NNN agreements

A type of agreement common with contract manufacturers, OEMs, subassembly manufacturers and component suppliers, especially in China to prevent or limit backdoor sales and knockoffs emerging from those entities or related companies. The three Ns refer to the key elements of the NNN Agreement, non-disclosure, non-use and non-circumvention.  NNN Agreement differ from trade secret agreements or normal non-disclosure agreements in that they do not require an underlying trade secret but rather make the business relationship consideration for the obligations the OEM and its affiliates and suppliers enter into. Typically this part of the overall business arrangement is a contract written in Chinese, governed by Chinese law and enforceable by Chinese courts

Non-use obliges the OEM not to use the disclosed ideas, concepts or products in a way that competes with the disclosing party. Non-Disclosure prohibits disclosure to any party, including any related parties or members of the same business group for any purpose other than the supply of the contract goods or products to the disclosing party. Non-Circumvention prohibits the OEM or any member of its group (including companies related through common family ownerships, etc.) from circumventing the disclosing party’s sales channels to offer the product through other routes.