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Legal Overview: Doing Business in the USA


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Vinita Mehra and Jasmin Hurley took part in an event about launching businesses put on by the Greater Columbus Chinese Chamber of Commerce. They discussed U.S.-China trade relations, focusing on U.S.-bound investment, its structures and incentives. They also covered entry options for investors, detailing corporate structuring and taxability, and gave several tips to doing business in the U.S., especially related to IP protection.

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Legal Overview: Doing Business in the USA

  1. 1. presented by Vinita Mehra + Jasmin Hurley Legal Overview DOING BUSINESS in the USA
  2. 2. Serving clients globally for more than 50 years Recognized globally for world-class client service Connected to 150+ firms and 11,000+ lawyers worldwide
  3. 3. 18practice areas 70+lawyers 100+focus areas
  4. 4. U.S.-China Trade at a Glance
  5. 5. Investments to China Information Technology Real Estate Health Care Manufacturing Education Services Investments from China Logistics + Distribution Manufacturing Financial Services Information Technology Pharmaceuticals
  6. 6. Drivers + Trends of China Outbound Investments to U.S. Innovation Natural Resources Value Added: Strategic Growth Low Valuation Expanding Existing Markets Financing for Expansion
  7. 7. Structures for INVESTMENT/ OPERATIONS
  8. 8. Acquisitions Joint Ventures Technology Collaborations Greenfield/Brownfield EB-5 Program Franchising
  9. 9. Incentives States have economic development organizations Focus is on job creation and economic development Help to navigate the process of acquiring and operating a foreign-owned enterprise
  10. 10. Greenfield / Brownfield Entry Options for Investors Foreign enterprises may operate in USA through various legal forms: Corporation General Partnership Limited Partnership Limited Liability Company U.S. Branch
  11. 11. Greenfield / Brownfield Entry Options for Investors Unlike China, U.S. has no federal company law, and the rules regarding formation, operation, and dissolution of business entities are defined by state law rather than federal law
  12. 12. Greenfield / Brownfield Entry Options for Investors Limited Liability accorded by state law to the owners of “qualifying entities” Improved ability to access capital markets for investment capital Common reasons to use separate legal entity are:
  13. 13. Greenfield / Brownfield Entry Options for Investors Consideration to annual state taxes Favorable incorporation laws Minimal restriction on corporate activities If a company will engage in interstate commerce, the choice on a state of incorporation should be based on:
  14. 14. Greenfield / Brownfield Entry Options for Investors CORPORATION Structuring + Its Taxability A legal entity separate and apart from the natural individuals who form and own it Business must be registered as a “C-corporation” Can only have one shareholder
  15. 15. Greenfield / Brownfield Entry Options for Investors CORPORATION Structuring + Its Taxability Generally, no “minimum amount” of capital requirement No nationality or residence requirements Most preferred form of legal entity by foreign investors
  16. 16. Greenfield / Brownfield Entry Options for Investors LIMITED LIABILITY CORPORATION Structuring + Its Taxability Filing of Articles of Incorporation with the Secretary of State, creates a LLC and it’s Operating Agreements Provides Limited Liability for owners, while maintaining a single level of tax
  17. 17. Greenfield / Brownfield Entry Options for Investors LIMITED LIABILITY CORPORATION Structuring + Its Taxability Tax-wise, the LLC is a “Pass Through” Generally, not preferred by foreign investors as the owners have to file tax returns
  18. 18. Greenfield / Brownfield Entry Options for Investors PARTNERSHIPS Structuring + Its Taxability Defined by U.S. tax law – a partnership includes a syndicate, pool, joint venture or only unincorporated organization by which any business is conducted – and which is not for Federal Income tax purposes, trust or estate
