International Business Law Overview
International Business Law Overview
The following is an international business law overview, including types of international business transactions, and the importance of international business contracts.
What is International Business?
As global business continues to become more pervasive, all companies must consider the opportunities and risks presented by international sourcing and international sales of goods and services. International business transactions are transactions between companies located in different countries that can involve the sale of goods, transfer of technology, and a plethora of other business arrangements.
Our attorneys handle a number of matters related to international business, including:
· International Business Transactions
· International Joint Ventures
· Global eCommerce
· International Development Agreements
· International Technology Transactions
· International Intellectual Property Protection & Enforcement
· International Litigation and Arbitration
An Overview of International Business Law
INTERNATIONAL TRADE – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Both U.S. and foreign national governments have an interest in regulating international payments, collecting customs duties, and overseeing transfers of sensitive technology. Our international trade team members help clients navigate a range of domestic and foreign international trade laws, including US import regulations enforced by Customs & Border Protection (CBP), export rules of the Bureau of Industry and Security (BIS), compliance with the Foreign Corrupt Practice Act (FCPA), and complying with U.S. sanctions.
INTERNATIONAL BUSINESS TRANSACTIONS – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Today’s global marketplace offers a plethora of opportunities but can also introduce significant challenges and risks. Our international business attorneys can help clients in identifying and managing these risks. Although the primary law governing an international business transaction will be the international business agreement between the parties, certain treaties such as the UN Convention on Contracts for the International Sale of Goods (CISG) can impact international business transactions. In addition, industry custom such as IncoTermscan assist in the negotiation and interpretation of international business agreements.
INTERNATIONAL JOINT VENTURES – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Sometimes the best way to enter a foreign market is to collaborate with a local partner. Each of these relationships is unique and must be reviewed carefully and deliberately, and the international joint venture agreement is a critical part of defining and managing the relationship with foreign partners.
Regardless of whether they are domestic or international, from a legal perspective, joint ventures are either contractual or equitable in nature. A contractual joint venture is merely a general partnership whereby the terms of the relationship are exclusively defined by a joint venture agreement. As such, the joint venture agreement must be clear in language and comprehensive in scope so minimize risk and prevent disputes among the venture partners.
Equitable joint ventures involve forming a legal entity, such as a U.S. corporation or LLC, or perhaps a foreign entity in the venture partner’s country. The venture partners become co-owners of the new entity and conduct all venture activities through the new entity. For these types of international joint ventures, the entity’s formation documents, shareholder agreements, management team and other governing documents must be carefully negotiated.
INTERNATIONAL DISTRIBUTORS – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Foreign distributors can help companies gain access to a new market abroad. However, if not property investigated and managed, these relationships can be more trouble than they are worth. A clear and comprehensive international distribution agreement is necessary to protect companies and avoid potential disputes with foreign distributors.
One of the key advantages of using an international distributor is that the international distributor typically has relationships with potential customers, as well as a knowledge of local law, customs, and market conditions and expectations. However, one must balance the advantages against the risk that the international distributor will be incompetent, will misappropriate intellectual property, will violate the FCPA, will damage the brand, or will otherwise cause harm or create liability.
The international distribution agreement represents the understanding of each partner’s respective rights, obligations and role within the venture. In addition, the international distribution agreement should address the ownership of intellectual property, provide for the ability to terminate the international distributor, and address issues such as installation and warranty returns. As such, the international distribution agreement requires careful review and drafting by experienced international distribution agreement attorneys.
INTERNATIONAL LICENSING – AN INTERNATIONAL BUSINESS LAW OVERVIEW
When a company wishes to grant foreign partners the right to produce or market its products in a foreign country, an international license agreement is critical to controlling the foreign licensee’s actions and protecting their own intellectual property. An international technology license involves the owner of a patent, trade secret, trademark or copyright (i.e., “intellectual property” or “IP”) granting another person or entity permission to use their IP. A license to use IP related to technology can include hardware, software and data, and other forms of technology. All technology licenses must be carefully crafted to protect the IP owner’s interests, but International technology licenses involve special considerations due to the impact of foreign country IP laws, among other considerations. There are a number of types of International technology license transactions, but the most common include international trademark licenses, international patent licenses, and international software licenses. International trademark licenses grant licensees the right to use your names, brands, logos and other trademarks and service mark. International patent licenses permit foreign companies to manufacture and sell products that incorporate your patented inventions, methods and designs.
GLOBAL ECOMMERCE – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Once a website is launched or mobile application is uploaded to an app store it becomes available to the global marketplace. As such, companies operating online need to address the issues presented by international ecommerce transactions. Online companies must understand the impact of foreign laws on their global ecommerce operations, such as the European Union’s data privacy laws known as General Data Protection Regulation (GDPR). Another issue that effects companies involved in global ecommerce is cybersquatting and domain disputes, and we assist companies with Uniform Domain-Name Dispute Resolution Policy (UDRP) actions to resolve these domain issues.
INTERNATIONAL INVESTMENT – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Often a company will decide to broaden its international presence by either launching a subsidiary in a foreign county or by acquiring an existing foreign enterprise. This foreign direct investment has a range of benefits and risks, and our international business attorneys can help identify and manage the risks implicated by foreign direct investment. There are three basic types of International investment transactions: setting up foreign subsidiaries and branches, international mergers and acquisitions, and international joint ventures.
Setting up a foreign subsidiary or branch allows a company to establish tangible presence in a foreign market. This structure is significantly controlled by foreign laws while still being subject to many US laws related to trade and financial dealings. A subsidiary is a new legal entity, such as a corporation or LLC, either under US law or under the law of the foreign jurisdiction. In contract, a branch is merely a new location of the US company, and thus any obligations or liabilities of the branch can directly impact the home company. Because of the significant influence of foreign laws, coordinating with local counsel in the foreign country is required to set up and operate a foreign subsidiary or branch.
