China Non Disclosure Agreements: Please do Not Try This at Home

Protect your IP from China with an NNN Agreement
Protect your IP from China with an NNN Agreement

United States companies all too often make the mistake of trying to protect their intellectual property from China by using a U.S. style non-disclosure agreement (NDA). These agreements do not work for China. Chinese companies know this and so they willingly sign them.

U.S. style NDAs focus on preventing disclosure of trade secrets to the public and they are written in English, subject to U.S. law, and exclusively enforceable in a U.S. city. These things all make complete sense if you are looking to stop an American company from revealing your trade secret, but this kind of NDA is of no value when dealing with your typical Chinese company based in China.

None.  

First off, the fundamental issue when dealing with a Chinese company is not protecting your trade secret from being disclosed to the general public. The Chinese company that wants to steal your idea does not want to do so to reveal it to the general public; it steals your idea to use for its own benefit. This means your non disclosure contract with your Chinese counter-party must make clear that whether the information you provide is a trade secret or not, the Chinese company cannot use that information in competition with you.

The other fundamental problem with U.S.-style NDA agreements is that it they are not enforceable in China. Chinese law allows for protecting trade secrets and for contracts that provide NNN protections. But for such a contract to be effective and enforceable in China it should be written in Chinese, governed by Chinese law, and exclusively enforceable in a Chinese court. See China Contracts That Work.
Do not use a U.S. style non-disclosure agreement. Instead, use an NNN (non-disclosure, non-use, non-circumvention) agreement written to be enforceable in China. For all that entails, check out China NNN Agreements.

This article was written by Dan Harris and published on China Law Blog. Original Post: https://www.chinalawblog.com/2018/03/china-non-disclosure-agreements-please-do-not-try-this-at-home.html      

View the original article here.

Dan Harris

Dan Harris is internationally regarded as a leading authority on legal matters related to doing business in China and in other emerging economies in Asia. Forbes Magazine, Business Week, Fortune Magazine, BBC News, The Wall Street Journal, The Washington Post, The Economist, CNBC, The New York Times, and many other major media players, have looked to him for his perspective on international law issues.