Peter Singfield and Duncan Sykes of Foot Anstey provide their five top tips on the legal considerations of cross-border business.
Understand your IP portfolio & the laws within the country you wish to trade.
Your branding and the uniqueness of your products can be the crown jewels of your business. Most IP rights work territorially (or regionally for instance within the EU). When trading abroad, businesses will need to get to grips with a suite of legal rights (both domestic and international). Some rights may be registered (i.e. trademarks or design rights) or unregistered (i.e. copyright or unregistered designs) and the protections afforded to each will vary.
Once the extent of all rights is clear, businesses should also get to grips with the law applicable to the country within which they wish to trade, in the same way as they would consider cultural and societal differences when exploring whether there is a market for their goods in that territory. Specific attention should be paid to the laws surrounding local product liability (i.e. for defective goods), tax and licensing.
Protect your IP
Ensure your brand:
a) is registered. Prior to exporting, your IP portfolio should be up to date at home which means making certain that the appropriate registrations are in place and considering whether any additional international registrations are required.
b) translates well. Different countries have different cultures and values and a brand that means something in one country may mean something entirely different in another. For example, Nordic Mist (a tonic water) was never launched in Germany as “mist” literally translates as manure!
c) is not at risk from squatting. Trademark squatting is where a business registers a second party’s trademark in a jurisdiction which, at that time, the second party did not hold a registration in an attempt to benefit from the second party’s mark. In some Far Eastern jurisdictions, we have seen a business who want to distribute for a brand register trademarks for that brand; a sales technique which to our knowledge has never worked. However, it creates a headache for the brand owner. It pays to plan ahead in this area.
Prevent Piggy Backing
Domain names are increasingly crucial for businesses, particularly those who are consumer facing. It is vital that domain names are registered to prevent piggybacking whereby another company operates a confusingly similar address in an attempt to attract custom on the back of the other’s domain.
The process for registration is cheap and straightforward and we would encourage any business that seeks to export its products abroad to take a relatively comprehensive approach to domain name registration to try to head off at the pass possible cyber-squatting.
Choosing an effective business structure
Assuming you are not building a root and branch operation yourself in a foreign territory, there are many ways to take a product to market, both directly and indirectly and, one size doesn’t fit all. The advantages and disadvantages of the three most common are set within the table below.
Build and manage an effective supply chain
Clarity on your supply chain and route to market is crucial in ensuring that value for money and reliability are delivered. Avoid confusion with a supplier by drawing up and agreeing to accurate contracts that comprehensively negotiate risk and cover, for example, the payment method, trading terms, insurance and delivery. Be aware of the potential impact of ethical supply on your hard-won brand and reputation. A relationship of trust is fantastic, but in a trusting relationship, neither side should be worried about recording clearly, in writing, the terms of their relationship and what happens if things don’t work out.
In summary, as ever, look before you leap, but provided you take care to plan, there are fantastic opportunities out there to explore!