What to do when your contract manufacturer becomes your competitor?

What to do when your contract manufacturer becomes your competitor?

Some Contract Manufacturers also design, produce, assemble and distribute, i.e., they more or less cover the complete gamut of the business. There are disadvantages to this arrangement, some are: Your competitor may get to know your IP / technology edge /designs.

What happens if you interfere with a competitor’s contract?

This is known as tortious interference with a contract. In your case, the non-competition agreement is a contract. If you interfere without justification, your competitor may have a claim against your for tortious interference with the non-competition agreement.

Can a competitor hire an employee from your company?

As a general rule, an employer cannot hire a competitor’s employee to obtain trade secret information or customers accounts. In addition, an employer cannot induce an employee to breach a non-competition agreement for an improper purpose.

What are the disadvantages of a contract manufacturer?

There are disadvantages to this arrangement, some are: Your competitor may get to know your IP / technology edge /designs. Further, you will have to share some of your IP with the Contract Manufacturer. The contract manufacturer may use your designs, IP and confidential information to make their own products and launch the same in the market.

Are there dangers of having an independent contractor sign a non-compete agreement?

Coupled with the possibility of re-classifying the independent contractor as an employee, the risks often outweigh the benefits of having an independent contractor sign a non-compete agreement. An independent contractor is expected to work for other businesses and have multiple contracts.

Can a contractor work for more than one company?

An independent contractor is expected to work for other businesses and have multiple contracts. Additionally, he or she is more likely to be an expert in the field and, therefore, may work for a number of companies at the same time in the same industry.

What should be included in an independent contractor contract?

The written contract may include information about who the independent contractor can provide work for. Some clients may include non-competition agreements with documents and agreements with independent contractors.

Can you delegate work to another independent contractor?

They may be able to delegate work to others. When determining the rights and responsibilities of an independent contractor – including whether or not the independent contractor can work for a competitor or other client – the written contract between the parties is the first thing to consult.