When Andrew Dorn, Industry Leader, Information Intensive Business, Acxiom Corporation, was recently researching the top manufacturers in the United States, one topic kept coming up — the strong growth expectations focused on the world's emerging markets. With the economies of the U.S. and Europe in flux, Dorn felt that, now more than ever, manufacturers need to be attentive to those emerging markets.
"The world is now flat," says Dorn. "Competition comes from everywhere, so manufacturers need to be everywhere."
Because of that, Acxiom has partnered with Smart Business to present a special one-hour webinar: "Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever."
During the webinar — on Wednesday, September 19 at 1:00pm EST — we will discuss why global sales for manufacturers is critical, what factors should be considered in developing or refining the international strategy, and, finally, present a roadmap that can be employed to optimize chances for success.
Featured panelists will be Zia Daniell Wigder, Vice President and Research Director, Forrester Research; Jennifer Barrett Glasgow, Global Privacy and Public Policy Executive, Acxiom; and Michael Biwer, Managing Director, Acxiom.
"As you enter the global market, it is imperative you understand the privacy laws in each country as they are quite complex and some are very stringent, for example, having criminal penalties for some violations," says Barrett Glasgow.
Other topics to be discussed include:
- How to determine which countries to enter and what data to gather to understand regional customer requirements
- Recommended approaches to building country-specific strategies that can help facilitate smooth transitions, lowest possible cost-of-entry, and consistent performance
- Considerations for navigating the complex web of country-specific data protection and privacy laws companies must adhere to in their efforts to connect with customers and prospects
- Best practices used by leading companies that have successfully entered new markets
"The U.S. and European economies are still recovering and the balance of growth is constantly shifting," says Dorn. "For example, China and Brazil have been experiencing strong growth. They are encountering a maturity curve, but that doesn't lessen the importance of the issue — manufacturers need to be diversified and have a presence in all major world markets."
The webinar, "Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever" will be held at 1:00 pm EST on Wednesday, September 19.
Your intellectual property may be safe at home, but do those patents and trademarks sink or swim once they reach international waters? Businesses may want to pursue a patent or trademark outside the United States to preclude a competitor from using their trademark or from making, using or selling whatever is protected by their patent.
“You have to take proactive steps to protect your patents and trademarks outside the United States, because coverage is generally on a country-by-country basis.” says Scott McCollister, a partner with Fay Sharpe LLP.
“For example, if you have a patent in the U.S., it doesn’t have any extra territorial effect. Trademarks are generally similar. Some countries may have common-law rights which develop based on your use in that jurisdiction, but many countries are registration-based, so you have to procure a registration through that country’s national trademark office before you have any chance to preclude a third party from using your trademark.”
Smart Business spoke with McCollister about how companies can take their intellectual property international.
In what situations would it makes sense for a business to pursue international protection for its IP?
If a business is selling or anticipates selling in a particular territory, it may want to pursue patent or trademark protection in that jurisdiction .
Similarly, companies should consider procuring protection in areas where you and/or your competitor manufacture. Even if it’s not a large sales region, or if the products are shipped elsewhere for distribution, having patent protection in a jurisdiction where the relevant goods are manufactured can be extremely beneficial. If you or your competitor don’t manufacture or sell in a particular country, pursuing patent or trademark protection there is most likely an unnecessary expenditure of funds.
What are the main considerations for a business preparing to take its IP international?
Even in countries where you are commercially active, before you consider pursuing patent or trademark protection, you should do a cost-benefit analysis. Patents, in particular, are expensive to obtain and maintain. There are foreign agent fees, translation fees, government fees, prosecution fees and annuities.
Protecting a small volume of product sales in a country by filing a patent application probably doesn’t make a lot of sense if the cost of obtaining the patent is even a measurable fraction of the sales volume.
Furthermore, consider the lifespan of your product. If your product has a five-year lifespan, it doesn’t make a lot of sense to file an application in a country that takes years to grant a patent.
How can using a regional or international office reduce cost?
