NNN Agreement (Non-Disclosure, Non-Use, Non-Circumvention Agreement)

An NNN agreement is a hybrid contract used when a research institution, inventor, or company discloses confidential technical information to a prospective foreign manufacturing or licensing partner — most commonly a China-based contract manufacturer or supplier — and a bare confidentiality clause is judged insufficient protection. It stacks three separate obligations on the recipient rather than one: Non-disclosure, Non-use, and Non-circumvention. A standard confidentiality agreement (NDA) only really covers the first of these.

The three protections

• Non-disclosure — the recipient may not share the disclosed information (specifications, drawings, formulations, source files, business terms) with third parties. This is the clause an ordinary NDA already provides.
• Non-use — the recipient may not use the disclosed information for any purpose beyond the stated one, such as manufacturing and selling a copycat version of the product itself, or reverse-engineering a process from the specifications it was given to quote a manufacturing job.
• Non-circumvention — the recipient may not go around the disclosing party to deal directly with that party’s downstream customers, distributors, or other business contacts introduced in the course of the relationship.

Non-use and non-circumvention address two of the most commonly reported risks in cross-border manufacturing relationships: a manufacturer producing and selling unauthorized units of the same product (“ghost shifts” or unauthorized overruns) once it has the specifications, and a manufacturer bypassing the original disclosing party to sell directly to its customers once it has been introduced to them.

Why a standard NDA is often not enough

An NDA drafted for a domestic relationship — and enforceable through a domestic court — frequently does not translate into effective protection when the counterparty is based in a different jurisdiction, particularly one where a foreign judgment or foreign-language, foreign-law contract is difficult or impossible to enforce locally. Two specific gaps are commonly cited by IP practitioners working on China-facing manufacturing deals:

• A confidentiality-only clause says nothing about use of the information for a competing product, so even a manufacturer that never discloses anything to a third party can still legally (under the terms of a bare NDA) build and sell its own version.
• A contract written in English, governed by a foreign country’s law, and naming a foreign court as the venue is often not directly enforceable in a Chinese court — which is usually where enforcement would actually need to happen, since that is where the manufacturer, its assets, and any infringing production are located.

An NNN agreement is designed to close both gaps: it adds the non-use and non-circumvention obligations an NDA lacks, and it is typically drafted to be directly enforceable in the jurisdiction where the counterparty actually operates — for China-facing agreements, that generally means a bilingual (Chinese-language-controlling) contract, Chinese governing law, a Chinese court as the named venue, and a liquidated-damages figure stated in RMB, since a foreign-currency or unliquidated damages claim is harder for a Chinese court to enforce quickly. This is standard, widely repeated guidance from IP and China-trade counsel, not a CASRAI-specific recommendation, and it is exactly the kind of jurisdiction-specific drafting a research institution’s technology transfer office (TTO) or general counsel — working with local counsel where needed — should own, not something to adapt from a generic template.

When a research institution needs one

The scenario recurs in university and inventor technology transfer whenever a licensed technology or invention needs to move from lab bench to physical product through a foreign contract manufacturer: an institution disclosing prototype specifications, formulations, or engineering drawings to a prospective overseas manufacturer as part of getting a manufacturing quote; a spinout company sourcing initial production runs before it has its own manufacturing relationship secured; or a licensee introducing the university’s inventor or licensing office to a manufacturing partner as part of commercializing a licensed technology. In each case, the institution or inventor is disclosing more than “this idea is confidential” — it is disclosing the specific technical detail a manufacturer would need to build a competing version, which is exactly what non-use and non-circumvention protections are meant to cover.

How it differs from a standard NDA

The distinction is scope, not format — an NNN agreement is still, structurally, a confidentiality contract, but with two additional obligations layered on top and (typically) different enforceability drafting:

	Standard NDA	NNN agreement
Covers disclosure to third parties	Yes	Yes
Covers the recipient’s own use of the information	Not directly	Yes (non-use)
Covers the recipient contacting the discloser’s customers/contacts directly	Not directly	Yes (non-circumvention)
Typical governing law / venue for a China-facing deal	Often the discloser’s home jurisdiction	Typically Chinese law, Chinese court, bilingual with Chinese controlling
Typical use case	Any confidential discussion, domestic or foreign	Disclosure to a foreign manufacturing/licensing partner, especially where enforcement risk is elevated

See CASRAI’s worked example of a standard confidentiality agreement, Confidentiality Agreement (NDA) Sample: A Full Worked Example, for the clause-by-clause structure an NNN agreement builds on, and Non-Disclosure Agreements (NDAs) in Research and Technology Transfer for when a university uses an NDA at all in the technology-transfer process.

What an NNN agreement does not replace

An NNN agreement is still only a confidentiality-and-conduct instrument. It does not grant any license to the disclosed technology, does not itself protect a patentable invention (a provisional or issued patent application does that), and does not substitute for the manufacturing or supply agreement that governs quality, price, quantities, and IP ownership of any tooling once a manufacturing relationship actually begins. It is typically executed early, before those substantive terms are negotiated, specifically to protect the information exchanged while evaluating whether to proceed at all.

Frequently asked questions

Is an NNN agreement only used with Chinese manufacturers?

No, but China-facing manufacturing relationships are by far the most common context the term is used in, because the enforceability gap it is designed to close (a foreign-law, foreign-court NDA not being directly enforceable where the manufacturer operates) is particularly well documented for Chinese counterparties. The same underlying structure — non-disclosure plus non-use plus non-circumvention, drafted to be enforceable in the counterparty’s own jurisdiction — can apply to any cross-border manufacturing or licensing relationship where a bare NDA is similarly weak.

Does an NNN agreement replace a patent application?

No. An NNN agreement is a contract between two named parties and only binds the party that signs it; it cannot stop a third party who was never a party to the agreement from copying a disclosed, unpatented invention. Patent protection (or trade-secret protection, where applicable) and an NNN agreement address different risks and are commonly used together, not as substitutes for each other.

Who at a university should be signing an NNN agreement?

As with any confidentiality agreement, this should go through the technology transfer office, sponsored programs office, or general counsel’s office — not an individual faculty member or inventor signing in a personal capacity — both for institutional signature authority and because the enforceability drafting (governing law, venue, language, damages) needs specialist review, typically including local counsel in the manufacturer’s jurisdiction.

References

• IPWatchdog, “Understanding ‘NNN’ Agreements in China”
• AUTM (Association of University Technology Managers), Guide to Confidentiality Agreements in University-Industry Interactions