Europe Breach Notification Law Coming?

By Thomas Smedinghoff (Wildman, Harrold LLP)
Excerpt from Global Intellectual Property
Asset Management Report
published by WorldTrade Executive, Inc.

The European Union, along with
several other countries, appears to be moving toward
a security breach notification requirement.

The European Commission recently published a
proposal to amend the Privacy and Electronic
Communications Directive to require providers
of “publicly available electronic communications
services” that suffer a data breach to notify subscribers
whose personal information has been
compromised.

Proposals for breach notification
laws have also recently been made in Canada,
the UK, Australia, and New Zealand. See Proposed
Directive at http://ec.europa.eu/
information_society/policy/ecomm/doc/library/
proposals/dir_citizens_rights_en.pdf.

More Information on International Information & IP Law

Intellectual Property Holding Companies: Tax Panacea or IP Mistake

Excerpt from International Finance & Treasury
published by WorldTrade Executive

by Paul Dau, Paul Devinsky and Justin Hill
(McDermott Will & Emery LLP)

The potential tax advantages of IP holding company structures are significant and well known. The objective, from a tax planning perspective, is to transfer the enterprise’s proprietary intangibles to an owner in a tax-advantaged jurisdiction, and to minimize exposure to tax in other jurisdiction by carefully controlling how the new owner exploits the intangibles.

However, in the international context, failure to assess properly competing economic and legal considerations can lead to failure to meet objectives and runaway costs. In many cases, the holding company is a subsidiary within an international corporate group. Sometimes, although less often, the holding company is the parent company of the overall corporate group. Adoption of a suitable structure depends to a large extent on the headquarter jurisdiction, the mechanism by which the various synergies are anticipated to operate, and on the circumstances of the particular scenario.

Issues to consider in detail include which group companies have standing to enforce the intellectual property and how damages are calculated in that event. For example, solutions which perhaps work best from the tax or insolvency point of view can compromise standing to sue and entitlement to claim certain categories of damages. Think about it; if your holding company does not make any sales, why should it have any claim to lost profits damages?

Other issues to consider include what happens in the future to the intellectual property of the operating companies. For example, most businesses want to continually develop their intellectual property portfolios. Selecting an IP holding jurisdiction purely on the basis of tax or corporate considerations can leave the holding company in a position where it does not have access to the international intellectual property treaties required to develop efficiently and manage an intellectual property portfolio. Depending on the scale of the portfolio, this can have huge cost and time ramifications.

Depending upon where the intellectual property is generated there may also be issues with technology exportation to get it into the holding company. For example, while South Africa generally does not require inventors to obtain a license when first filing an invention overseas, it does have relatively onerous exchange control legislation. This means export of capital by South African residents (including intellectual capital) is traditionally prevented in the absence of South African Reserve Bank Approval. Failure to properly observe such legislation, and to account for it in the documentation can lead to the relevant technology transfer transactions being considered void.

If a business wants the freedom to undertake structured financing or securitization processes, other considerations arise. What happens when a business unit is to be divested (this may be required as part of the investors exit strategy)? Does the structure afford the necessary freedoms and will the transfer give rise to stamp duty type considerations which still apply in a number of European jurisdictions?

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