Tooling Ownership Agreement

Attached is a form version of the Tool Ownership Agreement for your use. You can use it in the future with all your existing and potential factories, although we have to modify it slightly depending on the country, and of course, we also have to change it according to the agreement you make with each of your factories. This agreement is intended to cover all possibilities related to the source of the tools: factory manufacturing, third-party manufacturing or tools that you provide. One of my law firm`s international manufacturing lawyers recently entered into a model tool ownership agreement [Mold] for one of our clients whose products are manufactured in factories in several countries. This tool ownership agreement is essentially a model for that customer, and it still needs to be specified for that customer`s different tools or for the different countries to which their tools are sent. This customer is in the process of diversifying its suppliers. The following is an email we sent to this customer, heavily modified to hide all credentials, and shortened for convenience. Please note that our goal with this email was to give the customer a standard framework that can be used when discussing tool ownership with their different factories. This email is not intended to expose everything that should be included in a tool ownership contract. I am directing it here to give an idea of what goes into the most fundamental and general international agreement on the ownership of tools. This document is not suitable for a specific relationship or even a specific country. This document only covers the issue of ownership after payment of all fees.

It does not address the issue of payment design or structure. It should only give you and your employees a framework for initial discussions with your existing and potential factories. In addition to this tooling agreement, we also provided our client with a tool description inventory form to keep track of the tools provided. Each tool item is listed separately in a tool log (Figure 1) with the agreed cost of the item. This tool folder applies to both existing tools at the time of this Agreement and new tools manufactured or purchased at any time in the future. When a new tool item is purchased or delivered, each of these new tool items is entered into the tool set. CONTRACTOR AND _____ will work together on preparatory tasks for the possible manufacture of specific products for __. As part of this preliminary cooperation, the CONTRACTOR will manufacture certain tools in its own factory or purchase them from third parties. Tools should include: luminaires, luminaires, equipment used in the manufacturing process. In addition, the term tooling includes the DFA (Design for Assembly) documentation for the contractor, which refers to the layout of the assembly line and the physical assembly of the product.

The procedure for processing these tools is provided for in this Agreement. ____ can also purchase the tools necessary for the manufacture of the product and make these items directly available to the ENTREPRENEUR. Such purchased items will be treated as tools and will be treated as provided in this Agreement. ____ is the owner of the design and content of the tool and all intellectual property related to tool manufacturing. By this Agreement, the CONTRACTOR transfers all intellectual property to ____. The CONTRACTOR may not use the design of the tooling or any other intellectual property in connection with the tooling for any purpose whatsoever. The CONTRACTOR may not register any intellectual property in connection with the Tools in China or any other country. Failure to provide ____ tools as specified above constitutes a breach of this Agreement. In the event of such a breach, in addition to the contractual damages ____ mentioned above, the CONTRACTOR shall be liable for all actual damages resulting from such a breach. These damages include, but are not limited to: the costs of transporting replacement tools to a new location, the costs of manufacturing replacement tools and recycling a new ENTREPRENEUR, lost profits due to missing tools. The tools can be purchased by the ENTREPRENEUR by internal production or by purchase from third parties.

In some cases, the tools can be provided to the CONTRACTOR directly from ___. In any case, the tool is the property of the ___ and is treated as shown below. This Agreement shall be governed by and construed in accordance with the laws of ___ All disputes under this Agreement shall be resolved by a dispute in the court of competent jurisdiction with respect to the defendant. The successful party in a court case has the right to recover from the other party his or her reasonable attorneys` fees, costs and necessary expenses. In addition, _______ has the right to obtain the seizure of the contractor`s property prior to the judgment as security for the payment of the judgment and costs. This Agreement is written in English and ____________. In the event of a dispute, the original of this Agreement shall prevail over ____ The amount of such contractual damages shall be 125% of the cost of replacing each of these tooling items, as indicated in the tool log. The amount of damage is due and payable immediately if the CONTRACTOR does not provide the requested tools. The design and content of the tool is treated as confidential information. The CONTRACTOR may not transmit this confidential information to third parties. If the tool is manufactured or designed by a third party, the CONTRACTOR must ensure that this third party treats the design and other information provided as confidential information and that the third party protects the confidential information under the same conditions as the CONTRACTOR. If the third party violates these provisions, the CONTRACTOR will be liable for all resulting damages.

THE CONTRACTOR may not use the tools or confidential information for any purpose other than the manufacture of the product for ___. Any use of the Tools to manufacture Products by the CONTRACTOR or to sell Products to third parties other than ___ constitutes a breach of this Agreement. _____ has the right, at any time and for any reason, to request that a tool element be made available. Upon receipt of the notification, the CONTRACTOR must make these tools available for collection at its own expense ____ within ten (10) working days at the premises where the tool is located. ____ shall retrieve the tool at the appropriate location and bear all the costs of such collection and loading, but the CONTRACTOR shall ____ provide appropriate assistance if necessary. For FDFA and similar documents, a digital copy of these documents shall be made available to ___ within one day of the request for these FDFA documents by __. All tools in the possession of the CONTRACTOR shall be clearly identified as the property of ____ by a permanent method appropriate to the purpose of the specific tool in a form to be agreed by the parties. The CONTRACTOR is responsible for the maintenance of all tools and maintains all tools in good condition. The CONTRACTOR is responsible for all damage to the tools, with the exception of damage resulting from normal use.

If the CONTRACTOR procures tools on behalf of __, ____ must provide the Contractor with the confidential specifications necessary for the manufacture of these tools. The parties agree in advance (a) which entity will prepare the design of the tool and (b) the cost of designing and manufacturing the tool and (c) the method of payment of these costs. After payment of the costs incurred, ____ is the owner of the tool. Regardless of the payment of fees, ____ is the owner of the design of the tools and all related intellectual property in accordance with Article 2 above….