Question
We have been manufacturing and selling our product within the US for 11 months. Now a European company wants to manufacture our product and offers royalty payments per manufactured item. How can we make sure that 1.) we don't lose any IP in our own product by letting the overseas company manufacture it, and 2.) we are getting paid based on the correct number of manufactures items (how can we establish "trust")? What is the best way to do this deal? The company in question is based in Italy.
Answers: 2 public & 0 private
The question is more business oriented than legal at my point of view.
You provide no information about if you have a patent or if even you can receive one for your products. So I will not develop this point without more information from you, and even a trade secret is acceptable both in US and in Europe.
So I guess that the problem is mainly about the trust and how to build through a contract this trust.
So there are plenty ways to touch this goal by adding specific contractual clauses with free access to accounting or companies who provide specific material to build the item.
The best way is still to keep a exclusivity in the manufacturing of one specific part of the item and to provide it to the European company. Then to request another European company to buy from time-to-time a commercial item manufactured to check if the specific piece of the item is yours.
Depending in the kind of item you build, we can maybe help you to realize this project.
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