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www.leclairryan.com

Legal Considerations for the Exporter

www.leclairryan.com

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Questions for Exporters

1. Why should I export?

2. Where should I export?

3. How do I get my product sold?

4. How do I protect my product?

5. What laws should I be aware of?

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OVERVIEW - Topics

• Trademark and Patent Protection

• Foreign Corrupt Practices Act

• Distributor and Agency Agreements

• Conflict Resolution

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Logic of Sequence

Trademark and patent protection first because failure to properly address means staying home.

Foreign Corrupt Practices Act second because it establishes the rules of engagement in accessing the foreign market.

Distributor and Agency agreements third because this agreement establishes the legal relationship between the exporter and party responsible for promoting and selling the product in a given market.

Conflict resolution last because you don’t expect conflict, but you must anticipate it.

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Trademark and Patent Protection

Trademark1. Grant of a monopoly regarding use of a brand name to identify the source

of origin of particular goods or services

2. No universal trademark

3. First to file in most countries

4. Example

5. Danger: Confusion in the marketplace and loss of market access

Patent1. Grant of an exclusive right to exclude others from practicing an invention

for a period of 20 (U.S.) years before it goes into the public domain; not a monopoly, as right to use may depend on prior rights.

2. No universal patent

3. Danger: Loss of exclusivity

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Foreign Corrupt Practices Act (FCPA)

• FCPA prohibits U.S. companies from making corrupt payments to foreign officials for the purpose of obtaining or keeping business.

• Applies to any individual, firm, officer, director, employee or agent.

• Anything of value is enough to trigger, not just cash.• Large Penalties ($100K- $2M)• Don’t be fooled by “business as usual”• Don’t bribe local officials

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Other Rules of Engagement

• Treasury Anti-Boycott Regulation• Export Administration Regulation (compliance)• International Traffic in Arms Regulation• Blacklisted Countries, Companies, and

Individuals

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Distributor and

Agency Agreements

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Ways to Enter a Foreign Market

– Direct sales to foreign customers

– Hiring a distributor

– Hiring a commission agent

– Strategic alliances (partnership with overseas firm)

– Direct investment (opening branch or subsidiary)

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Agent vs. Distributor - Key Distinctions

Agent: Commission agent matches buyers and sellers, normally without taking ownership of goods; sells your product for a commission (usually no service, support, or maintenance); acts on your behalf

Distributor: Buys the goods from the principal and resells them in its own name (marketing service, assumption of credit risk)

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Pitfalls

1. Avoid form or online agreements (example)

2. Local Laws

3. Risk of inadvertent employment relationship

4. Compensation concerns after termination

5. Taxation of principal due to establishment of business

6. Registration requirements

7. Exclusivity/Payment/Protection of IP/Performance

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Conflict Resolution: Arbitration v. Litigation

1. Arbitration is generally faster and cheaper.

2. Arbitral awards can be easier to enforce.

3. Can specify expertise of arbitrators.

4. Home court advantage worth considering.

4. No effective appeal from arbitration.

5. Arbitrators can ignore the law.

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Moral: Careful analysis of legal issues is critical to success in exporting. There are

no good canned answers.

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Thank you.

Peer A. Segelke, Esq.2000 Kraft Drive, Suite 1000Blacksburg, Virginia(540) 443-3308Peer.segelke@leclairryan.com

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