The Importance of Intellectual Property Protection in Electronic Manufacturing

When you have designed and developed a new device, you likely will want to make sure that your intellectual property is protected, especially prior to bringing the product to market. However, in most cases, you will need to outsource the manufacturing to an electronic contract manufacturer. While this partnership is often necessary, it is understandable that there may be concerns with intellectual property protection. With due diligence in choosing an ECM, you can be assured that your IP will be protected during the process.

Why is Intellectual Property Protection So Important?

Most markets have many companies competing for business. Your intellectual property is what sets your device, and by extension, your company, apart from the competition. A competitive edge is what will allow your company to gain business and grow. Your customers will see the value in your intellectual property and trust your devices over other options. You can trust that an inferior copy of your products will not be present in the market, which will not only hurt your business, but can damage your reputation.

Establish Clear Ownership Terms

In your contract with the manufacturer, it should be clearly defined who owns the intellectual property rights related to the product, if the electronic contract manufacturer has any rights to use or license the IP, and if so, under what conditions. In the manufacturing process, intellectual property may be created, and it should be clearly defined in the contract how this property will be treated and if there are any differences from the treatment of the pre-existing IP owned by the developer. Establishing these clear terms protects both your intellectual property and the ECM.

Understanding Non-Disclosure Agreements

Non-disclosure agreements, often referred to as confidentiality agreements, will typically be put into place during the manufacturing process to protect your intellectual property. These contracts will protect sensitive and confidential information. The disclosing party will share the information necessary, and the receiving party will agree to not disclose the information outside of the manufacturing process or misuse it in any way. The NDA will often be thorough, including consequences for breach, exclusions from confidentiality, and what will be done with the information at the conclusion of the project.

Considerations When Drafting NDAs

The NDA is there to protect both parties. When drafting NDAs to protect intellectual property, there are several considerations. The scope of confidentiality needs to be specified so that both parties know exactly which discussions and actions are covered. All protected information must be clearly specified, as well as the purpose for that information. Clauses can be included that cover the period of confidentiality, exclusivity of the information, whether the NDA is mutual or unilateral, and the enforceability of the NDA. Legal counsel should always be consulted to ensure that the NDA complies with any applicable regulations.

Understanding Patents, Trademarks, and Copyrights

Intellectual property can be categorized into three distinct forms, and it is important to understand the unique purpose and protection of each.

• Patents

Patents protect inventions and new innovations, and grants the holder of the patent exclusive rights to make, use, sell, and license the invention. A predetermined duration will be included in the patent. Patents need to be applied for through a government agency, and will need to specify the type of patent requested.

• Trademarks

Trademarks protect symbols, names, phrases, and logos that will identify and distinguish certain brands, goods, and services. After applying for a trademark through a government agency, trademark protection can be renewed indefinitely. This protects the trademark holder from others using a confusingly similar mark.

• Copyrights

Copyrights protect original creative work including software and designs, which can be created by a single author or a corporate entity. Copyright protection is automatic upon creation of the work, but registration is required for additional legal benefits.

How Does Intellectual Property Protection Work Within Contract Manufacturing?

When the developer and electronic contract manufacturer partner for a new design, both parties should take steps to protect themselves. It is a collaborative agreement, but can come with challenges, especially for a new or innovative product. To begin, everything that requires protection should be defined in the contract and both parties should sign an NDA. Once work has begun, it is up to the electronic contract manufacturer to stay compliant, and practice data security to best protect the intellectual property. If an issue arises, a legal team can be brought in to resolve any potential disputes.

Best Practices for Compliance

There are several best practices that can ensure compliance with IP protection agreements. These can include:

• Limiting access to only those employees and contractors who need to know to perform their job.
• Training all employees in the importance of trade secrets and how to protect them. All employees should understand what constitutes a trade secret and requires protection.
• Physical and digital security best practices, including restricted and locked areas for physical protection, and cybersecurity measures for digital materials. Network monitoring is important when dealing with trade secrets.

Finding a quality electronic contract manufacturer who will prioritize risk management and intellectual property protection requires due diligence prior to partnering. Finding an ECM you trust and who understands how to manage risk and prioritize security is crucial to protecting your product and business reputation. Before partnering with an electronic contract manufacturer, discuss the measures they have in place to protect your trade secrets and what documentation you will need on file before you can begin. A quality ECM understands the importance of this and will work with you to protect your designs and products. To learn more about our extensive capabilities, contact Levison Enterprises for a quote on your next project.