Protecting Your Intellectual Property

Your company’s intellectual property (IP) is arguably the most valuable thing it owns. It has cost tens of millions of dollars to generate over a span of years and years, if not decades. When your business engages with a third-party vendor to support you in manufacturing, you’re risking your IP by sharing it. While most companies are trained on how to protect the IP they’ve generated, are you sure the third party you’re sharing it with has that knowledge? In addition, what about the IP that your third party is about to generate for you on your dime? Who owns that IP?

When working with a system integrator, it’s important to note that there are two intellectual property phases to a project that are separated by the purchase order. At first, there is mutual protection for the IP that each party brings to the table. The placement of the purchase order (PO) is the customer buying the IP from the integrator. This includes the concept and starts the next IP phase, but determining what exactly you have the IP rights to is something you should understand before you place the PO. Let’s dig in some more.

Before the PO: Mutual Protection

When you source custom automation, it’s important to execute a nondisclosure agreement. NDAs offer protection of the intellectual property you’re sharing such as product design, pertinent manufacturing processes, and any information that the two parties share in discussions. The simple fact that you’re sourcing automation for a certain product is protected, as well.

While businesses sometimes use one-way NDAs, it’s most common in the custom automation world to execute a mutual NDA for the early phases of a project. While you have intellectual property to protect, the machine builder will also want to guard the concepts they generate to solve your automation problems. Their concept is protected at a high level and would usually only be relevant with complex assemblies yielding hundreds of order of assembly and manufacturing process permutations. Intellectual property ownership is not straightforward, as the machine builder should be working directly with you to develop the concept and they’ll revise it repeatedly based on your feedback.

After the PO: You Own It?

Once you agree upon a concept, you can place a purchase order. The terms and conditions outlining the project will govern the PO. Here, the intellectual property that the integrator is going to generate on this project has to be clearly discussed. It most often isn’t. You’ll be moving on from the mutual NDA and will now be paying for engineering and IP generation. You should own the concept.

Below are many things that you, the customer, should expect to receive from a custom machine builder, both as a deliverable and in a written contract. Make sure you’re getting them!


It’s often the case that solving a problem with automation requires a unique innovation. This may happen as part of a proof-of-principle effort or simply be something that a creative controls engineer or a talented machine designer engineers to solve a complex problem elegantly. It’s important to make sure that you’ll own the intellectual property for such innovations as your competitors would certainly benefit should your integrator share this innovation. Physical solutions are easier to quantify IP for than processes that the machine builder developed. An example would be a leak test process. At ATC Automation, our customers are secure in knowing that all IP that a project generates is customer owned.


Your custom automation system will have a programmable logic controller (PLC). This will be programmed to control the entire line or module, receiving all the inputs as the brain of the automation system. You, the customer, should own the program and the rights to edit this program. Many system integrators don’t share the source code as they wish to further profit off you with their service department. You should be especially wary of custom machine builders offering their own intelligent chassis as the base software, saying IP for these systems won’t be shared. ATC Automation delivers all source code for our systems to our customers.

Drawings and 3D Models

While most companies will state that they’ll supply you with drawings, you should be clear about the format in which you wish to receive them. In addition, the 3D models’ format should also be clearly defined. ATC Automation delivers documentation related to CAD to our customers per their requirements.

Vendor Part Numbers

Some custom machine builders will take a vendor part number, like a pneumatic gripper from Vendor A or a simple shoulder bolt part number, and place their own company part number on it, giving you their part number in the BOM/documentation. This prevents you from sourcing the part yourself, costing you money and time. Remember, you paid for the engineering effort, but you didn’t pay for this company to forcefully put themselves as a middleman between you and the vendors they select. ATC passes all vendor part numbers through to our customers. Further, ATC selects components that are commercially available from partners that are the industry gold standard.

Selecting a Vendor That Takes IP Seriously

If you’re sourcing custom automation, you should spend time understanding how seriously the machine builder treats intellectual property. It matters.

It starts in sales. Did the salesperson mention a half-dozen companies you compete with and the products for which they’ve automated processes? If yes, would you like them to tell that to your competitors about your products? Probably not.

IP Protection Is a Company Culture

At ATC Automation, we take intellectual property very seriously. Here are some examples of the practices that help our customers feel secure:

  • Non-customer-related naming conventions on all ATC documentation. Nowhere in our shop will you see your company name on a document. It’s not until the final documentation package is delivered that your company name and logo appear on documents.
  • Private assembly bays for sensitive IP projects. ATC Automation has built-in infrastructure in our buildings to secure your builds from competitors’ eyes.
  • Secure badge access. Our customers’ visitor badges will only permit them to be in certain areas pertaining to their equipment. Further, our employees are also badged to only be in areas pertinent to their job.
  • Cybersecurity. This is a major concern to ATC Automation and our customers. We have dual-factor authentication for all network-capable devices that can access our customers’ IPs. Further, permissions within our network restrict project access to only those who need to be in there. File sharing is done with our customers via our secure SharePoint/OneDrive system. We routinely use Microsoft Teams for meetings, which offers additional layers of security over other third-party web meeting solutions.
  • Training. We regularly train our employees on the importance of IP protection, as well as any sources of vulnerability to our network.
  • Team structure. Lastly, and maybe most importantly, ATC Automation is team-based. We have nine design and build teams that, for the most part, stay together for decades. During the design, build, debug, and post-install support, these teams will acquire customer knowledge. You can rest assured that we won’t use these teams to work on your competitors’ projects, and they’ll be available to you on your next project with us.

To learn more about our automation solutions and how ATC Automation protects your intellectual property, contact us today.