Setting Up Business

in a Foreign Country

November 1, 2012

RINSA Global Business Access

Lethbridge, AB

2

Agenda

• Global protection of IP

(Dan Polonenko)

• Setting up business in a

foreign country

(Lorie Wheeler)

3

What is IP? 1. Trade-secrets

2. Patents (includes Industrial Designs)

3. Trade-marks

4. Copyrights

Options for protecting IP

4

Differences Between the Four Pillars

• Names & designs that are legally protected for

commercial use by a trademark owner

• Trademarks should be registered in each

country where you intend to do business

• Have to use them or will lose them

• Rights can be perpetual

TRADEMARKS

BRANDING strategies

®

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Why Patent? • Never expire – as long as the secret remains secret

• No government filings or approval required

• Can be very successful e.g., Coke, KFC, resins

Patents v. Trade Secrets

Trade Secret PROs

• Not everything can be protected – e.g. technology can be

reverse-engineered

• If the secret is exposed, then it’s no longer a secret

• Can be expensive to maintain, requires security,

contracts, complicated processes

Trade Secret CONs

6

Why Patent? • Legal right to prevent others from making, using, selling

the claimed invention

• Creates commercial opportunities for value capture

• Can control / affect commercialization

Why Patent??

Patent PROs

• Becomes public knowledge in 18 mos.

• Becomes “public domain” after 20 yrs.

• Can be expensive to secure & maintain protection

• Need to monitor marketplace for infringement

Patent CONs

7

• Invention is easy to reverse-engineer

• Significant business opportunity

• Secure a competitive advantage

• Canada & USA: within 1 yr of a public disclosure

• Everywhere else: before any public disclosure

When to Patent?

8

The Patenting Process

Step 1: Decision to patent

• Invention disclosure

• Commercial value assessments

• Patentability assessment

• Identification of global opportunities & access

• Potential commercialization / licensing

= Go / No go decision

The Patenting Process

Step 2: Patent preparation, filing,

prosecution, exploitation

9

Patenting is not

about the technology

It’s to protect the

business opportunities

created by the

technology

The Patenting Process

When & where to file patents

Three-step process over 2 ½ years

Step 1: file an application with CIPO or USPTO

• priority date / priority filing

10

Step 2: file an international patent application (PCT)

with WIPO through CIPO

• within 12 months of priority date

• defers “where-to-file” decisions & costs for 18 months

Step 3: national-phase filings in selected countries

• within 30 months from priority date (18 months after the PCT)

• file where there are business opportunities &/OR

• where competing products may manufactured

Commercialization

Essential component of patenting decisions

• takes a long time to start generating

(i) revenues & then, (ii) profits

• Product testing & refining (prototypes)

• Production scale-up (final product)

• Low-cost high-quality manufacturing (final product)

• Options for commercialization locally & beyond?

11

Reasons for Setting up Business in a Foreign Country

Typical motivations for a Canadian entity:

1) Economic Climate:

• Access to capital

• Lack of credit

2) Access to Resources:

• Access to foreign resources, know-how and technology

3) Strategic Complements and Efficiencies:

• Access to foreign markets generally

• Strengthens local market position and mitigate local risk

• Synergies with foreign technologies and foreign markets

12

Legal Considerations: Foreign Markets

• Foreign Intellectual Property laws

• Foreign investors rules on ownership of property

• Financial regulations – taking money out of the

country

• Foreign tax regimes

• Immigration laws

• Foreign rules governing employment 13

Choosing a Foreign Country

• Type of business helps with choosing your

countries, eg, oil and gas versus agriculture

technologies

• Research each country for the issues discussed

on the slide above

• Initially research can often be done on the

internet

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Legal Forms of Conducting Business Abroad

A. Direct Foreign Presence:

- Foreign Subsidiary

- Branch Office

- Joint Venture

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Legal Forms of Conducting Business Abroad

B. Indirect Foreign Presence:

- Distribution

- Agency

- Marketing Representative

- Licensing

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Legal Forms of Conducting Business Abroad

C. No Foreign Presence:

- Export from Canada directly to foreign

purchaser

- Transmission of information (i.e., over

computer networks, Internet, etc.)

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Legal Nuances

• Each individual type of legal form has particular legal

nuances and pros and cons.

Note: there are unique legal nuances for each type of

these legal forms.

• Not a one size fits all.

• Need to consider:

- type of business;

- foreign jurisdiction laws; and

- business objectives before selecting corporate

structure. 18

montréal ottawa toronto hamilton waterloo region calgary vancouver moscow london

Thank You

Dan Polonenko, PhD

Partner, Patent Agent

Tel: 604-443-7623

Email:

dan.polonenko@gowlings.com

Lorie Wheeler

Partner, Business Lawyer

Tel: 403-298-1805

Email: lorie.wheeler@gowllings.com