Arizona Technology CouncilCouncil Connect, March 2012

Karen DickinsonPartner – Quarles & Brady LLPKaren.dickinson@quarles.com602-230-5511

Lisa DuranPartner – Quarles & Brady LLPLisa.duran@quarles.com602-229-5225

Agenda

Q&B 80-20 Rule

International Implications

Immigration Issues

Other Scary Legal Stuff

Lessons Learned

Global Contracting Principles

• Q&B 80-20 Rule of Global Contracting

80% is the Same – industry sector, business goals, negotiation skills, common contracting issues

20% is Different – culture, laws, regulations, enforcement, government structure

The 20% makes a difference!

• Understand cultural and ideological influences

– formal v. informal– high context v. low context– high emotion v. use of “reason”– high sensitivity to time v. low sensitivity to time– general agreement terms v. specific agreement terms– high v. low level of risk taking– relationship building v. contract creation– negotiating as a unified team v. a collection of

individuals

International Implications - Culture

Immigration Issues

Business Visitor

• Visa Waiver Program

(ESTA)• Admitted for 90 days• B-1 Visa• Admitted for up to 6 months

 

Permissible B-1 Business Activities (Not Work)

•  Meetings• Training• Negotiating contracts• Assisting with litigation• Independent research• Commercial

transactions

Meaningful Ties To Home Country: Required

• Permanent employment

• Meaningful business or financial connections

• Close family ties or social or cultural associations

NAFTA Professional (TN) Visa

• Canadian Citizens apply at a U.S. Port of Entry

− Admitted in TN -1 status for 3 years

• Mexican Citizens apply at a U.S. Consulate

− TN-2 Visa issued for 1 year; admitted in TN-2 status for 3 years

• Extendible for as long as U.S. employer wants to employ the TN professional and as long as TN professional has non-immigrant intent

NAFTA Professionals

• TN available where job opportunity requires the services of one of the professions listed in NAFTA, for example:– Accountants– Architects– Computer Systems Analysts– Engineers– Land Surveyors– Librarians– Nurses– Pharmacists

E-2 Investor Visa

• Non-Immigrant

• Treaty-Based

• Individual or Corporate Investor

• Invest in Existing or New Enterprise

• Investment Must Be − Active− Substantial− Not Marginal

Investment Opportunities

• Existing Business: Document stock or ownership interest. Compile records reflecting financial and operations history of existing business

• New Business: Incorporate business, request Federal tax ID number. Identify rental space. Prepare business plan

Process

• Submit E-2 Visa Application to U.S. Consulate

− To Develop and Direct the Enterprise or

− Essential Employee

• Family Members− Spouse Entitled to Employment

Authorization− Children under 21

• 5-year visa with 2-year admissions

H-1B Specialty Occupation Visa

• The offered position must require a bachelor's degree in a particular field (or equivalent education and experience)

AND• The beneficiary must have a

bachelor's degree in that field (or equivalent education and experience)

Annual Caps

• 65,000 new H-1B visas per year

• 20,000 additional new H-1B visas for people with advanced degrees from U.S. colleges or universities

• USCIS' fiscal year begins on October 1 of each year; may file petitions for new H-1B visas on or after April 1 of each year (180 days before the effective date of the H-1B visa)

H-1B Filing Requirements

• Employer must agree to pay the higher of the actual or prevailing wage as determined by the Department of Labor (DOL)

• Employer must obtain a certified Labor Condition Application (LCA) from the DOL

• Employer files a petition with the USCIS service center having jurisdiction over the place of employment

• Employer agrees that it will be liable for the reasonable costs of return transportation for the H-1B worker if the worker is terminated before the end of the period of authorized H-1B status

H-1B Fees

• Employer required to pay all filing and attorneys' fees except for the premium processing fee

• Fees: $325 base filing fee− $500 fraud detection and prevention fee

− $1,500 education and training fee ($750 for employers with 25 employees or less)

• Premium processing (expedite) fee: $1,225

Deemed Export Issues

• In its petition, employer discloses if the beneficiary will have access to technology or technical data that requires a "deemed export license" pursuant to the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR)

• If so, employer certifies that the beneficiary will not have access to such technology or technical data until the deemed export license is received

