Why Your US NDA Won't Protect You in China (And What You Need Instead)

It is the nightmare scenario for every inventor:

You spend 6 months designing a revolutionary new kitchen gadget. You find a factory in China, send them your technical drawings, and sign a standard Non-Disclosure Agreement (NDA).

Three months later, before you have even launched, you see your exact product selling on Alibaba for half the price.

You call the factory. They say: "We didn't sell it. Our cousin's factory down the street is selling it. We can't control them."

Your US NDA is useless. You have just lost your competitive advantage.

At Dark Horse Sourcing, we see this happen too often to good entrepreneurs. The problem isn't that China is "lawless"; the problem is that you used the wrong legal tool.

Here is why you need to stop using NDAs and start using NNN Agreements, and how our Product Patent Service keeps you safe.

 

The Problem: The "NDA" is a Western Concept

In the US or Europe, an NDA focuses on "secrets." It says: "Don't tell anyone my secret."

But in China, factories don't usually want to steal your secret; they want to steal your market. They want to use your molds and your designs to manufacture products for themselves or your competitors.

A standard NDA often fails to stop them from:

1. Using your molds to make extra units during the "night shift."

2. Selling your "rejects" (seconds) out the back door.

3. Recommending your product to their other clients.

 

The Solution: The "NNN" Agreement

To truly protect your IP in China, you need a contract written in Chinese, enforceable in Chinese courts, covering three specific pillars. We call this the NNN Agreement.

1. Non-Use (不使用)

This is the most important part. It says the factory cannot use your design, your technology, or your molds for any purpose other than manufacturing products for you. If they make 5,000 units, they must ship 5,000 units to you. They cannot keep 50 units to sell on Taobao.

2. Non-Disclosure (不披露)

This is the traditional "secret" part. It prevents them from sharing your files with subcontractors without your permission.

3. Non-Circumvention (不规避)

This is critical for working with sourcing agents like us. It prevents the factory from trying to cut you out. They cannot look up your customers on the shipping label and contact them directly to offer a lower price. It secures your supply chain.

 

Don't Just Sign Papers—Check the Database

Contracts are great, but prevention is better.

Before you even pay for a mold, you need to know: Does someone else already own this design?

Many sellers unknowingly infringe on existing Chinese patents. If you do this, your goods could be seized by Chinese Customs before they leave the country.

This is where Dark Horse Sourcing's specialized Product Patents Service comes in.

Unlike other agents who just "Google it," our team performs a professional search:

1. CNIPA Search: We check the China National Intellectual Property Administration database to ensure your "new idea" hasn't already been patented by a Chinese company.

2. USPTO/EUIPO Search: We verify the patent status in your target markets.

3. Patent Registration: Once we confirm the design is unique, we can help you register the Design Patent in China under your name. This gives you the legal power to shut down copycats on Alibaba or 1688.com.

 

How Dark Horse Protects You (The Workflow)

We integrate IP protection into our sourcing process from Day 1:

1. The "Blind" Inquiry: When we first contact factories for quotes, we often don't reveal the full design. We use a simplified version to gauge interest.

2. The NNN Signing: Before we send the full CAD/3D files, we require the factory to chop (stamp) the NNN agreement.

3. The "Blacklist" Check: We cross-reference the factory against our internal database of suppliers known for IP theft.

4. Mold Ownership: We ensure the contract explicitly states that YOU own the molds, not the factory. If you want to switch suppliers later, we can legally move the molds.

 

Conclusion: Value Your Idea

Your product idea is your business's most valuable asset. Don't leave it unprotected with a generic NDA template you downloaded from the internet.

Work with a partner who understands the legal landscape. At Dark Horse Sourcing, we protect your Intellectual Property as fiercely as we protect our own.

Have a product idea you want to manufacture safely? Contact us to learn more about our Product Patents & IP Protection services.