Protecting IP in Foreign Manufacturing

May 13, 2015
Categories: Compliance, Counterfeit, Intellectual Property, IP Protection

It is particularly important to ensure an overall IP protection strategy is implemented when operating in new markets.

Companies can start by understanding an IP management system in the context of other business processes used to run their company. It may be possible to incorporate an IP protection system into existing operations to create integrated management systems. For instance, many manufacturers are already familiar with quality management systems—characterized by standards such as ISO 9001—which provide a standard for companies to meet and associated tools and guidance to improve their quality requirements. CREATe has experience helping companies to integrate IP protection into existing management systems, including ISO 27001, the information security standard.

Case study: Protecting IP in a New Manufacturing Plant in Mexico
CREATe works with companies around the world to ‘measure and improve’ the management systems that they have in place to address IP protection issues.

In one case, a US precision metal part manufacturer sought direction on how to ensure their IP was protected at a new company-owned factory they were opening in Mexico. The company’s manufacturing processes are based on highly sensitive technology, some of which is patented or considered trade secrets. They also receive valuable IP, including process know-how and other trade secrets, from their customers. Yet, they did not have an overall IP protection management system. However due to their nature of their business, the company has a very sophisticated quality management system. Working with CREATe, the manufacturer’s senior management realized that they could integrate much of the IP protection program onto their existing quality management system. They formed a cross-functional IP compliance team in the U.S., led by the quality manager and the IT security manager. The team developed more comprehensive IP protection policies and procedures. The company has started to form a team at the new facility in Mexico, and has begun to localize company policies and procedures saying:

We have received much value from your program. I will be at our facility in Mexico next week and will call a meeting with our new IP Protection Team to review the latest recommendations from and plan our next steps.

 – US Precision Metal Part Manufacturer

Being able to demonstrate a strong IP protection program can be an important competitive advantage for a manufacturer, in particular it makes the company more attractive in IP-intensive industries.

IP Vulnerabilities in Manufacturing
Intellectual property problems in manufacturing often arise from poorly managing access to confidential information or when companies lose control of their IP and how it is used. This commonly happens when showing or sharing a company’s prototypes and pre-release products with other companies, perhaps potential investors or suppliers. However providing access to these products can make them susceptible to infringement by competitors, particularly if access is not strictly controlled.

Other problems occur with unauthorized use of tooling and overproduction of manufactured goods for financial gain. This generates additional monitoring issues as production flows need to be examined for abnormalities indicating unauthorized product runs.

By taking a proactive approach to integrate IP protection into business operations, companies can reap the benefits offered by new markets and, importantly, share leading practices with companies in these regions and raise the bar on business practice.

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Related CREATe Resources:

CREATe – PwC Trade Secret Report: Economic Impact of Trade Secret Theft

Protecting Intellectual Property Through Enterprise Risk Management

Building on IT Security for Effective IP Protection

Whitepaper: Health and Safety Risks of Counterfeits in the Supply Chain


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