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The Manufacturing Agreement Clauses That Keep Your Trademark Yours

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Before you sign a contract manufacturing agreement, make sure it says four things in plain words: you own the brand name and logo, you own the artwork and the molds, the factory can't file for or use your name anywhere, and you control the quality of what goes out under it. At Citrus Legal, the trademark side of that starts with Grove, $2,600 flat for the search, the written opinion and the federal application in your company's name, plus $350 per class to the USPTO. The contract side is a separate, shorter job, and it's worth doing before the deposit clears.

Here's what I look for in a manufacturing agreement, and the terms that quietly give the brand away.

Why the agreement matters to the trademark at all

Trademark ownership in the U.S. follows control, not production. The USPTO's manual says an applicant can claim ownership of a mark "when the mark is applied on the applicant's instruction," including where "the applicant contracts with another party to have goods produced for the applicant." The party that decides what the product is and stands behind its quality owns the name. The factory doesn't become the owner by making the goods, and a party that only moves the goods "does not acquire a right of ownership in the manufacturer's or producer's mark merely because it moves the goods in trade."

That's the default. The agreement is where you either confirm it or accidentally undo it. The clauses below are the ones that decide.

Clause one: you own the brand, and the factory can't file for it

The agreement should name your company as the sole owner of the brand name, the logo and any product names, and say the factory won't apply to register them, or anything confusingly similar, in any country. That last part matters because the factory is often in a first-to-file country, where whoever registers first usually wins regardless of who built the brand. The article on a manufacturer registering your name in China covers what happens when that clause is missing.

It also matters at home. If the factory files the U.S. application in its own name, the application is void. The USPTO manual is direct: "If the applicant does not own the mark on the application filing date, the application is void," and "this defect cannot be cured by amendment or assignment." The only fix is a new application with a new date. The production run article explains why I file in the brand's name before the first order.

Clause two: the factory makes your product only for you

Call this the overstock clause. Without it, nothing in the agreement stops the factory from running extra units and selling them under your name, or selling the same product to another buyer with a different label. The agreement should say the factory makes the product only for you, ships only to you or your designated warehouse, and can't sell, donate or dispose of seconds, overruns or samples bearing your name or trade dress. Add a line that any excess inventory is destroyed or delivered to you.

This is also where a non-use and non-circumvention clause belongs: the factory can't use your specifications, artwork or name to make a lookalike for someone else, and can't go around you to your retailers.

Clause three: you control quality

The trademark law's definition of a "related company" is "any person whose use of a mark is controlled by the owner of the mark" with respect to the nature and quality of the goods. The USPTO manual says use by a related company "inures to the benefit of the party who controls the nature and quality," and that party "is the owner of the mark and, therefore, the only party who may apply to register the mark."

So the agreement should give you real quality control: specifications you set, the right to approve samples before each run, the right to inspect and reject, and a standard the product has to meet. Those terms aren't boilerplate. They're the facts that make you the owner if anyone ever asks. The article on licensing and quality control explains why a trademark owner who stops controlling quality can lose the mark.

Clause four: the artwork and the molds are yours, in writing

This is the one founders miss most, because it's copyright, not trademark. If the factory's in-house designer draws your logo, your packaging or your product's shape, copyright "vests initially in the author or authors of the work." The author is the person who drew it, unless the law's work-made-for-hire rule applies. That rule covers "a work prepared by an employee within the scope of his or her employment," meaning the factory's employee, which makes the factory the owner, not you. The second branch, for commissioned work, only applies to a short list of categories, and only if "the parties expressly agree in a written instrument signed by them." A logo isn't on that list.

The fix is an assignment. Copyright "may be transferred in whole or in part by any means of conveyance," so the agreement should assign to you all rights in any artwork, packaging design, product design files and tooling drawings the factory or its people create for you, signed by the factory. The same clause should say the molds, dies, tooling and masters are your property, paid for by you, labeled as yours, returned on request and never used for anyone else. The article on who owns a logo a contractor made walks through the assignment language.

The quiet terms that hand the factory your brand

A few things I've seen in supplier paperwork that undo all of the above:

  • The factory is the applicant. Some suppliers offer to "handle the trademark" as a convenience. If the application is in their name, it's their application. See clause one.
  • A license back to the factory. Language that lets the factory "use the marks in connection with the manufacture and sale of the products" without limiting "sale" to sales to you. That's a license to sell your product.
  • Joint ownership of designs. A line that improvements or designs developed "during the relationship" are jointly owned. Joint owners can each use the work. You want sole ownership.
  • No termination clause for the tooling. If the agreement ends and nothing says the molds come back, you'll be negotiating for your own tooling with a supplier you just left.
  • A governing law and venue you can't reach. If every dispute has to be heard in the factory's home court, the clauses may be right and still be hard to use.

Where the trademark work fits

The trademark filing and the manufacturing agreement are two different documents doing two different jobs. The filing gives you the federal right, in your name, from a filing date. The agreement keeps the factory from undermining it. Do both before the first run. The contracts page explains the flat-fee agreements we draft, and the brand contracts article covers the rest of the paperwork a new brand needs.

Seed is a $650 clearance search with a written opinion. Grove is $2,600: the search, the opinion and the federal application, with procedural Office Actions included. USPTO fees are separate, $350 per class.

Questions about your name? Email us at hello@citrus.legal, or book a paid 30-minute consultation (opens in a new tab) for advice on your specific situation.

Sources

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.

When you are ready to own it

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The search, the written opinion, the federal application and procedural Office Actions, for $2,600 or three payments of $950. Nothing is filed until you approve the search. If I call your mark low risk and the USPTO refuses it, I file again at no attorney fee.

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