Other Scary Legal Stuff

Scary Legal Issue #1.1: Export Controls

• Exporting is a privilege, not a right - regulations govern legal way to export, and require a "license" to export all goods

• No Export to certain countries

• No Export for use in nuclear or biological weapons – watch out for multi-use products

• No Export to "Denied Parties" – watch out if . . .– Customer or purchasing agent is reluctant to offer information about the end-

use of the product

– Product’s capabilities do not fit the customer line of business

– Product ordered is incompatible with the technical level of the country to which the product is being shipped

– Routine installation, training or maintenance are declined by the customer

– Customer is willing to pay cash when financing would be more appropriate

– Delivery dates are vague, or deliveries are planned for out-of-the-way destinations

– A freight forwarding firm is listed as the product’s final destination

– When questioned, the customer is evasive or unclear whether the purchased product is for domestic use, export or reexport

• International Traffic in Arms Regulations govern export of defense related materials and technologies

• Companies may only share these items with U.S. persons and organizations — unless they receive authorization from the Department of State or qualify for a special exemption

• If your company is in the aerospace and defense sector, you must pay attention

Scary Legal Issue #1.2: ITAR

• Becoming ITAR compliant:– Register with the State Department – Establish a written Company Export Compliance

Policy and Procedure Manual– Submit license applications for all exports of

controlled items well in advance of the shipments– Export classify all your part numbers — products,

parts, supplies– Know whether any party you do business with is not a

U.S. person (as defined by the ITAR)– Ensure you have a Technology Control Plan in place– Screen for denied parties– Keep accurate records on all activity against State

Department licenses and agreements

Scary Legal Issue #1.2: ITAR

• U.S. Regulations prohibit honoring any boycott formed by foreign countries against nations that are friendly to the United States

• Currently, the Arab Boycott of Israel

• Boycott requests found in Contractual Documents, Shipping Instructions and Letters of Credit

• Example: requests that products are not:– of Israeli origin– do not contain Israeli-origin parts– were not produced by Israeli firm or with Israeli

labor– Israeli certificate of origin will not be acceptable

Scary Legal Issue #1.3: Boycott Regulations

Scary Legal Issue #2: FCPA

• Foreign Corrupt Practices Act - U.S. law designed to prevent bribery of foreign governmental officials by U.S. companies in order to influence the official’s acts or decisions if this is done to obtain, retain or direct business to anyone

• Exceptions – Routine Governmental Actions

• Cultural Issue – Gift-giving!

FCPA Prohibitions

WhatOffer/Promise/

Authorization of

Payment

with

Money/

Anything of Value

Who Foreign Government

Official Political Party Official Candidate for Foreign

Political Office

Agent / ForeignRepresentative Official

PurposeInfluence

Official Act/

Decision

Obtain/Retain

Business

toeither

FCPA Warning Signs

• Watch out if . . .

– The contracting party has a reputation for offering bribes or violating other laws

– A decision maker asks for a lavish trip to see the demo product

– The contracting party, or one of its directors, shareholders or employees, is a close relative or business associate of senior foreign government officials

– The contracting party is getting paid unusually high commissions in relation to its scope of work and contractual obligations

– The contracting party requests payments in an account outside the country of its residence

– The contracting party has undisclosed principals, associates, or subcontractors with whom it splits fees

– A decision maker asks for a “personal favor” for their child

FCPA Compliance Tips

• Look before you leap: know your business associates, partners, consultants and sales representatives

– STEP 1 - Conduct a Background Check

– STEP 2 - Contractual Representations

– STEP 3 - Opinion of Counsel if Necessary

Scary Legal Issue #3: Protecting Your Crown Jewels

• Intellectual property laws vary from country to country – but are still important protection!

• Contracts only form of protection for intellectual property that offers protection in every country

• Confidentiality provisions necessary to preserve trade secret rights in “know how”

• Can use “bundle of rights” to negotiate flexible arrangements that meet both parties’ needs

• But Remember - file U.S. trademark and copyright registrations with U.S. Customs & Border Protection

Lessons Learned

• Need to understand the culture and the political, legal and economic system – Get help with the 20%

• Intellectual property protection is just as critical outside U.S. as domestically

• Written contracts maximize protection

• Have fun – it brings people together and makes for good business!