International mergers and acquisitions allow a company to leverage the goodwill and relationships of an existing foreign enterprise to create an instant presence in a foreign market. Although International mergers and acquisitions dramatically decreases the time it takes for a company to begin operating in the foreign market, the cost of an international merger and acquisition can be significant. Moreover, in international mergers and acquisitions, the acquiring company is buying more than just equipment and brands; they are also inheriting a management and operations philosophy that might not be compatible with its own culture - or US law.
INTERNATIONAL DEVELOPMENT AGREEMENTS – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Software and product development is a truly global industry. Having a solid international development agreement is important to protecting intellectual property and avoiding future conflicts with developers, and our international business attorneys have the experience to help negotiate an effective international development agreement. There are a number of types of International development agreement transactions, but we frequently assist clients with technology product development, software development agreements, international app development agreements, and international website development agreements. Technology product development can include the development of prototypes or the manufacture of products integrating a company’s technology, proprietary designs, data, methods and other know-how – much of which may be patented or trade secrets.
International software development agreements are needed when an international software developer is engaged to create or modify a customized software application. The developer may be hired to create the entire application, or perhaps only a portion. International app development agreements are used in essentially the same situations as International software development agreements, except that the final product the developer is creating is intended to be a mobile application typically available to users via an app store such as iTunes. International website development agreements govern situations in which a developer is engaged to create a website. Although agreements for these various international development agreements will typically contact similar terms and provisions, each of the transactions has unique nuances and challenges that must be adequately addressed in the development agreement.
INTERNATIONAL TECHNOLOGY TRANSACTIONS – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Technology is mercurial by nature, which means it is easily transferred, licensed and sold worldwide. But the unique character of technology also creates a range of risks that require experienced technology counsel to adequately identify and address. There are three basic types of International technology transactions:
International technology development
International technology license
International technology transfer.
International technology development is a common way for companies to speed up development while minimizing costs. International technology development can be used to engage a foreign developer to create or co-create a web site, software program, prototype, or some other form of technology. Important components of International technology development agreements include the scope of work, determining milestones and deliverables, non-infringement representations and clarifying the ownership of all elements of the final product. An international technology license involves the owner of a patent, trade secret, trademark or copyright (i.e., “intellectual property” or “IP”) granting another person or entity permission to use their IP. A license to use IP related to technology can include hardware, software and data, and other forms of technology. All technology licenses must be carefully crafted to protect the IP owner’s interests, but International technology licenses involve special considerations due to the impact of foreign country IP laws, among other considerations.
Unlike an International technology license, International technology transfer involves more than merely granting permission to use IP; International technology transfer refers to the sale of IP assets from the IP owner to another party. Key elements of an International technology transfer agreement include pricing and payment, the scope of the technology transfer, the ownership of all aspects of the technology involved in the transfer, the impact of the technology transfer on any existing licenses, as well as other important considerations. Regardless of the type of technology transaction involved, an international technology agreement is a critical to protect the rights of the contracting parties and clearly establish each party’s rights and obligations. Although every international technology agreement is unique, our attorneys have been involved in hundreds of international technology agreements and can leverage our experience to help ensure our clients don’t experience any unpleasant surprises.
INTERNATIONAL INTELLECTUAL PROPERTY PROTECTION & ENFORCEMENT – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Protecting intellectual property in the U.S. is important, but in a global marketplace, companies need to look beyond our borders to ensure their intellectual property rights are protected in key foreign markets. Registering intellectual property in specific foreign jurisdictions is important to protect US intellectual property rights abroad. A number of international intellectual property treaties have been formed over the years to provide some standardized practices among major trading nations, most notable the World Intellectual Property Organization (WIPO) and the TRIPS Agreementwhich is part of the World Trade Organization (WTO). On addition, there are a number of other treaties created to provide some level of multi-national registration or protection for specific types of intellectual property, such as the Patent Cooperation Treaty (PCT) for patents, the Paris Convention and Madrid System for trademarks and the Berne Convention for copyrights,.
INTERNATIONAL LITIGATION AND ARBITRATION – AN INTERNATIONAL BUSINESS LAW OVERVIEW
Contracts and intellectual property registrations are useless without the ability and will to enforce them, and international transactions create unique issues regarding enforcement and dispute resolution involving foreign vendors, partners, and customers. International litigation is, at its core, similar to domestic litigation. However, the involvement of foreign plaintiffs and dependents creates increased complexity and hurdles such as getting jurisdiction, conducting pre-trial discovery, and enforcing judgements. Unlike international litigation, international arbitration does not involve lawsuits filed in U.S. or foreign courts. Instead, international arbitration is a process conducted pursuant to rules of arbitration such as ICC, AAA, or UNCITRAL.
International litigation and arbitration services include:
Representing foreign companies in US courts
Managing foreign counsel on behalf of US companies involved in litigation around the world
Handling US pre-trial discovery in international litigation, such as depositions and document review
Enforcing a foreign judgement or arbitration award in the US
Enforcing a US judgement or arbitration award in a foreign country
Representing foreign companies in US arbitration
Representing US companies in international arbitration
Managing foreign counsel on behalf of US companies involved in arbitration around the world
Handling US pre-trial discovery in an international arbitration, such as depositions and document review
Our international business lawyers have the transactional and regulatory experience to help companies navigate business opportunities and risks around the globe, and have effective relationships with local legal resources in every key international market. Our attorneys have advised clients on transactions involving over 150 countries, and also serve as U.S. counsel to foreign clients from all over the world.
Klemchuk PLLC is a leading intellectual property law firm focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. We help clients protect innovation and increase market share through investments in IP.
This article has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2023 Klemchuk PLLC