Setting Up Business in a Foreign Country by Daniel Polonenko and Lorie Wheeler

1. 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)
2

3. Options for protecting IP
What is IP?
1. Trade-secrets
2. Patents (includes Industrial Designs)
3. Trade-marks
4. Copyrights
3

4. TRADEMARKS
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
BRANDING strategies
4

5. Patents v. Trade Secrets
Trade Secret PROs
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
Trade Secret CONs
• 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
5

6. Why Patent??
Patent PROs
Why Patent?
• Legal right to prevent others from making, using, selling
the claimed invention
• Creates commercial opportunities for value capture
• Can control / affect commercialization
Patent CONs
• 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
6

7. When to Patent?
• 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
7

8. The Patenting Process
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
Step 2: Patent preparation, filing,
prosecution, exploitation
8

9. The Patenting Process
Patenting is not
about the technology
It’s to protect the
business opportunities
created by the
technology
9

10. 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
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
10

11. 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

12. 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

13. 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

14. 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
14

15. Legal Forms of Conducting Business Abroad
A. Direct Foreign Presence:
- Foreign Subsidiary
- Branch Office
- Joint Venture
15

16. Legal Forms of Conducting Business Abroad
B. Indirect Foreign Presence:
- Distribution
- Agency
- Marketing Representative
- Licensing
16

17. 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.)
17

18. 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

19. Thank You
Dan Polonenko, PhD Lorie Wheeler
Partner, Patent Agent Partner, Business Lawyer
Tel: 604-443-7623 Tel: 403-298-1805
Email: Email: lorie.wheeler@gowllings.com
dan.polonenko@gowlings.com
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