assembling its product in the US was better off maintaining confidentiality. For the other two, I recommended trademarks or further consultation.”

b. Case Study One: Assembling Chinese Components in the US

One company intended to use 5-6 Chinese components, assembling them into their final product in the United States. I advised that their optimal protection strategy was to keep their activities confidential from Chinese entities and guided them on how to achieve this. It took me ten minutes to convince them that doing this would provide them with much better IP protection, and it would have the added benefit (for them, anyway) of not paying my law firm anything.

c. Case Study Two: When a Trademark Trumps an NNN Agreement

I explained to the other two companies why an NNN Agreement would not be very good at providing them the IP protection they sought and then told one of them how a China trademark would be both better and cheaper.

d. Case Study Three: The Timing of Your NNN Agreement Matters

I suggested the other company return for a consultation once it reached a specific stage in product development, to then reassess its best China IP protection strategy.

The Limitations of NNN Agreements and Alternative Solutions

Though NNN Agreements have become a staple in protecting IP in and from China, they are not a one-size-fits-all solution. The intricacies of IP protection in China demand careful tailoring to each business’s unique needs.

Conclusion: The Need for Customized IP Protection Strategies

As demonstrated by the diverse scenarios our China IP lawyers encounter daily, the right approach often involves a mix of legal strategies tailored to individual circumstances rather than a one-size-fits-all solution. Having an NNN Agreement in place is not enough — the agreement needs to provide protections that align with your company’s specific business objectives and needs.

Your goal should be to strategically mitigate your China IP risks with customized protections. This involves discerning whether an NNN Agreement, trademark registration, confidentiality measures, or a combination of these strategies is most suitable for your unique business needs.