  19. 19. Greenfield / Brownfield Entry Options for Investors BRANCH OF FOREIGN CORPORATION Structuring + Its Taxability Not a separate legal entity – just an extension of the foreign corporation with the U.S. Generally, not recommended to foreign investors
  20. 20. Greenfield / Brownfield Entry Options for Investors BRANCH OF FOREIGN CORPORATION Structuring + Its Taxability Could subject foreign corporation to: 1. being a more viable target for lawsuits/claims in the U.S. 2. being liable for U.S. taxes on worldwide income 3. Piercing of corporate veil
  21. 21. Greenfield / Brownfield Entry Options for Investors General Corporation law of Ohio is advance and mature Ohio is one of the best environments for corporation in terms of authority given to directors compared to the liability they can have in other states DELAWARE VS. OHIO Structuring + Its Taxability
  22. 22. Which State to Incorporate? Depends upon particular company’s needs to be closer to its customers and/or where center of operations is
  23. 23. for Doing Business in USA TOP TIPS
  24. 24. Protecting Your Business with Insurance 1
  25. 25. Protecting Your Business with Written Contracts 2
  26. 26. Due Diligence on Prospective U.S. Partner 3
  27. 27. Protecting Your Crown Jewels (Intellectual Property Assets) 4
  28. 28. Identify + Acknowledge Cultural Differences 5
  29. 29. The Intellectual Property LANDSCAPE
  30. 30. COPYRIGHT Progress Clause Art. I §8 cl. 8 Copyright Act 17 U.S.C. § 101-1332 TRADEMARK Commerce Clause Art. I §8 cl. 3 Lanham Act 15 U.S.C. § 1051-1141 PATENT Progress Clause Art. I §8 cl. 8 Patent Act 15 U.S.C. § 1-376 TRADE SECRETS Uniform Trade Secrets Act DOMAIN NAMES Anti-cybersquatting Consumer Protection Act of 1999
  31. 31. Trademark Source Indicators Prevent Consumer Confusion FUNDAMENTALS
  32. 32. Distinctive Used = +
  33. 33. GENERICDESCRIPTIVESUGGESTIVEARBITRARY/ FANCIFUL Strongest trademark rights Inherent distinctiveness Strong trademark rights Inherent distinctiveness Weak trademark rights Acquired distinctiveness No trademark rights No distinctiveness CLOCK ESCALATOR TRAMPOLINE ASPIRIN BAND-AID TISSUE
  34. 34. Effective communication tool Easy for customers to find you Help to utilize the internet Help to figure out your rights Infringement is a costly game Represent an opportunity to capture + monetize brand goodwill Competitive advantage
  35. 35. U.S. Common Law
  36. 36. Benefits of REGISTRATION Evidence of validity and ownership Constructive nationwide use Right to use ® symbol Access to federal courts Potential for increased recovery Provides basis for registering the trademark in some foreign countries Reveals points of infringement exposure
  37. 37. Madrid Protocol
  38. 38. Trademark ISSUES Priority Infringement Dilution Counterfeiting
  39. 39. Copyrights Original works of authorship Protect the “expression” of an idea WHAT ARE THEY?
  40. 40. Copyright REQUIREMENTS The expression must be ORIGINAL No protection for “functional articles”
  41. 41. Ideas Facts Titles Processes Names Unprotected MATERIAL Slogans Public Domain Materials
  42. 42. Rights of Ownership Automatic protection from moment of fixation Reproduce Distribute Perform Display Create Derivative Works
  43. 43. Infringement Ownership Copyright ISSUES
  44. 44. Patents WHAT ARE THEY?
  45. 45. Patentable Subject Matter Useful = + Novel Non- obvious
  46. 46. Rights of Ownership No rights without registration First to File Reproduce Distribute Display License
  47. 47. Patent ISSUES Infringement Ownership Trade Secret v. Patent
  48. 48. Permission TO USE Trademarks Copyrights Patents
  49. 49. Legal Advice This presentation is designed to provide an overview of a number of legal principles and considerations. As each legal issue is fact dependent, this presentation should not be used or viewed as legal advice, and your legal counsel should be consulted on the application of your particular factual situation to the current law. Copyright: 2018 Kegler, Brown, Hill + Ritter Co., L.P.A.
  50. 50. Vinita Mehra Director + Co-Leader, Global Business Practice 614-255-5508 Jasmin Hurley Intellectual Property + Business Associate 614-462-5465