Last time, I discussed outsourced manufacturing as well as the process and personnel. Now, I continue the discussion by exploring control over transactions and products as it relates to IP protection.
Establishing and Maintaining Oversight
Requiring the manufacturer to maintain a designated facility for all work involving the transaction can reduce the risk of violations and simplify the monitoring and protection of the company’s IP. In all cases, the company should reserve the right to frequently audit the manufacturer’s facilities. If possible, the scope of these audit rights should extend enterprise-wide to ensure protection and containment of critical information.
The company should also consider appointing one or more company delegates to oversee key steps of the outsourced manufacturing process within the manufacturer’s facilities. This is the case even where the manufacturer’s employees, and not the company’s delegates, are responsible for the manufacturing activities. The company’s delegates also can serve in a quality control capacity.
Control Over the Final Product
Finally, if the company can control the distribution and sale of the products following manufacture, it may be in a position to better control the continuity of its business and limit the impact and ability of the manufacturer trying to set itself up as a direct competitor.
Next we will discuss trade secret-specific things a company can do to protect its crown jewels during the outsourced manufacturing process.
Contact me with questions or comments.
David L. Cohen, Esq.
David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025