Every couple of months, someone calls or emails one of our manufacturing lawyers for help in “getting their molds” back from their overseas manufacturer. Whenever a foreign company terminates its manufacturer, it is at great risk of having the manufacturer keep the foreign company’s molds. The manufacturer typically holds on to the molds to extract money from the foreign company, but sometimes it does this simply for revenge.

We have not once pursued any claims against an overseas manufacturer for the return of molds because none of the people who have contacted us had contracts good enough on which to base a lawsuit. On the flip side, our mold contracts have always worked so as to prevent the overseas manufacturer from even trying to hang on to our client’s molds.

How can you achieve that sort of result?

The way to avoid having your manufacturer run off with your molds is to make sure you require the manufacture to sign (and seal) a contract that makes clear to whom the molds belong (to you) and what will happen to the manufacturer (specific damages) if it fails to return your molds to you. It is also critical that your contract be written for the legal system for the country in which your manufacturer is located, and not a U.S./British common law system.

Even better, you should, if possible, get a deposit for your molds, which deposit you will return when your molds are returned to you. If your manufacturer will not give you a deposit for your molds, (most will not), put in a liquidated damages provision that applies if your mold is not returned when specified. That provision alone goes a long way towards taking away any incentive for your manufacturer to hang on to your molds.

When we are retained to draft a stand-alone mold agreement or when we put a mold provision in an OEM Agreement, we usually start out by sending the following questionnaire to our client, which in turn is typically followed by a subsequent set of more specific questions:

  1. Please provide a 1-2 paragraph description of what you will be doing that will be covered by this mold agreement. This is essential: we need to know, in layman’s terms, what is going on
  2. What kind of items will be the subject of the agreement: molds, tooling, equipment?
  3. Where will the tooling be located? One manufacturer? Numerous?
  4. Do you have a direct relationship with the manufacturer, or are you working with an intermediary (sourcing agent or similar)?
  5. What agreements are now in place concerning the basic business relationship with the various parties? If you have any written agreements, please send them.
  6. Does the tooling already exist?
  7. What will be the source of the tooling? Will the manufacturer design and manufacture the tooling? Will the manufacturer purchase from others? If yes, under what kind of agreement? Will the tooling be contributed to the manufacturer by the buyer? By the buyer’s agent? Some other entity?
  8. What will be the method of payment for the tooling, and who will pay?
  9. Who will design the tooling? In what form will the design be provided to whoever will manufacture the tooling?
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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.