Just fired off the same email I’ve probably sent at least two dozen times. It was in response to someone who just realized that their Chinese manufacturer or potential manufacturer had used confidential or trade secret information.
Here’s the email to me (changed to get rid of any identifiers):
I had my Chinese factory sign a non disclosure agreement and I just learned that they copied my product and are selling it to two of my competitors. I am still buying product from them. What should I do? I want to sue them.
Here’s my pretty much standard response:
I suggest you send me a copy of the NDA that your factory signed. If it is in Chinese and provides for litigation in China and was sealed/chopped than you are likely in quite good shape. If it contains a provision making crystal clear what the exact dollar/RMB penalty is for a violation, all the better. But if you just used an off the shelf American version of an NDA, than doing anything on this would almost certainly be a waste of time. If your NDA provides for suing in the United States, that will be even more true. I should also note that if it just provides for the manufacturer not revealing trade secrets (as opposed to selling your product to others) your likelihood of winning a case will be reduced. In the meantime, I suggest you read the following about China NDA/NNN Agreements:
- Why Non Disclosures (NDAs) Alone Are Not Enough For China.
- Why Non Disclosures (NDAs) Alone Are Not Enough For China, Part II. At Least Make It Enforceable.
- China NNN Agreements. Watching The Sausage Get Made.
Almost without exception, we hear nothing further, which is fine since it is always easier to deliver bad news by email as opposed to by phone.