In April 2026, the Federal Circuit handed down a ruling that every U.S. business owner sourcing products from China should read carefully. In Fortress Iron, LP v. Digger Specialties, Inc. (2026), the court invalidated two fully issued patents — not because the invention was obvious, and not because of a flawed prior art search. The patents died because one coinventor, an employee of a Chinese manufacturing partner, could not be located when it came time to fix the inventorship record. That was it. Two patents, gone.
I have seen this problem coming for years. And I tell every client who sources from a Chinese manufacturer the same thing: get the invention assignment signed before work begins. Not after. Not once the relationship matures. Before. Here is why your Chinese manufacturer will push back — and exactly what you should do about it.
The 90/10 Trap That Most Business Owners Walk Into
Here is the typical scenario. You have a product idea. You find a Chinese manufacturer who already makes something 90% similar to what you want. You ask them to make a 10% modification that is unique to your business — a specific feature, a design change, a performance improvement. That 10% is your invention. That 10% is what you want to patent.
The problem is that your Chinese manufacturer’s engineers are the ones who figure out how to execute that 10% change. And under U.S. patent law, if they contributed to the conception of the invention — even a portion of it — they are coinventors. Coinventors own rights to the patent unless they sign those rights away. See 35 U.S.C. § 256 (governing correction of inventorship on issued patents).
This is not a theoretical risk. This is the exact fact pattern in Fortress Iron. And it is the exact dynamic I see in client relationships with Chinese manufacturers every week.
Why Your Chinese Manufacturer Doesn’t Want to Sign an Invention Assignment
When you ask your Chinese manufacturer to assign invention rights to you, they will almost certainly push back. You will hear things like:
- “We are partners. We trust each other.”
- “We are looking for a long-term relationship.”
- “We do not do this with any of our customers.”
- “We are not trying to steal your idea.”
Do not be flattered. This is business.
Here is the dynamic at play. If your Chinese manufacturer assigns invention rights to you, you can take those rights and switch to a different manufacturer. They know this. The invention assignment is what gives you the freedom to move. Without it, you are dependent on them. With it, you can go elsewhere — and they lose your business. The “friendship” framing is a negotiating tactic, not a genuine offer of trust.
In my experience advising U.S. clients sourcing from China, the relationship works fine right up until the moment it doesn’t. Once a dispute arises over pricing, quality, or exclusivity, the goodwill evaporates quickly. Chinese manufacturers often operate through tight family and social networks. What you shared in confidence with your “trusted partner” can reach a competitor through a cousin or a word-of-mouth introduction before you even know a dispute is brewing. Do not get suckered into the same situation that has cost countless U.S. companies their IP.
What Happens When You Don’t Get It in Writing: The Fortress Iron Warning
Fortress Iron owned two patents on a vertical cable rail barrier system — a real, commercial product sold in the market. The invention was developed in collaboration with employees of a Chinese quality control liaison company. One of those employees, a man named Huang, was a coinventor. When Fortress later discovered the inventorship problem and tried to correct it, they could not find Huang.
Under 35 U.S.C. § 256, correcting inventorship on an issued patent requires that the omitted inventor receive notice and a hearing before a court can order the correction. No Huang, no notice. No notice, no correction. No correction, no valid patent. The Federal Circuit ruled both patents invalid — in a case of first impression — holding that an omitted coinventor who cannot be located renders the patent permanently unenforceable.
The lesson: If Huang had signed an invention assignment agreement at the outset, Fortress Iron would have owned his rights regardless of whether anyone could find him later. A signed assignment solves the problem before it starts. Waiting to fix inventorship after the fact can mean waiting until it is too late.
For a deeper look at how inventorship affects patent ownership and what to do when third-party contributors are involved, see my post: How to Properly Identify Inventors in an ADS and Protect Patent Ownership.
Put Your Foot Down Before Work Begins
I tell my clients this directly: demand the invention assignment upfront, or find a different manufacturer. This is not a negotiation point. It is the price of doing business with you.
Many business owners hesitate because they are afraid of losing the manufacturer. But consider the alternative: you spend months developing a product, file a patent application, build your business — and then lose your IP because a Chinese engineer who contributed to the design cannot be reached two years later.
You have more leverage than you think. Chinese manufacturers want your business. They will negotiate. For broader strategies on how to prevent a manufacturer from stealing your idea, that post is a good starting point — but understand that an invention assignment goes one critical step further than an NDA alone.
Use an NNN Agreement to Make the Demand More Palatable
One of the most effective tools for this situation is the NNN agreement — Non-Disclosure, Non-Compete, Non-Use. It is the Chinese equivalent of the NDA, and Chinese manufacturers are generally more comfortable signing an NNN than a Western-style NDA because they are familiar with it. For a primer on NNN agreements and how they compare to NDAs, see: Nondisclosure Agreements and Other Basic Agreements.
Build the invention assignment requirement into the NNN agreement. When it is bundled with familiar terms — confidentiality, non-compete, non-use — it feels less like a hostile demand and more like a standard business arrangement. Frame it as mutual protection: the assignment clarifies who owns what, so there is no confusion later. Manufacturers who have experienced IP disputes understand the value of clarity on the front end.
What the Assignment Agreement Needs to Cover
At a minimum, your invention assignment from a Chinese manufacturer should:
- Identify all individuals — by name and employer — who may contribute to the design or development of your product;
- Assign all inventions conceived during the engagement to you, whether patentable or not;
- Cover improvements and modifications, not just the original design;
- Be executed before any technical work begins; and
- Be governed by U.S. law with a U.S. venue clause.
If the manufacturer’s engineers will be making decisions about how to implement your unique features, get those engineers identified and their rights assigned — either directly or through the manufacturing company’s agreement — before your project starts. For an explanation of how patent assignments work and what they must include, see my detailed post on that topic.
For more on protecting your IP internationally, including filing in China as a parallel layer of protection, see: How to Get Patent Protection Fast and Cost-Effectively in China.
The Bottom Line
Fortress Iron is a wake-up call. It shows precisely what happens when the invention assignment conversation is deferred because the relationship feels good and everyone trusts each other. Your Chinese manufacturer’s friendliness is real — and it is beside the point.
Business conditions change. People become unreachable. Disputes arise. When that happens, what matters is what you have in writing — not the relationship you thought you had.
Get the assignment before work starts. Use an NNN agreement to make the conversation easier. And if the manufacturer refuses to sign, find one who will. The cost of getting this right upfront is a fraction of what it costs to lose a patent in court.
If you are sourcing from a Chinese manufacturer and want to make sure your patent rights are protected from day one, give me a call at (949) 433-0900 or schedule a consultation online.