Ownership of Beer Formulas and Intellectual Property under the ODM Model (Specialized for the Beer Industry, Combining the Civil Code with Industry Practice)

Core conclusion first:

Default legal rule: the party that conducts the research and development owns the original intellectual property rights. In ODM arrangements, where the beer formula and brewing process are developed by the brewery (the commissioned R&D party), the intellectual property rights to the formula naturally belong to the brewery unless otherwise agreed in a written contract. The brand owner only holds the right to sell the finished products and its own trademark rights.

I. Explanation of Ownership in Two Specific ODM Scenarios

1. Off-the-Shelf Private-Label ODM (the factory selects an existing beer formula from its inventory and applies a new label)

The factory has already completed formula development and stability testing, so the formula belongs to the factory's pre-existing background intellectual property.

1) Without a buyout agreement: Ownership of the formula permanently belongs to the brewery. The factory has the right to supply the same beer formula to multiple brands. The brand owner only has the right to purchase finished products, apply its own trademark, and sell them; it has no right to obtain the formula documents and may not take the formula to another brewery for production.

2) With a buyout agreement: The parties agree that a buyout fee will be paid, and all intellectual property rights to the formula are transferred to the brand owner. During the contract term or permanently, the factory may not provide the same beer formula to any third party, and must deliver the complete formula, process parameters, and testing data.

2. Directed Custom ODM (the brand proposes an idea, and the factory develops a completely new beer formula from scratch)

Applicable to: innovative beers (hyaluronic acid wheat beer, oyster peptide beer, 0-sugar functional beer, etc.)

According to the commissioned development rules under Article 859 of the Civil Code:

> For the technical results of commissioned development, if the contract does not clearly specify ownership, the R&D results (formula and process) belong to the developer (the brewery). The brand owner only has a royalty-free license to use the formula for production and sales and does not own the formula.

Simply put: paying a brewery to develop a formula does not mean that the formula automatically belongs to you. Without a written buyout agreement, the brewery may still supply the formula to competing brands.

Only by signing an intellectual property transfer or exclusive buyout agreement that clearly stipulates the transfer of ownership of the formula, process, and all experimental data to the brand owner can the brand owner fully own the intellectual property rights.

II. Clarification of Several Easily Confused Concepts

1. Trademark ≠ Intellectual Property Rights to the Formula

The brand owner's possession of its own trademark only means that it may apply the trademark to finished products for sale; trademark rights and ownership of the beer formula are independent of each other. Even if the product bears your brand, this does not mean that the beer formula belongs to you.

2. Receiving Finished Beer Samples ≠ Obtaining Intellectual Property Rights to the Formula

When the brand owner receives confirmation samples or finished products from a bulk order, it has merely obtained the product and cannot reverse-engineer the complete brewing process or ingredient ratios. Legally, this is not considered a transfer of ownership of the formula by the factory.

3. Exclusive Supply License VS Formula Buyout (Key Distinction)

- Exclusive supply license: The formula still belongs to the brewery. The brewery only agrees to produce for you and not supply others. Once the cooperation ends, the brewery takes back the production authorization, and you cannot take the formula with you.

- Formula buyout: The intellectual property rights are fully transferred, and the brand owner permanently owns the formula and may freely choose any brewery for production.

III. Comparison: Underlying Intellectual Property Differences between Beer OEM and ODM

1. Beer OEM

The formula and process are provided by the brand owner and independently developed by the brand; the intellectual property rights belong to the brand owner from beginning to end. The factory is merely the contract manufacturer and uses the formula in accordance with a confidentiality agreement, without the right to retain, disclose, or otherwise use it.

2. Beer ODM

The formula is developed by the factory; by default, the intellectual property rights belong to the factory and can be transferred to the brand owner only through a written contract.

IV. Common Industry Risk Reminders (Practical Considerations for Contract Beer Production)

1. Oral promises are ineffective! All exclusive supply, buyout, and resale prohibition clauses must be incorporated into a written contract for commissioned processing;

2. Many breweries promote “custom ODM” but only provide exclusive supply without transferring ownership of the formula. Be sure to distinguish this before signing the contract;

3. If you plan to change the brewery at a later stage, you must complete a formula buyout. If you only use exclusive-supply ODM, production cannot be transferred after the cooperation ends;

4. The formula is a trade secret. The buyout agreement should require the factory to destroy all archived formula materials and establish long-term confidentiality obligations;

5. Distinguish among ownership of the formula, exclusive rights of use, and rights to use samples. The boundaries of these three rights are completely different, so do not use ambiguous wording.

V. Brief Summary (Can Be Used Directly for Business Development and Documentation)

1. Beer ODM without a buyout agreement → Intellectual property rights to the formula belong to the brewery; the brand only has the right to sell the finished products;

2. Beer ODM with a formal buyout and transfer agreement → Intellectual property rights to the formula are transferred to the brand owner;

3. Beer OEM, regardless of the circumstances → The formula naturally belongs to the brand owner, and the factory only obtains the right to use it for production;

4. Ownership is determined first by the written contract. In the absence of an agreement, the default legal rule applies directly: the developer (the brewery) owns the intellectual property rights to the formula.