Tuesday, May 15, 2012

Wants NDA+ for Taiwanese Manufacturer

Dear Rich: I’m trying to find a triple-N agreement to send to my Taiwan manufacture (NNN = non-disclosure, non-use and non-compete). I am concerned that customers in the Far East will try to get him to manufacture our product directly for them. If we have a good NNN agreement, it will help dissuade him from doing that. Can you direct me to any resources? We've spotted a few of these templates floating around the Internet, but from our research (and limited experience) it's not a good idea to use off-the-shelf NDA-type agreements with foreign manufacturers. The main reason is enforcement: a manufacturer that operates solely in the People's Republic of China (ROC) would only be subject to Taiwanese law and you would need to rely on ROC courts to enforce the agreement. That reduces the chances of enforcing an English-language off-the-shelf agreement -- particularly if you are relying on American style injunctive relief (a hard sell in some Asian courts).  The only way to increase your chance of enforcement is to show the manufacturer that you mean business by preparing a properly translated agreement that caters to the laws of the ROC -- or Peoples' Republic of China (PRC), depending on who is really in control in Taiwan. That means engaging an English speaking lawyer who is familiar with ROC laws. For more information, you may wish to check these two articles: one explains why a Triple-N agreement is the way to go with Chinese manufacturers, and the second explains the common pitfalls when trying to make the agreement enforceable.
An exception .... One exception to the rules expressed above is if the foreign manufacturer has a presence in the U.S. -- for example, there's a U.S. subsidiary or headquarters. In that case, the company is likely to be subject to U.S. jurisdiction and you may be able to enter into a typical template agreement. If you're seeking a basic NDA for various purposes, we've uploaded a collection of agreements with explanations.