INTERNATIONALTRADEANDTHEPROTECTIONOFINTELLECTUAL

PROPERTYRIGHTS

EvanY.ChuckInternationalTradeGroupLeader

ManagingPartner–ShanghaiOfficeBryanCaveLLP

AsiaPacificBusinessOutlookConferenceLosAngeles,California

April8,2013

RoadmaptoDoingInterna0onalTransac0onsinChina  International Trade – a Business View   Focus on China – Update on Opportunities   Accessing the China Market   The Right “Partner” in China   Documentation – Do’s and Don’ts in Contracts   Protecting Your Intellectual Property in China   Intellectual Property and the Foreign Corrupt Practices

Act

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Interna0onalTrade–aBusinessView

Planning Formation Operational Dispute Exit

Tax Planning

Foreign Regulatory

Government Relations

IP Protection

OutsourcingOffshoringJoint VentureM&ALicensing

Export Controls and Economic SanctionsAntiboycott

US/Foreign CustomsValuationClassificationInvestigationSeizures

FCPAUK Anti-briberyLocal Anti-bribery

U.S. Trade Remedies

ArbitrationLitigation

US/Foreign Bankruptcy

M&A SaleIPO Exit

Bilateral Agreements

- NAFTA - Multilateral

- WTO

Foreign RegulationLaborEnvironmentalFood & Drug

Anti-Counterfeiting

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Interna0onalTrade–aBusinessView

Planning Formation Operational Dispute Exit

Tax Planning

Foreign Regulatory

Government Relations

IP Protection

OutsourcingOffshoringJoint VentureM&ALicensing

Export Controls and Economic SanctionsAntiboycott

US/Foreign CustomsValuationClassificationInvestigationSeizures

FCPAUK Anti-briberyLocal Anti-bribery

U.S. Trade Remedies

ArbitrationLitigation

US/Foreign Bankruptcy

M&A SaleIPO Exit

Bilateral Agreements

- NAFTA - Multilateral

- WTO

Foreign RegulationLaborEnvironmentalFood & Drug

Anti-Counterfeiting

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FOCUSONCHINA–TheOpportuni0esandPiDalls

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OpportunityandRiskinChina

 TheRiseofRMBPrivateEquityFunds ConsumerBrandBoom

 Retailers  Franchises

 China’sCorporateandRegulatoryEnvironmentGetsMoreComplicated

 DomesAcInnovaAonPolicy–KillingtheGoosethatLaystheGoldenEgg?

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OpportunityandRiskinChina

 China’sLaborandEmploymentLawsandPoliciesFavortheEmployee

 NewTaxesAssessedtoExpatsforChineseSocialSecurity

 StructuringEquityIncenAvePlansforChineseEmployeesIsProblemaAc

 IncreasingCostsMakeAlternaAvesANracAve–Vietnam,Cambodia,evenMexico

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AccessingtheChinaMarket

 AvoidRetailRisk:DistribuAonandLicensingAgreements

 SellDirectlytoThirdParAesfromtheUS–RepresentaAveOffice

 SellfromChinatotheChinesemarket–WhollyForeignOwnedEnterprise(“WFOE”)andSino‐ForeignJointVentures(“JointVentures”)

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The“Right”PartnerinChina

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• DueDiligenceisKey• LookforChinesecharactersintheNameCard

• LookforState‐ownership,ControlorOriginsinState‐OwnedBusinesses

• PubliclyTradedCompanyoutsideofMainlandPRC

• NetworkofPublicSources,InvesAgators,Tax‐relatedSources,Ex‐militaryIntelligence

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ContractDocumenta0oninChinaDeals  Useof“MOUs”andnonbinding“LeNersofIntent”(“LOI”)

  Choiceoflaw:considerUS(NYorCAwitharbitraAonclause);“neutral”laws–UK,HongKong,orSingapore;ChinaandCIETACarbitraAon

  Chinesecontractsvs.UScontracts–majordifferences  Civilcodeinfluenceondetailsofcontracts  Equitableremedies(i.e.injuncAons)limitedunderChinese

law

  JointVentureContracts–Chineselawcantrumpcertainprovisions,regardlessofhowwelltheyaredraded  Bepreparedforre‐negoAaAon,notenforcement

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Protec0ngYourIntellectualPropertyinChina

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Protec0ngyourIntellectualPropertyGlobally

  AssessglobalintellectualpropertyprotecAonneedsbymarketshareinAsia  Considertrademark,patent,copyrightandlocalinternetdomainsiteprotecAonandstrategy

  IPlicensesinChinashouldgenerallyberegistered

  SodwarethatislicensedorsoldinChinaissubjecttoregistraAon

  TradeSecretsaremostdifficulttoprotect  Considerreviewoftradeagreementsintheregion

  Considerregional“PixieDust”assemblystrategy

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IntellectualProperty–ChinesePiDalls

  FirsttoFile/FirsttoUse  “ChivasRegal88”andtheproofofawell‐knownbrand

  NeedseparateapplicaAonsfordifferentcategoriesofgoods

  ProposedamendmenttoTrademarkLawallowssingleapplicaAonformulAplecategories

  DomainNames

  DomainnamesquaNersleveragefirsttofileadvantageforprofit

  LiAgaAon–defendingthemark

  BewareofinfringerstrategiestocloudAtletotrademark

  EnforcementandliAgaAonagainstonlineinfringementdifficultandcostly

  Non‐useoftrademarkforthreeyearsmayleadtocancellaAon  RevocaAonbyTrademarkOfficeorthirdpartyapplicaAon

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ChinaIntellectualPropertyandtheFCPA  Risk:TrademarkregistraAonandenforcementacAon

mayinvolvetheAdministraAonofIndustryandCommerce(AIC),Customs,orjudicialauthoriAes

  TheForeignCorruptPracAcesActprohibitsofferingorgivinganythingofvaluetoaforeigngovernmentofficialforthepurposeofobtainingorretainingbusiness

  Alsoprohibitsofferingorgivinganythingofvaluetoathirdperson“whileknowing”thatanyorallofitwillbepassedtoaforeigngovernmentofficial

  “Whileknowing”includes“awarenessofahighprobability”

  “Governmentofficial”includespoliAcalparAes,candidatesforofficeandofficialsofpublicinternaAonalorganizaAons 14

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WhyistheFCPAImportantToday?  Morethan1,000SECandDOJlawyersinWashingtonD.C./SiliconValleyfocusingonsuchcases

  Ifyou’reinbusinessintheBRIC,especiallyChina,youhaveabullseyeonyourback

  ExtendedsupplychainsexposecompaniestomoreFCPArisk

  It’snotthebribe,it’stheaccounAng

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China–TheBriarPatchofFCPAandLocalAn0briberyLaw

  “Ontheground”staffreceivetraining,butodenfailstresstests  Enormouspressure–“redenvelopes”and“mooncakeswithbenefits”

  Hardtotellwhoisa“governmentofficial”  Doctors  Enterprisesareownedbystateownedenterprises

  Communistpartymembers/PLA

  FCPAlocallawexcepAonisproblemaAc–locallaw/pracAce

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Thankyou!

  ContactinformaAon:

EvanChuckPartnerBryanCaveLLP120Broadway,Suite300SantaMonica,California90401(310)576‐2126

evan.chuck@bryancave.com

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