The reason is that, while the agreement is entirely appropriate for the United States, it is not enough to address the unique challenges that you, as a U.S. company, can face in cooperation with Chinese producers. If you include in your NNN agreement an arbitration clause, the Chinese manufacturer will most likely argue for arbitration and say that the Chinese court has no right to rule on your case without both parties being adjudicated. If you prohibit a Chinese factory from using your protected information, the Smart Chinese Unit does not directly violate the non-use ban; instead, it will reveal the concept to someone in its “group” and then deny violating the non-use ban because it did not directly use the protected information. For this reason, it is important to understand the type of group with which you are dealing and to specify in writing that: 1) disclosure is expressly prohibited within the group and 2) if a member of the group is violated, the factory that made the disclosure is held responsible. The non-circumvention clauses of the agreement prohibit the Chinese manufacturer from copying your product, bypassing your business and selling the product directly to your own customers. The next “N” in a Chinese agreement on the NNN is secrecy. In most cases, you don`t have to pay attention to your Chinese counterpart making your secrets public. The Chinese factory generally has no interest in leaving the general public to its good cause, as it generally wants to use your idea or concept for its own purposes. But as we mentioned above, this is usually all that a standard NOA can accomplish, and it generally cannot do so even in a Chinese context.
This does not mean that the privacy rules in China have no value. It simply means that confidentiality rules must be coupled with other legal safeguards to be fully effective. More importantly, if your NNN agreement is to be applied in a Chinese court, but it is not in Chinese, the Chinese judge should order a translation of your agreement. The non-use clause contained in an NNN agreement means that the company with which you sign the contract cannot use the product for purposes outside the contractual purpose. It makes sure they don`t use your product or idea to compete with you. You cannot sell your product to your competitors or competitors. An NNN agreement must contain a specific contractual injury clause that a Chinese court can and will enforce by ordering the seizure of the defendant`s property. However, care is necessary, as China`s judicial system does not allow punitive damages and does not allow for substantial consecutive damages. It is therefore important to set contractual damages at a level that adequately compensates for the damage resulting from an infringement. I need a certified Chinese lawyer who can write me a legal agreement on China, called confidentiality agreement, non-use, non-circumvention. The written language is Chinese with its English translation. The agreement should focus on this point: because of your signature on the document, it means the approval of all changes, whether you know them or not.
Second, the NNN agreement must be drafted in such a way that the Chinese company is genuinely concerned that its violation of the agreement will have direct and negative consequences.