Category Archives: International

No more DIY in the US for Foreign Trademark Registrations

Courtesy of our friend David Copland, a trademark lawyer based in Dresden, Germany:

Amendments to the Trademark Rules of Practice published in the U.S. Federal Register of July 2, 2019 require as of August 3, 2019 all foreign trademark applicants, registrants, and parties to a TTAB proceeding are required to use a U.S.-licensed attorney for filing any trademark-related submissions to the U.S. Trademark Office.  

Previously all trademark filings could be made directly by a foreign individual, or by a member of a foreign limited corporation, a partner of a foreign partnership, or an officer of a foreign corporation.  Under the prior rules, foreign counsel could “ghost write” filings which foreign trademark owners could submit directly.  This will no longer be possible. 

The Madrid system does not allow for designation of a U.S. attorney for applications submitted through WIPO’s International Bureau.  Consequently, initial applications filed through the Madrid system need not be filed by a U.S.-licensed attorney.  However, any further submissions to the U.S. Trademark Office related to a Madrid application, such as responses to office actions or registration maintenance filings, will require the foreign trademark owner to have a U.S. attorney.

Other than an initial application filed under the Madrid system, foreign trademark owners must be represented by a U.S.-licensed attorney for all U.S. trademark filings after August 3.

For more information see the USPTO Website or give us (or David) a shout.

Too much information … information … information

Lwl briefboegen cd website10

Image courtesy of LWL-Klinik Lengerich
One of the questions I’m asked all of the time is one which no one on this side of the Atlantic Ocean would ever expect, and that is, what are the legal requirements for business letterhead in the US? The answer is, there are none, usually accompanied by a vaguely perplexed look. That’s not entirely true, as I’ll discuss below, but it’s pretty darn close. But first, why the question in the first place?

Perhaps unsurprisingly, Germany does regulate the content of letterhead, as do most European countries to one extent or another. Although the requirements differ for different types of corporations, German letterhead (Briefbogen) typically includes the company name and address, the court at which the company is registered, the company’s number in the corporate registry (Handelsregisternummer), and the managing directors or officers of the corporation. Germans also typically include their complete banking information, including the IBAN or similar bank number and account.

In the US, in contrast, letterhead is typically limited to the company name, address, phone numbers, and website address. personalized letterhead may also include an e-mail address or other contact information, and occasionally letterhead will include a slogan or information about the company’s productions. That’s typically it – no additional information is required or expected. In fact, you can leave most of that information off if you really want, although it may not make as professional an impression.

While not a requirement under the law, it is advisable for companies to include their full legal names somewhere on the letterhead, including “Inc.” or “LLC” or whatever, to clearly indicate to the recipient of any correspondence that they are dealing with a limited liability business entity. Certain industries include additional information by custom (e.g., law firms include the names of partners in the partnership), but that’s not a legal requirement.

It’s also important that the letterhead not be deceptive – while you don’t have to include any particular information on your letterhead, the information you choose to include should be accurate and clear.

So, to be clear, you do not need your EIN (tax number), directors, officers, or bank information on your US letterhead. In fact we recommend against it, because that’s just information that scammers can use to try and social engineer their way into your company bank account.

For more information about German letterhead requirements, see this summary from the Hamburg Chamber of Commerce (in German) or shoot us an e-mail.

Do I really have to worry about the new European privacy rules?

Is it finally time to pay attention to European efforts to regulate privacy? At least according to pwc, the answer is yes.

Let’s face it – many Europeans regarded the former “Safe Harbor” as a loophole big enough to drive a truck through, and many US companies quietly agreed by effectively ignoring it. The GDPR is an attempt to address that more effectively, at least with respect to American companies with assets in Europe, particularly behemoths like Google and Facebook. As of May 25, 2018 most processing of European personal data will have to comply with the GDPR (General Data Protection Regulation), including processing by US-based companies. There are a few reasons for US companies to be more concerned about the GDPR than previous efforts to regulate privacy:

  • The GDPR has the effect of law, without the need for individual (and often inconsistent) country legislation.
  • All businesses which “target” EU nationals are subject to the regulation, no matter where they are based.
  • The fines have been increased significantly and can be tied to worldwide revenue, to ensure that they are meaningful for even the largest of companies.

