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How to do Business in the United States of America seminar presentations from Frost Brown Todd Atorneys at Law
Seminar presentation form Susan Grogan Faller and Joe Dehner; Frost Brown Todd LLC | Cincinnati USA
How to do Business in the United States of America
Strategic alliances and choices as to how a Latvian company can enter the U.S. market
Structures to consider
Factors to consider
Strategic Alliances
USA
Strategic Alliances
– Market access is potentially high depending on distributor’s identity and efforts – Know-how/information sharing is good – Degree of operational control is moderate – Protection of technology is very good – It requires a simple contractual arrangement – Has good flexibility depending on the agreement – Capital cost is low and profitability is high – Cannot control resale price.
What does U.S. litigation cost, optimistically and in worst case scenario
THE U.S. LEGAL SYSTEM HAS:
THE U.S. LEGAL SYSTEM HAS:
– Every case can be appealed at least once.
Statistic for high and low end litigation costs
– Germany (1.1%), – Japan (0.8%) – U.K. (0.7%).
Tactical and strategic considerations of bringing a lawsuit as compared with being sued, including cost and other practical considerations, as well as differences in control of litigation factors
What to do if a Complaint is properly served or you want to sue?
You must proceed in accordance with the rules of the jurisdiction, and the rules in state courts vary from state to state.
Suing vs Being Sued:
– Change of venue – “Home Court” advantage? – Knowledge is power (unless you are not liked) – Big verdicts are more common in some areas (E.g. Texas and California)
– Court fees themselves do not vary much – The judge in charge may make quite a difference
U.S. discovery procedures really raise the cost and place cost containment out of any easy control, when a case is actually in court
– But not for unpredictable major litigation
-Conferring with counsel -Reviewing Pleadings -Gathering Documents -Preparing for and attending depositions -Preparing for and attending trial
Jury trials are more expensive than trials to the court
– $100,000 per month – Cases costing millions – Some large companies spend millions annually on litigation
Differences in litigation costs for product liability cases as compared to other litigation
Product strict liability cases often render high verdicts.
“From 1996 to 2003, the average size of jury verdicts in accident cases doubled to more than $1.2 million.* From 1992 to 2005, the median damage award in state courts in the nation’s 75 most populous counties increased from $154,000 to $749,000.** In 2004 the median jury award in product liability cases was $1.8 million***.”
Victoria Sherrow, Product Liability, page 57 (2010)
*Catherine Crier, The Case Against Lawyers: How the Lawyers, Politicians, and Bureaucrats Have Turned the Law Into an Instrument of Tyranny and What We As Citizens Have to Do About It. New York: Random House, 2003, p. 81. **Lynn Langton and Thomas H. Cohen, “Civil Bench and Jury Trials in State Courts, 2005.” U.S. Department of Justice, Bureau of Justice Statistics, 2008, http://www.ojp.usdoj.gov/bjs/pub/pdf/cbjtsc05/pdf. ***National Small Business Association, “Product Liability Reform: Issue Brief,” http://www.nsba.biz/docs/product_liability_reform.pdf.
“Higher damage awards mean higher insurance premiums. The American Tort Reform Association (ATRA) notes that product liability insurance premiums have risen at twice the rate of inflation in recent years.”* id, page 57.
*American Tort Reform Association (ATRA). “Product Liability Reform: Issue Brief,” http://www.atra.org/issues/index.php?issue=7341.
“ Statistics show that product liability cases are less common than people think. One study published by the Rand Corporation found that only about 10 percent of the people injured by a product file a claim for compensation.* From 1992 to 2005, the number of product liability trials in state courts in the nation’s 70 most populous counties declined from 657 to 225.”** id, pages 72-73.
*Ralph Nader, The Ralph Nader Reader. New York: Seven Stories Press, 2000, p. 281.
** Langton and Cohen, “Civil Bench and Jury Trials in State Courts, 2005.” “The National Center for State Courts (NCSC) found that from 1996 to 2000, the number of tort cases fell from 320,976 cases to 260,745 cases in 16 states.* When the NCSC looked at activities in 35 states, it saw a decline of 4 percent from 1992 to 2002. (The total population in these states is about 77 percent of the U.S. population as a whole.) Moreover, the number of tort cases filed per capita also had declined, going from 230 per 100,000 residents in 1975 to 212 per 100,000 in 2000.**” id, page 73.
* National Center for State Courts (NCSC), “Court Statistics Project,” 2007, http://www.ncsonline.org/D_Research/csp/CSP_Main_Page.html. ** Ibid.
Negligence cases, as opposed to strict liability cases, may add administrative costs. First it must be determined whether the defendant was negligent. In a strict liability case, only causation of plaintiff’s injuries must be proved. Strict liability cases are often faster and efficient. id, page 75.
“The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such product on the market rather than by the injured persons who are powerless to protect themselves.” id page79, quoting Justice Traynor in Greenman v. Yuba Power Products, Inc, 59 Cal.2d 57 (1963).
Patent cases are often the most expensive. Patent infringement litigation where $1 million to $25 million is at issue can range on average in total cost from over $1,000,000 to over $3,000,000, depending upon the US location.
Patent infringement litigation where over $25 million is at issue can range on average in total cost from over $4,000,000 to over $7,000,000, depending upon the US location. * American Intellectual Property Law Association 2011 Report
Trademark infringement litigation where $1 million to $25 million is at issue can range on average in total cost from over $600,000 to almost $2,000,000, depending upon the US location.
Trademark infringement litigation where over $25 million is at issue can range on average in total cost from over $900,000 to over $3,500,000, depending upon the US location. * American Intellectual Property Law Association 2011 Report
Copyright infringement litigation where $1 million to $25 million is at issue can range on average in total cost from over $600,000 to almost $3,000,000, depending upon the US location.
Copyright infringement litigation where over $25 million is at issue can range on average in total cost from over $400,000 to over $5,000,000, depending upon the US location. * American Intellectual Property Law Association 2011 Report
Moral of the story:
Insurance
– Amount of Coverage
– Premiums – Deductible – Choice of Counsel
– Insurance is not available for all lawsuits
Contractual arbitration clauses
Voluntary arbitration or mediation
– Less Money Spent – Less Time Spent
Protecting your assets from the beginning in the way that you set up a US operation, structure the entity, choose locations
Plan from the start:
Brand and other IP
– Trademarks – Quality of product/service – Brand/Company image
– Trademarks – Trade secrets – Patents – Talent
Form of entity
Location
– National treatment, so program oriented – EB5 Treaty investor
– Highly competitive, changing – Generally # of jobs based – Negotiate before committing
– No “US” corporation or LLC
US Personnel
Federal, state and local statutes falls into four main categories:
Labor relations laws
Labor standards laws
Non-discrimination laws
Employee benefit laws
Many federal laws have state counterparts – some more burdensome than federal
Sales Strategy
Tax Planning
Financing
Raising Capital
Crowd Funding
New Techniques
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For questions, please, contact Valters Gencs, attorney at law at info@gencs.eu
The material contained here is not to be construed as legal advice or opinion.