In Part 1, we explored how New York’s Brand Owner model separates brand creation from manufacturing. Now we turn to the asset that drives the entire business: Your formula is not just a recipe—it is protectable intellectual property.
How Brand Owners Accidentally Lose Ownership
In many co-packing arrangements, the manufacturer:
- Adjusts the formulation for scale
- Sources ingredients
- Maintains batch records
- Documents production methods
If the agreement is silent, the manufacturer may gain practical—or legal—control over the finished product.
Risk #1 — Loss of Control Over Your Own Product
Some contracts unintentionally allow the manufacturer to:
- Modify ingredients without approval
- Reuse similar formulations for other clients
- Halt production during disputes
This can dilute your brand identity, create competitive knockoffs and disrupt your supply chain.
Risk #2 — You Can’t Move to a New Manufacturer
Without express assignment of:
- Formula ownership
- Process documentation
- Scaling data
You may not be able to replicate your own product elsewhere. That can be a brand killer.
Risk #3 — Trade Secret Exposure
Your formulation is protectable—but only if treated legally as confidential IP. A proper brand-owner agreement should state:
- The formula is owned exclusively by the brand owner
- The co-packer receives no ownership interest
- Use is limited solely to producing your product
- Confidentiality survives termination
- All data related to production, marketing, and sourcing belongs to the brand owner
Your Brand Is More Than a Trademark
Many founders secure a trademark but fail to secure:
- Formula rights
- Label artwork ownership
- Packaging design rights
- Production know-how
Your co-packer should never own:
- Trade dress
- Brand assets
- Regulatory approvals
Yet template agreements often grant exactly that.
Coming Next in Part 3
Even if ownership is protected, brand owners face another major risk: labeling compliance in a multi-party production environment.
Part 3 explains why labels—not recipes—are where enforcement risk most often arises.
If you have any questions about contract manufacturing and brand owner licenses, reach out to Tracy at Tjong@EvansFox.com.
Tracy Jong is a Senior Attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at Tjong@EvansFox.com.
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The content has been prepared for informational purposes only; it should not be construed as legal advice, does not create or constitute an attorney-client relationship, and readers should not act upon it without seeking professional counsel.