From A Legal Perspective: FAQs for Global Business Startups

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If I want to sell products to customers in another country, what steps do I need to take?
Before considering any international distribution, a company should develop a business plan that considers:

  • the particular market.
  • market-specific requirements
  • such as tariffs or trade barriers.
  • cultural or language differences.
  • the economics and politics of the region.
  • the impact upon the market.

Then put together a marketing and distribution plan for getting the product into the market. If you are uncertain about who to approach as distributors in the market, check out your competition and see who others are using to get their products to market. An international distributor can help shortcut some of the questions about how to get established within a specific market.

With that information in hand, you will then need to complete any legal and trade certifications required by each foreign country (including possible local government requirements) and create international distribution agreements to govern all product distribution and resolution of disputes with your distributors. Depending on the nature of the product, you will need to consider:

—- consumer labeling and safety regulations.
– product liability laws.
– —implications to product distribution.
– —insurance needs for various aspects of the distribution.

It is advisable to have a lawyer specializing in international contract law to advise on the process along the way and to assist with drafting agreements, applications or certifications necessary to distribute within a chosen foreign market. It is often advisable to also hire local attorneys from the specific country to provide country-specific guidance and assistance. You may want to consider a tax lawyer who can advise on any tax law implications for incomes earned outside the U.S.

There are several good federal resources to help you get started, including from the U.S. Commerce Department, the Small Business Administration and the Export- Import Bank, which can all be accessed through www.export.gov, a collaborative governmental website.

Do I need an export license? If so, what are the things people need to know?
An export is much broader than you might think and includes more than shipping or mailing products overseas; it may also include providing information by facsimile, telephone or even downloading software off the Internet. The U.S. Department of Commerce’s Bureau of Industry and Security has a set of Export Administration Regulations that must be consulted and complied with when exporting products overseas. The license requirements depend on four criteria, including:

1) the item’s technical characteristics
2) the designation
3) the end use
4) the end user

Subject to certain exceptions, there are 10 general prohibitions to exporting without a license. It is recommended that you seek the advice of an attorney to assist in determining if an export license is needed for your specific product and planned export.

Do U.S. laws still apply to business done in foreign countries? How do foreign laws come into play? Which takes precedent?
This largely depends on the nature of the issue involved. With regard to financial questions, particularly with regard to taxes, U.S. companies doing business abroad would generally be required to comply with local financial laws and regulations but may also have to pay U.S. income tax on the revenue derived. Tariffs, customs and transshipment laws often vary from country to country. Any U.S. trademarks should also be registered in the foreign country to ensure the brand and products are protected under local laws. Generally, once the product reaches the foreign country, the local laws of that country will apply to the product, its distribution and your liability for such operations or business within the country.

If I have a patent in the U.S. will it protect my intellectual property when doing business globally?
U.S. patent law generally only extends to the borders of the territory of the United States. Almost every country has its own patent and trademark laws, and a person desiring a patent or trademark in a particular country must make an application in that country, in accordance with the requirements of that country.

Federally registered trademarks and copyrights are protected by international treaty, but it is best to record copyrights and trademarks with the U.S. Custom and Border Protection and then consider registering in the foreign country as well to ensure continued protection under local law.

To protect your company’s intellectual property rights (“IPR”) overseas, it is recommended you engage legal counsel to help develop an overall IPR protection strategy that includes all patents, trademarks and copyrights.  You will want to develop detailed IPR language for licensing and subcontracting contracts as well as record your U.S. registered trademarks, copyrights and patents in key foreign markets including defensively in countries where IPR violations are common. The United States Patent and Trademark Office has more information on its website, www.uspto.gov, for protecting IPRs abroad under existing treaties and international laws.

 TK