China Non Disclosure Agreements: Please do Not Try This at Home

Protect your IP from China with an NNN Agreement

Protect your IP from China with an NNN Agreement

Foreign companies doing business with China all too often make the mistake of trying to protect their intellectual property from China by using a Western-style non-disclosure agreement (NDA).

These agreements do not work for China. Chinese companies know this and so they willingly sign them.

Western-style NDAs focus on preventing disclosure of trade secrets to the public and they are written in English, subject to U.S. or maybe EU law, and exclusively enforceable in a U.S. or European city. These things all make complete sense if you are looking to stop an American or European company from revealing your trade secret, but this kind of NDA is of no value when dealing with your typical Chinese company based in China.

None.

First off, the fundamental issue when dealing with a Chinese company is not protecting your trade secret from being disclosed to the general public. The typical Chinese company does not want to steal your idea to reveal it to anyone; it wants to steal your idea to use for its own benefit. This means your non disclosure contract with your Chinese counter-party must make clear that whether the information you provide is a trade secret or not, the Chinese company cannot use that information in competition with you.

The other fundamental problem with Western-style NDA agreements is that they are not enforceable in China. Chinese law allows for protecting trade secrets and for contracts that provide NNN protections. But for such a contract to be effective and enforceable in China it should be written in Chinese, governed by Chinese law, and exclusively enforceable in a Chinese court. See China Contracts That Work.

Do not use a U.S. style non-disclosure agreement. Instead, use an NNN (non-disclosure, non-use, non-circumvention) agreement written to be enforceable in China. For all that entails, check out China NNN Agreements.

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