{"id":48,"date":"2013-11-19T16:26:45","date_gmt":"2013-11-20T00:26:45","guid":{"rendered":"http:\/\/intersticeconsulting.com\/ibtt\/tradeandtaxation\/?p=48"},"modified":"2013-11-18T16:29:48","modified_gmt":"2013-11-19T00:29:48","slug":"cross-border-licensing","status":"publish","type":"post","link":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/2013\/11\/19\/cross-border-licensing\/","title":{"rendered":"Cross-Border Licensing"},"content":{"rendered":"

Of course, global business expansion is critical and the myriad of different ways to achieve expansion is dizzying.\u00a0 Licensing is one of the lower cost more effective methods of gaining a foothold in a foreign market. Generally licensing includes, patent and know-how licensing, copyright licensing, and trademark licensing, but this is certainly not exhaustive.\u00a0 There are challenges to cross-border licensing, but there may also be significant benefits. \u00a0The following Post raises just a few<\/span> of the many issues that are essential to a successful cross-border license program.<\/p>\n

Intellectual Property Protection:\u00a0 When analyzing whether licensing is the best option, first determine what intellectual property protection is available in the country and\/or region being considered. \u00a0A Nondisclosure\/Confidentiality Agreement is particularly essential when talking with potential foreign licensees. \u00a0Make certain there is one in place prior to discussing any specifics with regard to your intellectual property.\u00a0 Obtaining patent, copyright or trademark protection in the licensee host country is also important.\u00a0 Although, the license agreement could shift the burden of these expenses to the licensee, the resulting royalty stream would necessarily thereby be reduced, and protection may be difficult to control. \u00a0If possible, register your key intellectual property assets in your target markets.\u00a0 Decide whether any derivatives, improvements or modifications to the intellectual property will be owned by your business or the licensee. \u00a0\u00a0Make certain you include provisions that include assignment of any such derivatives, improvements or modifications.<\/p>\n

Tax consequences: One of the benefits of licensing is that no Permanent Establishment is created.\u00a0 The license agreement should be designed to ensure the activities of the licensee, and the relationship created by the license agreement does not create a Permanent Establishment.\u00a0 Determine whether there are withholding taxes due on payment of a royalty.\u00a0 In most cases there will be withholding tax, but often this is mitigated by a double tax treaty which results in a lower or zero withholding tax.\u00a0 There are a number of different license models, where one model can attract withholding tax another model may be considered delivery of a service.<\/p>\n

Compliance with foreign laws:\u00a0 Review your license business model to determine whether it raises any issues regarding data privacy laws, warranty limitations, or export laws. \u00a0Data privacy laws, for example, are rapidly changing and the penalties for noncompliance often stiff.\u00a0 Review the data privacy laws in the licensee country and develop an in-house data privacy policy.<\/p>\n

Hedging for foreign exchange risks: Determine whether your business is willing to take the foreign exchange risk.\u00a0 For example, \u00a0will the licensee in France pay royalties or license fees in US dollars or Euros.\u00a0 If the licensee pays in Euros, and the business must convert the Euros into US dollars what will the exchange rate be at the time of payment or the time of conversion?\u00a0 Exchange rates fluctuate and the result may be an increase or decrease in your overall margin, if for example, the Euro weakens against the US dollar.<\/p>\n

In conclusion, cross-border licensing transaction can be good for the bottom line, take the time to complete your due diligence and understand the risks are before proceeding to avoid any surprises.<\/p>\n","protected":false},"excerpt":{"rendered":"

Of course, global business expansion is critical and the myriad of different ways to achieve expansion is dizzying.\u00a0 Licensing is one of the lower cost more effective methods of gaining a foothold in a foreign market. Generally licensing includes, patent and know-how licensing, copyright licensing, and trademark licensing, but this is certainly not exhaustive.\u00a0 There … Continue reading Cross-Border Licensing<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false},"categories":[],"tags":[],"_links":{"self":[{"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/posts\/48"}],"collection":[{"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/comments?post=48"}],"version-history":[{"count":1,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/posts\/48\/revisions"}],"predecessor-version":[{"id":49,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/posts\/48\/revisions\/49"}],"wp:attachment":[{"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/media?parent=48"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/categories?post=48"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/intersticeconsulting.com\/ibtt\/index.php\/wp-json\/wp\/v2\/tags?post=48"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}