A Manufacturing Services Agreement establishes how a manufacturer will produce goods on behalf of another party, often covering quality, delivery, and intellectual property. This playbook highlights negotiation tactics for pricing, warranty coverage, and supply chain continuity.
Why This Matters: Maintaining confidentiality and clear IP rights preserves competitive advantage and avoids misappropriation disputes that could be costly and reputationally damaging.
Negotiation strategy
If you're the Company:
Ensure that the confidentiality clause includes specific obligations for the Contractor to protect proprietary information. Clearly define IP ownership or licensing terms, specifying what rights are granted or retained.
If you're the Contractor:
Negotiate for clear terms on the use of proprietary information and ensure that any IP created under the agreement is owned by the Contractor unless otherwise specified.
Essential elements
1
Confidentiality Obligations
Protects proprietary information.
2
Data Handling Protocols
Ensures secure data management.
3
IP Ownership Terms
Defines rights and ownership.
Action framework
ACCEPT
Propose edits if the clause lacks specific data handling protocols or clear IP ownership terms.
EDIT
Reject if the clause fails to protect proprietary information adequately.
ADD
Add language if confidentiality or IP rights are not addressed.
PRO TIP
Always align confidentiality and IP clauses with the company's policies and applicable legal standards.
Example clauses
FAVORABLE
Strong Confidentiality and IP Clause
"Each party agrees to maintain the confidentiality of the other party's proprietary information and to use such information solely for the purposes of this agreement. All intellectual property rights in any materials or information provided by one party to the other shall remain the property of the providing party, unless otherwise agreed in writing."
NEUTRAL
Basic Confidentiality Clause
"The parties shall not disclose any confidential information to third parties."
UNFAVORABLE
Weak IP Rights Clause
"Intellectual property rights are not clearly defined, leading to potential disputes."
Fallbacks
High-Risk Projects
In high-risk projects, ensure that confidentiality and IP clauses are robust to protect against significant financial and reputational damage.
Cross-Border Agreements
Consider jurisdiction-specific requirements, such as GDPR in the EU, to ensure compliance and avoid regulatory penalties.
Joint Ventures
Clearly define IP ownership and licensing terms to prevent disputes over jointly developed intellectual property.
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