Of course, it’s easy for EU officials to threaten Google, which has at least four data centers located in the EU, each presumably worth many millions of dollars. It’s a little harder for them to penalize US companies which don’t have assets on the ground in the EU, particularly given that US courts are likely to be skeptical of attempts to enforce the regulation against companies with no offices in Europe. So, how do you know if you should be worried about the GDPR? If you answer yes to any of the following you need to start getting your privacy house in order:

  • Do you have assets in Europe? As already noted, you should be GDPR compliant unless you’re willing to kiss those assets goodbye without compensation.
  • Do you have personnel in Europe? Even with limited assets on the ground, you need to consider the risk to your employees, and the subsequent risk to your company if they are penalized and decided to sue.
  • Is the European market is important to you, or is it expected to be important to you in the future? Obviously, an adverse judgement in the EU could result in loss of any European-based revenue, to say nothing of the loss of customers due to bad publicity.

Notwithstanding the hype, companies with no footprint in Europe and minimal aspirations of success in the European market probably have little to fear from the GDPR. That being said, given increasing concern over privacy on this side of the ocean, even those companies may want to consider implementing some of the GDPR requirements, to minimize any penalties and to make compliance easier if and when it becomes necessary. Besides, better privacy practices may well make business sense for a lot of US companies.

Well, then we’ll just sue them!

Vinnie

I guess you could save a little money on counsel, if you really want to.
When working with international (especially German) clients, we sometimes get to the point where the client says “well, then we’ll just sue them.” Unfortunately, while filing a lawsuit is easy, winning anything more than a Pyrrhic victory is often hard.

There are a number of reasons for that, some of which international clients are also familiar with. In most countries, I suspect, litigation takes longer than the parties (particularly the plaintiff) might like, and involves more effort than seems necessary. Similarly, the parties are sinking cash into what already seems to be a lost cost, although in many countries they can get back what they’ve put into the litigation if they win (more on that later). Finally, collecting in any country can be a challenge, and can involve making difficult decisions about when to pursue collection and when not to.

In the United States, however, there are some additional things to consider before bringing a lawsuit. After all, bringing the lawsuit itself is markedly easier than it might be elsewhere, but successfully prosecuting one can be a lot harder. Some of those issues include:

  • As noted above, the loser doesn’t pay the fees of the winner. That means that, in calculating the damages you expect to collect, you have to deduct the expense of filing, carrying out, and collecting on the lawsuit from any award. Sure, you have all read about our seemingly generous regime of “pain and suffering” and other punitive damages, but in the average commercial dispute you can expect to knock off anywhere from thousands to hundreds of thousands of dollars from any actual damages you are awarded, and you’re not likely to get any of those extra damages to make up for it.
  • Adding to both that cost and the impact on your business is the US system of “discovery,” which allows both parties to demand documents, depose witnesses, and otherwise intrude on the daily business life of the other party. Given that flying just one executive to the United States for one day of depositions can costs thousands of dollars and three work days, that’s a cost foreign companies have to think a little more carefully about than their domestic US counterparts. And remember, that money is not coming back even if you win.
  • All of the above means that a party who can afford to win the “war of attrition” can make it difficult to collect on even larger amounts due by driving up litigation costs to the point that a smaller vendor can’t maintain the litigation long enough to collect. I suspect that’s true in most countries, but again, the prospect of never recovering those expenditures makes things more problematic.
  • And then there’s collection – an award in one jurisdiction can be hard to collect on in another, and none of that matters if the party you’ve won against has nothing to collect on. It’s important to do some research up front before filing that lawsuit, since a judgement for $250,0000 which cost you $15,000 to get is really just a loss of $15,000 if you can’t collect in the end.
  • Finally, it’s not all about money. The interruption to your business and stress caused by depositions and document collection and review can be significant, and even more so for non-US employees who aren’t used to that sort of thing. Equally importantly for the foreign employer, in some cases US discovery laws may be inconsistent with your own laws, requiring a difficult choice between compliance with US law or accepting a negative result in the US in order to comply with foreign law.

There are definitely times when a lawsuit is the right way to go, but suing “on principle” in the US rarely makes sense. A lawsuit is like any other business decision, so before filing make sure the return is going to be worth the investment.

At the rate we’re going, we’ll soon be traveling with books and cassettes

IMG 1917

Let’s not go here again
As I watched the luggage carousel spin slowly around I was pretty well aware what I would see there – nothing, or at least nothing which belonged to me. We had barely made our connection in Frankfurt, after circling for hours, and the only thing which made it through to Philadelphia was a cat. I don’t even like cats.

