Soody Tronson spoke at the U.S. Patent & Trademark Office, U.S. Commercial Service and the Licensing Executives Society-Silicon Valley Workshop on Intellectual property rights Protection in Europe & Cross-Border Licensing Strategies.
When engaging in cross-border transactions, it is critical that you are aware of local and regional laws, some of which cannot be “contracted out” by the parties. Choice for US law may also not help in some cases since mandatory law applies.
For example, when expanding into the EU, using a distributor or an agent is a logical step since having a local representation (agent, distributor) is often useful because they have local knowledge of the relevant markets and are also used to local business practices. Furthermore, often, using representatives in most cases, specially for SME’s (small-medium-enterprises) is less expensive than hiring employees.
However, it is important to be aware of the European legal landscape since inadequate definitions of the relationships may lead to unintended consequences.
A distributor promotes and sells your products directly to end customers on his own account while agents are appointed to negotiate and/or conclude contracts on your behalf. Which one is better for a company depends on a range of business factors. From a legal perspective it is important to be aware that agents are protected under the European Agency Directive (EC/86/653) and are entitled to a compensation or an indemnity payment upon the termination of their contract by the principal. The compensation and indemnity payments are severance payments to which the agent is entitled if the agent brought you new customers or has significantly increased your business with existing customers.
Distributor agreements, on the other hand, in most European member states are governed by the general principles of contract law. Although there is no comparable European directive applicable to distributor agreements, the laws on distribution agreements differ from country to country. Distributors can also be protected under national laws and in some countries distributors are protected in a way similar to agents (for example Spain and Germany).
Date: Monday, December 7, 2015, 1-3pm
Location: U.S. Patent & Trademark Office – Silicon Valley, 26 S. Fourth Street, San Jose, CA 95113