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| US Firms Expanding Abroad |
  U.S. Firms Expanding Abroad
Tips for International Success
Trademarks
Contracts
Arbitration
U.S. Firms Expanding Abroad
Pitegoff Law Office PLLC represents U.S. companies in their
international business. We have a great deal of experience
in international licensing, distribution and franchising.
Although we do not advise on foreign law, we understand
the elements of a successful international venture. We
work with local counsel in the destination country to be
sure that the contracts we draft meet the requirements
of local law and practice and to understand the legal and
tax implications of the planned transaction. Local counsel
also assists with any local filings. We draft the contracts
and work with the U.S. client, while we manage the relationships
with local counsel abroad.
Tips for International Success
A U.S. company is most likely to succeed internationally
if that company: is successful in the U.S. and is seeking
to build on that success abroad, rather than to export
a concept that is untested or unsuccessful in
the U.S.;
- has made an informed decision on which country
to enter, has studied the destination market and
is confident that the business can be tailored
successfully to meet the peculiarities of that
market;
- has carefully selected the best available
contract partner or partners in the destination
country;
and
- is prepared to make a substantial commitment
of personnel to service and support the foreign
market, rather than simply turning over the local
business entirely to its contract partner.
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The most important of these points may be the selection
of the right people in the destination country. No amount
of good lawyering can improve the business partner abroad.
Your own business partner is the most likely cause of loss of
brand value, as well as the most likely reason for your
success. One way to increase the likelihood that you are
working with the right foreign partner is to make use of
the U.S. Department of Commerce Gold Key program. [Link
to the website.]
Planning is also very important. For example, a promising deal
may fall through before it is signed if unexpected costs come
to light only after a company makes a price offer to a prospective
foreign partner. The tax laws, antitrust laws, commercial laws
and other laws of the U.S. and the destination country will
affect the way the deal is structured. A company will be in
a far better bargaining position knowing in advance what is
permitted and what is required in light of U.S. and foreign
law.
Trademarks
One of the very first considerations of most companies venturing
abroad is whether the company's trademarks (i.e., brand names)
are protected. Unless a company protects its trademarks in the
destination country, the company may find that its marks infringe
the rights of another trademark owner in that country. The
company will then be faced with the prospect of either being
required to litigate its rights, purchase the mark from the
foreign owner or sell under a different mark. The result can
be that the company is required to use different brand names
in different countries.
A preliminary question is whether the trademarks will work
from a marketing point of view in the destination country.
A mark may have an entirely different connotation in the
destination country. This alone would be reason to use a different
mark in that country.
If the mark is likely to be successful from a marketing point
of view, it may nevertheless be unregistrable as a matter of
law. In some countries, for example, service marks may not
be protectable at all.
Another possibility is that the mark may be unavailable in
the destination country because someone else has already registered
it. Before launching a business abroad, the company should
have a search firm do a full trademark search to be sure that
the trademark will not infringe the rights of anyone else.
If the search results indicate that the mark is available,
the company should seek trademark registration in the destination
country.
Trademark registration abroad is especially important abroad
because trademark rights in most countries are based on registration
and not on use. The first to register is the one who has the
rights.
Contracts
A written contract is essential in any trademark licensing
arrangement. A trademark owner can lose its rights in the destination
country if the licensee has not signed a written license agreement.
License and distribution agreements can serve many purposes
in addition to specifying pricing, delivery and payment terms.
A written agreement can define the scope of any exclusivity,
the extent of any restrictions against competition, and the
term, renewal and termination rights.
Contracts can also help protect trade secrets and other confidential
information. Not all countries have laws that allow for the
protection of trade secrets. The contract may be the only legal
basis on which the company can guard against the unauthorized
disclosure of its trade secrets.
A well-drafted contract can also provide performance incentives
and put the business relationship on a solid foundation for
success.
The negotiation process fleshes out important business issues
in advance, thereby reducing the likelihood of disputes. If
a dispute does arise, a well-drafted contract will establish
a mechanism for dispute resolution.
Arbitration
Arbitration is a common method of resolving international disputes.
One reason to consider arbitration in international agreements
is that many countries have signed the 1958 Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, commonly
referred to as the New York Convention. This means that the
award of the arbitrator or the arbitration panel will be enforceable
in most countries. Other reasons to arbitrate include the ability
to choose arbitrators knowledgeable in a particular field,
the need to maintain confidentiality and the desire to avoid
creation of binding precedent. The parties can also specify
the administering body. In New York , the American Arbitration
Association is probably the most commonly used in international
commercial arbitrations, although the International Institute
for Conflict Prevention & Resolution (CPR) and other alternate
dispute resolution organizations exist and are active in New
York as well. |
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