Reading time: 3 minutes

During the manufacturing process, you will most likely provide your manufacturer with detailed specifications, trade secrets, intellectual property and other information that you would not want on-sold or used inappropriately. Your Manufacturing Agreement should then comprehensively outline any issues relating to intellectual property and confidential information.

Mutual Confidentiality Clause

Typically, Manufacturing Agreements will include a mutual confidentiality clause that sets out that neither party will use each other’s confidential information except as required under the Agreement. It also provides that each party will not disclose confidential information to external parties.

License v Assignment

If you are the customer, you should confirm the Agreement says that you are only licensing and not assigning the material to the manufacturer, and it is for the purpose of creating the product only. Notably, the customer needs to ensure that they own the product’s intellectual property or that they have the appropriate license.

You are also able to include more specific obligations in the Agreement. For example, the manufacturer must return the materials when the relationship ends.

Confidentiality Agreement

Before signing a Manufacturing Agreement, both parties should strongly consider entering into a Confidentiality/Non-Disclosure Agreement. This document ensures that during preliminary discussions, both parties protect their confidential information. It can sometimes be difficult when working closely with a manufacturer to develop a product who owns what intellectual property. The Agreement should address this to avoid any potential disputes later down the track.

How Can the Manufacturer Use the Intellectual Property?

Your Agreement should set out how the manufacturer can use the intellectual property. For example, setting out that they must comply with reasonable requests as to how they can use the material and taking reasonable steps to prevent the infringement of your intellectual property rights.

You may also consider applying to register your design or patent rights with IP Australia. This best places you to protect your intellectual property before it is disclosed or licensed to the manufacturer. 

Similarly, manufacturers particularly in the Research and Development space, commercialise their product before considering a patent application, at which point it is often too late because their product is in the public domain. 

Of note, both parties are interested in protecting their intellectual property so it is commercially sensible to discuss this at the outset of drafting and negotiating your Manufacturing Agreement. 

Conclusion

Unquestionably, your product’s intellectual property and any associated confidential information is paramount. If you are the customer, then you should then take steps to ensure that you adequately protect your rights in your Manufacturing Agreement.

LegalVision’s lawyers have extensive experience drafting these agreements as well as Distribution and Reseller Agreements. So if you are in need of legal advice, or if you have any questions, please contact LegalVision on 1300 544 755 and speak with one of our experienced solicitors today!

Webinars

Construction Contract Essentials

Thursday 12 August | 11:00 - 11:45am

Online
Understand how construction contracts are drafted and how to protect your construction business.
Register Now

Startup 101: Understanding Cap Tables and ESOPs

Thursday 19 August | 11:00 - 11:45am

Online
Cap tables and employee share option plans are essential for fast-growing startups. Learn more with this free webinar.
Register Now

Expanding to NZ: Structuring Your Business For Success

Thursday 26 August | 2:00 - 2:45pm

Online
Launching a business in New Zealand? Understand how to structure your business for success with this free webinar.
Register Now

Preventing Modern Slavery: Your Business’ Legal Obligations

Thursday 9 September | 11:00 - 11:45am

Online
Are you an Australian business with $100m+ annual consolidated revenue? Learn how to determine if you are a modern slavery reporting entity and your obligations under the legislation with this free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer