Marc s. friedman slides for legalbooster

CONTROLLING THE LEGAL

AND CULTURAL RISKS OF

DOING BUSINESS IN THE U.S.

Marc S. FriedmanDentons US LLPNew York, New [email protected] +001 212 768 6767

June 2014

Locations

Month Day Year Dentons US LLP Document reference # 2

Offices by list

Month Day Year 3

Optional subhead here

Key Canada United States EuropeCentral and

Eastern EuropeAfrica Middle East Asia Pacific

l Offices

Associate offices

Facilities

u Associate firms

+ Special alliance firms

l Calgary

l Edmonton

l Montréal

l Ottawa

l Toronto

l Vancouver

Atlanta

Boston

l Chicago

l Dallas

l Kansas City

l Los Angeles

Miami

New Orleans

l New York

l Phoenix

l San Francisco

l Short Hills

l Silicon Valley

l St. Louis

l Washington, DC

l Barcelona

l Berlin

l Brussels

l Frankfurt

l Madrid

l Paris

u Zurich

l Bratislava

l Bucharest

l Budapest

l Istanbul

l Prague

l Warsaw

u Accra

u Algiers

u Bissau

u Bujumbura

l Cairo

u Cape Town

u Casablanca

u Dar Es Salaam

u Johannesburg

u Kampala

u Kigali

+ Lagos

u Luanda

u Lusaka

u Maputo

u Nairobi

u Nouakchott

u Port Louis

u Praia

u São Tomé

u Tripoli

l Abu Dhabi

Amman

u Beirut

l Doha

l Dubai

Kuwait City

l Manama

l Muscat

Riyadh

l Beijing

l Hong Kong

l Shanghai

l Singapore

United Kingdom Russia and CIS Central Asia

l London

l Milton Keynes

l Kyiv

l Moscow

l St. Petersburg

l Almaty

u Ashgabat

l Baku

l Tashkent

Dentons US LLP Document reference #

Why should we come to the U.S.?


• U.S. is the premier location for new business

investment

• GDP of $16+ trillion - per capita $52,000

• Population of 320,000,000

• Under free trade agreements access to $25 million

more for goods and services produced in the US

• Well-educated citizenry with world's best

university system, and thus availability of highly-

skilled labor

More reasons


• Respect for intellectual property and a strong

enforcement regime

• Most brands not considered truly global without a

U.S. presence

• Stable democracy

• Accessibility of investment that prefers a

domestic presence

• "Businesses operating in small markets in other

countries can become large, dynamic firms in the

United States." U.S. Dept. of Commerce

THE BOTTOM LINE?


• The U.S. can be a very fertile area for expansion of

your business

• There are legal land mines which can be

eliminated or controlled through a careful entry

plan

• There are cultural problems you can encounter if

you are unaware of them

• None of the legal land mines or cultural risks

should prevent your expansion into the U.S.

Methods of entry


• Start your own operation

• Enter into a joint venture with a US partner

• Acquire or merge with a U.S. company

• Each method has its own features and risks

• There are risks and concerns common to all three

methods of entry

Major legal risks of doing business in the U.S.


• Commercial liability

• Personal injury liability

• Regulatory violations

• Employee-related claims

• Intellectual property claims (including patent

infringement claims)

• Losing intellectual property rights

• Data privacy violations

Additional legal risks


• Litigation and other judicial or quasi-judicial

proceedings

• Tax consequences

• Immigration violations

• Transferee (imputed) liability to European entity

• Officer and Director liability

Controlling the legal risks by formation


• Selecting the best business structure

(corporation, LLC, other)

• Create a subsidiary, sub-subsidiary or other to

insulate upstream companies from liability

• Place IP in another company with licensing

agreements

• Identify the most suitable state of formation

including from a tax perspective(usually

Delaware)

• Identify where you must qualify to do business

• Obtain necessary licenses and permits

Controlling the legal risks through insurance


• Commercial general liability

• Property and casualty insurance

• Product liability insurance

• Worker's compensation insurance

• Vehicle coverage

• Errors and omissions

• Directors and Officers insurance

• IP infringement insurance

• Agent v. broker

Employer liability


• Possible employee claims

• Sexual harassment or discrimination in hiring, firing and workplace

conditions

• Wrongful termination or denial of benefits

• Can arise under Federal, state and sometimes city laws

• Can result in damages and attorney's fees, punitive damages and

reinstatement

• Federal anti-discrimination statutes (Title VII, Age Discrimination.

Americans with Disabilities, Pregnancy Discrimination), Family

Medical Leave, ERISA, NLRA, OSHA, Employee Polygraph

Protection Act, etc

• Similar state statutes in all states and District of Columbia and

some cities such as New York City

• The risk of liability can be controlled and in some cases eliminated

Ways to reduce employer liability


• Understand the "rules of the road" including

immigration laws

• Employee handbook

• Other workplace rules (including OSHA)

• Sexual harassment training

• Carefully-drafted executive and non-executive

employment agreements, and independent

contractor agreements

• Employer liability insurance

Controlling the risks of commercial liability


• Sales of goods (including software) are covered

by the Uniform Commercial Code (UCC)

• UCC provides contract drafting techniques that

significantly reduce a seller's risk of liability and

damages

• Also may be governed by UN Convention on the

International Sales of Goods (CISG)

Controlling the risks of commercial liability


• Some states (eg. California) have additional laws

including covering services transactions

• May be significantly different than your own

country's laws

• All contracts for goods or services should be

drafted or reviewed by knowledgeable lawyers

• All contracts should be in writing, which is what

Americans expect

Protecting your intellectual property


• Create an IP protection plan, that may include

• Seeking patent protection

• Building an enforceable trade secret program

• Registering copyrights and trademarks

• Confidentiality agreements and inventions agreements

with employees and consultants

• Confidentiality agreements with third parties

• Carefully-drafted IP license agreements

Protecting against IP and related claims


• Obtain a freedom-to-operate opinion

• Obtain trademark clearance opinions

• Take advantage of DMCA provisions

• Understand and comply with U.S. data protection

and privacy laws

• Be prepared to respond to patent infringement

claims asserted by patent trolls

• IP infringement insurance

You must determine whether your goods/services are

regulated


• What regulatory bodies, if any, have jurisdiction

• What are the applicable regulations regarding

importation, labeling, materials, etc?

• Federal Trade Commission, Federal Food and

Drug, ATF, Health and Human Services, Homeland

Security, Consumer Product Safety Commission,

Agriculture, DOD etc.

• State regulatory agencies such as Consumer

Protection Bureau

Cultural lighthouses to watch when doing business

in the U.S.


General tips when doing U.S. business

• Americans have a large and diverse culture with

great freedom of expression - be aware of regional

differences

• Americans have strong opinions and are willing to

voice them

• Americans love humor and sarcasm

• Americans work long hours, two weeks of

vacation and work on vacation

More tips


• Typically business relationships are between

companies and not people

• Not important to develop a personal relationship

for a successful business relationship

• American companies want to get the best deal and

the best service and are driven by the bottom line

• Americans are uncomfortable with silence and fill

in the void with conversation

• Americans ask many questions, often rapid-fire

More tips


• Americans like direct communication - yes means

yes, and no means no

• Do not interrupt someone speaking but if you do

always start with "excuse me"

• Americans believe in written agreements and shy

away from oral agreements

• Use good eye contact in all settings

• Start all encounters with a handshake but if a

close friend a quick, gentle hug or between males

a chest or fist bump.

• Spell all names correctly in writing (eg. Marc

Friedman, not Mark Freedman)

More tips


• Be on time and if more than 5 minutes late call

• Be aware of the religious Sabbath before

requesting a meeting on Saturday or Sunday

• Be sure to meet all deadlines. If not, advise the

other party well in advance

• Meetings generally informal and relaxed but

serious. Be prepared to start after a quick

exchange of greetings

• All attendees should make some contribution or

else they may be viewed as irrelevant

Tips for business meetings


• In major cities, business suit and tie for men and

business suits for women. Less formal in smaller

cities or rural areas.

• Fair to ask ahead about dress code

• Polished shoes, clean and well-pressed clothes

• Do not keep looking and using smartphone unless

specific to the meeting, and if so explain

• If comfortable, ask you be called by your first

name (eg. "Please call me Marc")

• Give all speakers the chance to finish expressing

their thoughts

Tips for business meeting conversation


• Topics that are acceptable include job-related

information, sports, travel, food, music, movies

books

• Topics that may be unacceptable include religion,

politics, controversy (eg. Gay marriage, abortion,

gun control, Obama, Tea Party, Putin, etc.)

• Men especially use sports metaphors which if

necessary you should ask for an explanation (eg.

Rounding third base, curveball, full-court press,

balk, ice, four corners)

• Ask about idioms (eg. "Let's go the whole 9

yards", "according to Hoyle" etc.)

Patent Troll Infringement Claims


What is a patent troll?


• A patent troll typically is a company funded by investors that

acquires portfolios of patents in order to make claims of

infringement against large and small companies to collect license

fees

• A patent troll is an entity that tries to make a great deal of money

from a patent or patents it did not invent, never practiced and has

no intention to practice.

• A patent troll may also be known as an NPE (non-practicing

entity) or PAE (patent assertion entity)

• Best known patent trolls: Acacia, Tessera, Rambus, Wisconsin

Alumni Research Foundation, Interdigital, Rockstar, Round Rock

and Intellectual Ventures

• In 2013, patent trolls filed 67% of all patent infringement cases, up

from 19% in 2006, 23% in 2007, 25% in 2008, 27% in 2009, 29% in

2010 and 45% in 2011 and 62% in 2012. Top 10 filers were patent

trolls

Top 10 ways to protect against patent troll claims


• Early assessment - develop litigation and settlement

strategy at outset, and how to respond to a claim letter

• Engage experienced counsel with a reputation for

success and experience defending troll claims

• Be appropriately and economically aggressive -- early

dispositive motions, declaratory judgment suits

(including by vendors), IPRs

• Leverage Joint Defense Groups -- knowledge,

resources, creativity

• Invalidate the Patent -- use post-grant review, such as

IPR, PGR, CBM, or reexamination

Top 10 ways to protect against patent troll claims

(con't)


• Avoid Infringement - stop arguable infringement,

design around patent

• Understand the Patent Troll, its motivation and its

economics

• Discredit the Patent Troll and/or the Inventor

• Minimize damages - apportionment, isolate value

to "footprint" of invention, royalty stacking

• Don't be afraid to try the right case to a jury

Should we be afraid of patent trolls?


• Patent Troll Claims Are Risks to be

Controlled, Not Reasons to Refrain from

Expanding to the US

The Bottom Line?


The United States offers broad and rich business

opportunities for European companies. While doing

business in the United States carries legal risks,

many of those risks of doing business can be

significantly controlled and many other risks of

doing business can be completely eliminated

through careful planning and execution.

"An ounce of prevention is worth a pound of cure!"

Benjamin Franklin

Thank you

Marc S. Friedman

Dentons US LLP

1221 Avenue of the Americas

New York, New York

USA 10022

© 2013 Dentons

Dentons is an international legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its

content. Please see dentons.com for Legal Notices.

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Marc s. friedman slides for legalbooster