Outsourced Manufacturing and Trade Secrets: Controlling the Manufacturing Process (Part 8)

Outsourced Manufacturing and Trade Secrets: Controlling the Manufacturing Process by David L. Cohen

Last time, I discussed outsourced manufacturing as well as the process and personnel. Now, I continue the discussion by exploring control over transactions and products as it relates to IP protection.

Establishing and Maintaining Oversight

Requiring the manufacturer to maintain a designated facility for all work involving the transaction can reduce the risk of violations and simplify the monitoring and protection of the company’s IP. In all cases, the company should reserve the right to frequently audit the manufacturer’s facilities. If possible, the scope of these audit rights should extend enterprise-wide to ensure protection and containment of critical information.

The company should also consider appointing one or more company delegates to oversee key steps of the outsourced manufacturing process within the manufacturer’s facilities. This is the case even where the manufacturer’s employees, and not the company’s delegates, are responsible for the manufacturing activities. The company’s delegates also can serve in a quality control capacity.

Control Over the Final Product

Finally, if the company can control the distribution and sale of the products following manufacture, it may be in a position to better control the continuity of its business and limit the impact and ability of the manufacturer trying to set itself up as a direct competitor.

Next we will discuss trade secret-specific things a company can do to protect its crown jewels during the outsourced manufacturing process.

Contact me with questions or comments.

Related articles:

Outsourced Manufacturing and Trade Secrets: An Economic Overview

Outsourced Manufacturing and Trade Secrets: Outsourced Manufacturing

Outsourced Manufacturing and Trade Secrets: Risks & Benefits

Outsourced Manufacturing and Trade Secrets: Internal Controls

Outsourced Manufacturing and Trade Secrets: Due Diligence

Outsourced Manufacturing and Trade Secrets: Transaction Structure & Contract

Outsourced Manufacturing and Trade Secrets: Manufacturing Process & Personnel 

David L. Cohen

David L. Cohen, Esq.

David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025
dlc@davidlcohenpc.com 
(914) 357-5196

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