China NNN Agreements: What To Do After You Get One Signed

Foreign companies (new to our law firm) often contact us for help because a Chinese company has “violated our Non Disclosure Agreement (NDA).” Nine times out of ten, their NDA is not worth the paper on which it has been printed and we tell them that we cannot help them. For why this is so often the case, check out China NDAs/NNN Agreements. What You/We Need To Know and China NNN Agreements. Watching The Sausage Get Made.

We seldom can help in the other one out of ten either because the foreign company has not acted in accordance with its own NDA or NNN Agreement. I thought about this the other day when I received a fairly standard email we send to our clients for whom we have drafted an NNN Agreement. In this email, attached to which we provide our NNN Agreement (in Chinese as the official version and in English for our client) and an Acknowledgment of Receipt for the confidential information, we also remind them of the need to abide by the agreement. Abiding by the agreement in most cases means being clear to the Chinese company about what information is confidential and making sure to maintain the confidentiality of that information with everyone who has not signed an NNN Agreement. Here is that email:

For your review, attached please find an NNN Agreement for use with a generic Chinese counterparty, along with a separate Acknowledgment of Receipt to track the confidential information you send. Both documents are fully translated into Chinese. Once you determine the identity of the Chinese counterparty, you will want to modify these documents as described in my previous email.

Note also that executing this agreement is just the first step in protecting your IP. It’s also important for everyone on your team to act in accordance with the agreement. If you share confidential information with a Chinese entity, make sure you also mark that information as confidential, keep track of it, and take measures to ensure that it will remain confidential.

The above are some pretty basic rules for NNN Agreements and confidentiality, but far too few actually follow them.

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We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.