No problem, right? We could just run out and buy luggage on the airline’s dime.

Or not. Airline liability for lost or damaged baggage on international flight is regulated by a treaty called the Warsaw Convention, which limits airline liability for checked baggage significantly. According to Delta’s website, that’s $9.07 per pound up to a maximum of $640. Normally the answer is simple – if it’s valuable, don’t check it. The proposed ban on laptops and tablets for flights to the US from Europe, however, adds a new wrinkle to that otherwise simple advice, since most business travelers don’t really have an alternative to traveling with a laptop. Most road warriors won’t be terribly happy about seven to nine hours of lost work time, to say nothing of that low-res airline entertainment. They’ll be even less happy if they can’t retrieve the laptop at the end of that long flight.

The bigger issue, of course, is security. A lost laptop means lost data, and lost data can result in all sorts of headaches depending on what’s actually on the laptop. While encryption can limit the damage, that still won’t compensate for the loss of productivity for business travelers who depend on their laptops for their daily work.

While business travel won’t stop, the laptop ban combined with other issues which make international travel more onerous may well hit the bottom line of airlines with international routes. It will also increase the interest in everything from insurance for lost luggage to rentals of laptops and similar equipment overseas (which brings with it additional security concerns). Some frequent travelers may even consider storing electronics at offices or apartments overseas, to ensure that they are able to get back to work quickly upon arrival.

In the grand scheme, however, Skype begins to look pretty attractive when the alternative is eight hours of airline entertainment or watching TV on a cell phone followed by a full cavity search on arrival.

Of course, you could always fly via Canada.

State of Incorporation

State of Incorporation

Alas, not the most popular state to incorporate in
Europeans often think that they are catching up to the US, at least in terms of harmonized and consistent laws, but in many instances our system is actually more federalized than that of Europe. Whereas you can now form a European corporation, US corporations are formed under the laws of a particular state, rather than under the federal (United States) law. Typically, that means you’ll have to decide between the state in which you’ll actually be headquartered or operating (assuming you know which state that is) and one of the states which has advantageous tax or corporate laws for corporate formation.

Traditionally, Delaware has been the first choice of most corporations because of its favorable tax and corporation laws, but other states such as Nevada, Alaska, and Wyoming have also been trying to get into the lucrative business of corporate services in recent years. If you’ll be operating completely within the border of a single state, you might as well incorporate in that state, but most German businesses are seeking to sell throughout the United States so a Delaware (or other law-tax state) corporation will be more advantageous. There is no equivalent to the European Corporation (SE) in the United States, so every US company will have to choose a state of incorporation.

Even more confusing, if you will be operating in a state outside of your state of incorporation you will have to file for authorization to do business in that state (or those states) as a foreign corporation. That’s right, a Delaware corporation doing business in California or even neighboring Pennsylvania is considered “foreign” for the purposes of state law, just as a German corporation would be, and may have to register as a foreign corporation. Although state laws regarding filing for authorization differ, it’s a safe bet to say that if you’ll have employees or physical assets based in a particular state you’ll be required to register in that state.

So, for example, if you form a corporation under the laws of Delaware, but will have your offices in New Jersey, you’ll form the corporation in Delaware and then file for authorization to do business in New Jersey. If you also have branch offices in California and North Carolina, you’ll need to file for authorization in those states as well. Filing for authorization in a particular state triggers other obligations as well, including the obligation to file an annual tax return and, usually, to file papers with the state relating to labor, taxes, and other fees. For any state in which you do not have a physical presence you’ll also need to pay a registered agent to accept mail and service of legal process on your behalf, which usually costs no more than $200 per year.

This is the first in an occasional series of posts on starting your business in the US.

Of Cherry Blossoms and Business Cards

Japan

In my practice, I work with people from all around the world, but a large number of them come out of Europe, more specifically, Germany. While that has made me very sensitive to the cultural quirks of different European cultures, I’m not nearly as familiar with the dos and don’ts of Asian culture. That’s why, when I was asked to meet with a prospective Japanese client, I reached out to a friend and colleague for advice. His tips are below, for your reading pleasure.

