Who Owns Moulds, Tooling and Samples in China Manufacturing?
How overseas buyers can protect ownership and release of moulds, tooling, samples and related IP when manufacturing in China.
Paying for a mould does not by itself answer every ownership, possession, lien or intellectual-property question.
Custom moulds, dies, jigs, fixtures, gauges and samples can become critical production assets. Disputes often arise when the relationship ends and the buyer discovers that the supplier considers the tooling its property, refuses release, claims unpaid charges or continues using the tools for other customers.
The contract should separate four questions: who owns the physical asset, who possesses it, whether the supplier may retain it for unpaid debts, and who owns the intellectual property embodied in the product or tool design. This guide forms part of our International Trade & Commercial Contracts resources.
Key takeaways
- State exactly when ownership of each tool transfers and how the asset is identified.
- Do not confuse physical tooling ownership with ownership of drawings, product design or other intellectual property.
- Require marking, inventory records, storage standards, maintenance obligations and restrictions on unauthorised use.
- Plan the release and transfer process before termination or a supplier dispute occurs.
- Consider Chinese-law lien issues if the supplier will possess buyer-owned equipment while other invoices remain unpaid.
1. Define what counts as buyer tooling
Use a schedule listing each mould, die, jig, fixture, gauge, test device, pattern, sample or other production asset. Include identifying numbers, photographs, location, acquisition cost and the products for which it is used.
If the supplier creates replacement tooling or modifications, state whether they become part of the same buyer-owned asset pool. Avoid a clause that refers only to “the mould” when the project actually depends on several pieces of equipment.
2. State when ownership transfers
The contract should say whether the buyer owns tooling from creation, upon payment, upon acceptance or on another defined event. If the supplier contributes part of the tooling cost, explain whether that changes ownership or only the price arrangement.
Do not rely on the assumption that paying an invoice automatically establishes every proprietary right. Keep payment records, tooling invoices, design documents and the supplier’s written acknowledgement of ownership.
3. Distinguish ownership from possession
A buyer can own a physical mould while the supplier keeps possession so it can manufacture products. The agreement should state that possession is for a limited production purpose and does not itself transfer ownership.
Require the supplier to store the tools safely, prevent commingling where practicable and notify the buyer of loss, damage or relocation. The contract should give the buyer reasonable inspection or audit rights over the tooling inventory.
4. Mark and register the assets operationally
Where practicable, require permanent labels stating the buyer’s name or asset number. Maintain a tooling register signed or acknowledged by the supplier. Photographs and serial numbers are particularly useful when several similar moulds are stored at the same factory.
Marking is not a substitute for a legal ownership clause, but it can materially improve evidence and reduce factual disputes.
5. Separate tooling ownership from intellectual property
The physical mould is one asset; the product design, CAD files, drawings, software, know-how and patent or design rights are different assets. Under Article 600 of the Civil Code, transferring goods that contain intellectual property does not by itself transfer that intellectual property unless the law or parties provide otherwise.
A manufacturing agreement should therefore address ownership and permitted use of drawings, improvements, production data and other IP separately from the physical tool.
6. Restrict unauthorised production and third-party use
The supplier should not use buyer-owned tooling to manufacture for itself or another customer unless the buyer expressly agrees. The same restriction should apply to copies, derivative tools and confidential drawings where appropriate.
Address overruns, scrap, samples and rejected goods if they could enter the market and expose the buyer’s brand or design.
7. Allocate maintenance, repair and replacement costs
State who performs routine maintenance, who bears normal wear costs and what happens if the tool is damaged through supplier fault. For high-cycle tooling, consider an expected life, maintenance log and replacement procedure.
If the supplier is paid a tooling-management or storage fee, define the service rather than leaving the buyer to assume that long-term storage is included indefinitely.
8. Address lien and retention risk
Chinese law recognises a possessory lien in specified circumstances. Articles 447–449 of the Civil Code provide that a creditor may in qualifying circumstances retain legally possessed movable property where due debt is unpaid, and they contain special rules for liens between enterprises. The Civil Code also recognises that law or agreement may provide that particular movable property is not subject to lien.
This area is fact-sensitive. A buyer should not assume that an ownership label alone guarantees immediate release if the supplier asserts unpaid charges. The manufacturing agreement should address whether buyer-owned tooling may be retained, set off or used as security, to the extent permitted by applicable law, and should keep unrelated payment disputes from becoming leverage over essential production assets where possible.
9. Create a release and transfer procedure
The contract should state when the supplier must release tooling, how quickly it must cooperate, where delivery occurs, who pays packing and transport, and which files or accessories must accompany the physical assets.
If production is being transferred to a new manufacturer, the buyer may need CAD files, maintenance records, test fixtures and process information as well as the mould itself. Define the complete handover package.
10. Plan for termination, insolvency and factory shutdown
Do not wait until the supplier is insolvent or unresponsive to document ownership. Keep an updated inventory and consider whether critical tools should be periodically inspected. If there are warning signs of financial distress, obtain advice before announcing termination or allowing disputes over unpaid invoices to escalate.
A contract cannot eliminate every insolvency or enforcement risk, but clear ownership evidence and a practical release mechanism can materially improve the buyer’s position.
11. Coordinate tooling terms with payment and dispute clauses
If tooling is paid in stages, align payment with design approval, manufacture, testing and handover documentation. The dispute clause should be capable of supporting urgent relief if the supplier threatens unauthorised use, destruction or disposal.
For a broader manufacturing-contract checklist, see China Manufacturing Agreement: What Overseas Buyers Should Include.
Frequently asked questions
If I paid 100% of the mould cost, do I automatically own it?
Do not assume so. Payment is important evidence, but the contract should expressly state ownership and the transfer event. The surrounding documents and applicable law may also matter.
Can the supplier use my mould for other customers?
The contract should prohibit unauthorised use if exclusivity is required. Ownership, confidentiality and IP provisions should work together.
Can the supplier keep my mould because I owe money?
Potentially disputed retention or lien rights may arise depending on the facts and applicable law. Address this issue expressly in the contract and obtain transaction-specific advice if the supplier refuses release.
Who should pay for worn-out tooling?
The agreement should allocate normal wear, negligent damage and replacement. If tool life can be measured by cycles, record the expected life and maintenance obligations.
Does owning the mould mean I own the product design?
No. Physical tooling and intellectual property are distinct. The contract should address both separately.
Principal official sources
Discuss your China-facing contract with Jay Chen
If you are preparing, reviewing or renegotiating a manufacturing, supply or other commercial contract involving a Chinese counterparty, contact Jay Chen with a short description of the transaction, the parties, approximate value and the stage of negotiations. After conflict clearance, the scope can be tailored to the commercial risks that matter most.
About Jay Chen
Jay Zhifeng Chen is a PRC-qualified lawyer and partner at Guangdong Zhuojian Law Firm. His previous in-house legal roles at Foxconn, Hytera and Avnet inform his commercially focused approach to China-related contracts, investment and cross-border disputes.
This article provides general information, not legal advice for a particular transaction. The legal position depends on the facts, the contract, applicable law and the chosen forum. Reading this article or submitting an enquiry does not create a lawyer-client relationship.
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