Got an email the other day from an attorney seeking help for a client. Client (Company A) was interested in suing one of the online customs/sourcing sites for having broken out by name all of the Chinese companies from whom Company A bought its Chinese product. Company A was (rightfully) in a panic about its United States customers learning from whom it was getting product and then watching as those US customers went around Company A and purchased the product directly from the now-listed Chinese suppliers.
Company A is convinced that the site which is providing the names of Chinese suppliers (for a fee) is doing so illegally and Company A wants to sue. I suggested that what Company A should have done (and should still be doing) is to require its Chinese suppliers sign an OEM Agreement that forbids them from dealing directly with any of Company A’s US customers. I also suggested Company A consider having its US customers sign an agreement agreeing not to go around Company A by going direct to its Chinese suppliers.
I then explained how it might not make economic sense to try to enforce such a provision against the Chinese companies, but that they still can be quite effective because they can be used to threaten any US company with a lawsuit for tortious interference with a contractual relationship. In other words, if the US company starts trying to deal directly with the Chinese supplier, Company A can point out to that US company that it has a contract with the Chinese company that forbids the Chinese company from dealing directly with the American company and if the American company is going to interfere with that contract, Company A will sue it. Tortious interference with a contract is a valid tort claim in the United States.
I am not saying such a provision is going to guarantee you will not have problems with companies seeking to go around you, but I know these provisions have been used to prevent these sorts of circumvention and I also know that without such a provision, you do not stand a chance, unless maybe you want to sue the messenger.

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.

  • The problem here is that unless you are Apple Computer, I can’t imagine why an Chinese OEM would want to sign this sort of agreement.
    The other thing is that if you hit them with tortious interference with a contract, they could hit you back with restraint of trade and anti-trust. If you sign an agreement with one OEM, then the agreement is likely to be ineffective. If you sign an agreement with all of the manufacturers of a product not do to business with your competitors, you start running into anti-trust issues.

  • Henry, Chinse lawyer

    The OEM agreements I reviwed for my Chinese clients can be devided into two groups based on who have the design or IP right. If the foreign buyer brings the design to the supplier to OEM, there are provisions prohibiting supplier from manufacturing any OEM products outside the orders of the buyer. If contrary, the supplier will not agree unless the buyer promises minimum orders satifying the supplier.
    As my understanding, such prohibting provisions are mainly decided by the IP situation and balance of business powers of the parties.