  • Don’t be uncomfortable with silence. Japanese often pause for long periods, or sit in silence. It is crazy uncomfortable for a westerner.
  • Small grunts (mmm, mmmm) are not signs of agreement, but just I’m listening. The reverse is also true and can help with number 1.
  • Japanese occasionally close their eyes in meeting and look like they are going to sleep (and in large meetings many do sleep). It is not considered rude at all.
  • You probably read this but don’t put the business card away. When they hand it to you study it, and when you sit, put it in front of you. If more than one person comes, you line them up in front of you in the order the people sat (don’t make a stack).
  • Unless this is a very western Japanese person, he or she will want to establish a relationship with you before bringing you on board. They may say they’re hiring you, but you might see just little dribbles of work until you get a good relationship. Wine and dine and spend time with them, visit them, give them attention. The more comfortable they are with you the more biz you’ll get.

I found these pretty helpful, and some probably apply in most cultures to differing degrees.

For those of you in the Philadelphia area with an interest in things Japanese, the Cherry Blossom Festival (above, unfortunately this blog post is too late for that) is a great event. See the Japan America Society of Greater Philadealphia for more events.

How about Estonian law with your morning cuppa’

DailyTimes screengrab

It’s like the Hotel California, you can subscribe any time you like but you can never leave.
It’s not often you start the morning with an international legal dispute, and that before one’s morning coffee. This morning, from the kitchen, I was treated with the dulcet tones of my wife arguing with the London Times about cancellation of her online subscription. It turns out they only accept cancellations from the US via passenger pigeon on odd Tuesdays which have a full moon, and then only when written in the blood of a recently slain unicorn. Ok, not really, but as we haven’t actually figured out how one successfully cancels a subscription, that may in fact be the cancellation policy. Pro tip – don’t subscribe to the London Times.

Anyway, the interesting thing about that kerfuffle is the degree to which the average consumer worldwide is entering into contracts with companies in other countries, ostensibly under the laws of those countries. As consumers, however, those individuals remain protected under the consumer protection and other laws of their respective countries (or, in the case of the US, an odd patchwork of federal, state, and local laws). As a result, even as simple transaction as a newspaper subscription or Facebook registration can give rise to significant legal cases with an international impact.

Many of those cases involve privacy and the EU-US privacy shield. Europe isn’t alone in its concern for the privacy of citizens, however, with a new decision extending the protections of Canadian Privacy to data disseminated outside of Canada (hat tip to Daniel Solove). While the US doesn’t really care as much (or perhaps at all) about privacy, there are laws like the Speech Act which attempt to protect US residents (in this case writers) from the effects of foreign laws which are against US public policy (in this instance, the right to free speech).

There are a host of other issues which arise from these contracts, however. Do companies like the Daily Times understand and follow US legal requirements like the Fair Debt Collection Practices Act or, in the case of selling (and upselling), the Telephone Consumer Protection Act? Even if they do, how does one collect a relatively small debt in a foreign country in an efficient and cost-effective way? In the other direction, Europe has extended its controversial “right to forget” worldwide, creating a compliance nightmare for Google and other big US tech companies, and an unresolved conflict for others without as much skin in the game in Europe.

The Internet makes international business possible from your kitchen table. What that means for public policy and protection for the consumer remains largely unresolved.

Blocking the ad blockers

IMG 5435

Munich (but not the appellate court)
Advertisers don’t much like adblockers, and publishers in particular see them as a drain on revenue necessary for the production of content.

One of the most popular ad-blocking plugins is the not-so-cleverly-named Adblock, by the more cleverly named German company Eyeo GmbH, based in Cologne. According to a recent report by German IT news portal heise online, a recent attempt by three German media outfits to take Adblock offline has met with skepticism by Munich’s appellate court. The plaintiffs (which include my “other” hometown newspaper, the Süddeutsche Zeitung, threw everything they could at Eyeo, from copyright infringement to antitrust, but the court doesn’t seem to have bought into it. At issue, among other things, is the “whitelisting” process which allows Eyeo to make money on blocked ads.

This decision may vindicate Eyeo’s partial loss against Axel Springer, and follows a win in Hamburg against Spiegel Online. Either way, it looks as though efforts to block the adblocker will make their way to Germany’s Supreme Court in Karlsruhe sometime next year. Having failed in the courts before, however, German media isn’t putting all of their eggs in one basket. In addition to technical measures, the industry group for German newspapers is also pursuing the legislative route to see off Adblock.

Efforts to block Eyeo in France also seem to have faded, and in the US there has been little in the way of legal action against ad blocking software, probably due to different antitrust and competition laws. Thus far Eyeo has won more of these battles than it has lost, so adblocking will remain a thorn in advertisers’ sides for some time to come.