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，加拿大西安大略大学毅伟商学院终身教授，美国印第安纳大学凯莱商学院博士，已在JOM,MSOM,POM等顶级期刊发表论文十余篇，IJPR副主编！  

    Hubert Pun博士任教于加拿大西安大略大学毅伟商学院管理科学系。 Hubert Pun博士在香港出生，于加拿大卑诗省大学获得工程系学士学位。工作数年后，受聘于委内瑞拉一企业的业务发展部门，从2003到2005年期间，全力为该公司发展于哥伦比亚、墨西哥、巴拿马和美国等地的业务。

       2010年， Hubert Pun博士获取美国印第安纳大学运营管理和管理科学系博士学位，其后于毅伟商学院任教本科、MBA和博士课程。近年，屡获毅伟院长以及大学学生会的教学表扬奖。 Hubert Pun博士的研究重点包括市场推广与运营的关系、合作性供应链管理和医护运营管理。其硏究成果，获行内高度认可，并在各大重点刊物上发表，包括Manufacturing & ServiceOperations Management, Production and Operations Management, Decision Sciences等。此外，由2016 至今，受邀为International Journal of Production Research 副编辑。