Title: Combating Supplier-Copycatting with IP Agreements

Abstract: When a manufacturer outsources the production of a product, it distributes its intellectual property (IP) into a supply chain that it may not be able to fully control. In the past, non-disclosure IP agreements in some countries, such as China, were not effective. Recently, a new type of IP agreement has gained popularity, the non-disclosure, non-use, non-circumvention (NNN) agreement, and this agreement is regarded as a highly effective IP protection tool. The goal of this paper is to examine how an IP agreement can be used to combat supplier-copycatting. We use a game-theoretic approach to examine a system where a manufacturer outsources to a supplier. The supplier and a third-party firm decide whether or not to enter the market with copycat products while the manufacturer selects the level of marketing investment. The manufacturer can eliminate the threat of supplier-copycatting by signing an IP agreement. Interestingly, we find that the manufacturer can be worse off from signing an IP agreement with its supplier, even if the IP agreement is costless and perfectly enforceable. While the supplier and the customers are the players that produce and consume copycats, we show that these two players can benefit from the (self-interested) manufacturer’s decision in signing an IP agreement. Despite this benefit, these two players can benefit even further if governments are involved in regulating against copycat products. Therefore, our paper demonstrates the strengths and limitations of an IP agreement, and advocates for governments to tighten regulations against copycat products.

Keywords: coopetitive supply chain; copycat; developing countries; government regulation; intellectual property

Faculty Bios

Dr. Hubert Pun is a professor and the Ph.D. program coordinator of the Management Science area group at the Ivey Business School (Western University). He grew up in Hong Kong. After earning his undergraduate degree and working in Vancouver for a few years, he became part of an expansion team of a Venezuelan start-up company that grew the business to Central/North America (e.g., Colombia, Mexico, Panama, and USA) during 2002-2005.

He graduated from the Kelley School of Business (Indiana University) in 2010, where he completed his PhD in Operations Management and Decision Sciences. He joined the Ivey Business School in 2010 and has taught in the undergraduate, MBA and Ph.D. programs. In the last couple of years, he was awarded with Ivey Dean’s Teaching Commendation Letters (top 10% Ivey faculty) and the University Students’ Council Teaching Honor Roll. His research interests include, marketing/operations interface, co-operative supply chain management, and healthcare operations management. He has published in Manufacturing & Service Operations Management, Production and Operations Management, Decision Sciences, etc. Currently, he is serving as an associate editor at International Journal of Production Research.

Hubert Pun副教授，加拿大西安大略大學毅偉商學院終身教授，美國印第安納大學凱萊商學院博士，已在JOM,MSOM,POM等頂級期刊發表論文十餘篇，IJPR副主編！  

    Hubert Pun博士任教于加拿大西安大略大學毅偉商學院管理科學系。 Hubert Pun博士在香港出生，于加拿大卑詩省大學獲得工程系學士學位。工作數年後，受聘于委内瑞拉一企業的業務發展部門，從2003到2005年期間，全力為該公司發展于哥倫比亞、墨西哥、巴拿馬和美國等地的業務。

       2010年， Hubert Pun博士獲取美國印第安納大學運營管理和管理科學系博士學位，其後于毅偉商學院任教本科、MBA和博士課程。近年，屢獲毅偉院長以及大學學生會的教學表揚獎。 Hubert Pun博士的研究重點包括市場推廣與運營的關系、合作性供應鍊管理和醫護運營管理。其硏究成果，獲行内高度認可，并在各大重點刊物上發表，包括Manufacturing & ServiceOperations Management, Production and Operations Management, Decision Sciences等。此外，由2016 至今，受邀為International Journal of Production Research 副編輯。