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Will a factory making a patented product also make knock-offs?

On Behalf of | Mar 10, 2023 | Patents

Securing a patent protects an inventor or a business invested in a product from unfair competition. After prosecuting a patent, the creator or the company that purchased the concept will have the sole right to its use and control over who else can use the idea. New ideas subject to patents won’t be lawfully accessible to competitors without enforceable legal agreements in place.

In the event that infringement occurs, the process of enforcing a patent often takes a year or longer and can cost thousands of dollars. Of course, this investment is often worthwhile because it protects the rights of the patent holder. Having the right to use a concept is only the first step. A business also generally desires to actually manufacture goods per the specifications of the patented concept and market those goods. If infringement compromises a company’s ability to accomplish these aims in a competitive way, that can render a patent virtually useless.

As a result of this reality, many companies understandably hesitate to work with outside manufacturers. If their intellectual property isn’t safeguarded to an adequate degree, their entire business model could be placed in jeopardy. Therefore, it is understandable that company leadership may wonder whether utilizing the services of an outside facility could lead to patent infringement.

There is a long history of factory knock-off products

Although some kinds of intellectual property protections are international, including patents, actually enforcing rights across international boundaries can be quite difficult. Many inventors and startup businesses have learned the hard way that the cheap offshore factory they hire to manufacture their product might also start selling a knockoff version of their patented product for a fraction of the price online.

Such issues can be hard to resolve depending on the country in which fabrication occurs. In some cases, the same factory working for a company might simultaneously infringe on its patent. Other times, factories with access to patented processes or information might share it with other manufacturers for a price.

The easiest way for a business to protect against issues involves either domestic fabrication or careful contract inclusions, ideally both. It is possible to include terms in a contract with a manufacturer to prevent the misuse of intellectual property and impose harsh penalties should have violation occur. It will also be easier to go after a factory in North America violating a domestic patent than one on the other side of the world.

Businesses need to address all risk factors when manufacturing sensitive innovations. For an organization to remain profitable, it will need to identify and address any issues that could lead to unfair competition or diminish the return it anticipates on its investments. Proactively protecting intellectual property when manufacturing physical products is crucial for any company that is hoping to turn a patented concept into a revenue stream.