For each country you file in, you generally need a local agent who submits the patent or trademark application to that country’s patent/trademark office. Accordingly, for every national filing there are associated governmental expenditures and service fees paid to a local agent. However, using Europe as an example, we have the option of filing through a regional office, the European Patent Office (EPO), that has the ability to grant one patent that can be extended to any selected country within the European Community. In this manner, we can submit all patentability arguments before one examiner and employ only one European agent to perform the bulk of the work in the European region. Similarly, a significant cost savings can be achieved using the European Community Trademark Office to obtain a ‘European Community’ trademark registration rather than pursuing and maintaining multiple national registrations.
I also recommend using the Patent Cooperation Treaty (PCT) for international patent filings. One year after you file your U.S. application, you can file a PCT application. It is effectively an 18-month placeholder. I refer to it as a placeholder because the application cannot directly mature into a national patent. Rather, at the end of the 18-month period, you will need to file in any country (or region, if available) in which you are interested in obtaining coverage. Advantageously, during the 18-month period you receive a preliminary report on whether the idea is patentable or not.
This provides two primary advantages. First, if the review finds the idea is not patentable, you’ve spent a relatively small amount of money on a PCT application instead of a large amount of money filing the application in multiple countries.
Second, it buys you another year and a half to evaluate if the product is commercially relevant. Does it deserve protection or did it fizzle? It may have been a good idea at the time, but the marketplace didn’t accept it. Buying that extra year-and-a-half lets you evaluate how interested you really are in protecting the invention.
The same is true on the trademark side. Based on your company’s U.S. trademark filing, the Madrid protocol allows you to file on a worldwide basis through a single international agency, and have the trademark extended into countries you designate. A significant savings is achieved by avoiding hiring of a lawyer in every country.
What other steps do you recommend for businesses going international?
Assuming you satisfy these criteria and want to proceed, you can still be wise in how you spend your money. For example, procuring a patent in the eight countries with the largest economies in Europe and keeping that patent alive for 20 years is an expenditure in excess of $100,000.
However, if we pursue the patent in Germany, England, France and maybe a country where your competitor is headquartered (preferably through an EPO filing), we can achieve similar results for roughly half the cost. Moreover, your competitor may be unlikely to introduce product X in Europe if they are precluded by your patent from selling in a large percentage of the market. I believe with a little analysis we can often achieve the same result in Asia or South America, for example.
Lastly, I strongly encourage any company considering pursuit of IP coverage outside the U.S. to have an open dialogue regarding costs, risks, advantages, objectives and expectations with a patent and/or trademark attorney. Moreover, this is a complex topic and many of the observations outlined above are not applicable to all situations and can have certain limitations.
Scott McCollister is a partner with Fay Sharpe LLP. Reach him at (216) 363-9115 or firstname.lastname@example.org.
It’s a reality of business today: many of the products sold in the U.S. are part of a global supply chain. There is even a debate surrounding what percentage of a product has to come from the United States in order to be labeled “Made in the U.S.A.”
“Unless they are very small, most manufacturing and distribution companies in the U.S. are involved with at least one other country,” says Debra F. Scalice, vice president, Millennium Corporate Solutions.
“Importing from China alone has increased from $109 billion in 2001 to $365 billion today — that’s huge; almost a 300 percent increase. Obviously the removal of U.S. manufacturing jobs has had multiple impacts, and among these is increased international risk,” Scalice adds.
Unfortunately, she says, many U.S. companies are not fully cognizant of the consequences that may occur if they are not covered properly while conducting business with and in other nations.
Smart Business asked Scalice about some of the exposures businesses face and what they can do to minimize them.
Why is international risk such an important topic right now?
Many U.S. manufacturers are fighting to stay alive and they are often resorting to smaller, niche markets, leaving their old product skews behind and innovating new products or parts, which are imports. They must change or face extinction via lack of competitive price points. Nearly all U.S. companies are involved to some degree with importing or exporting. All too often, U.S. companies think they are protected from various liabilities when in reality they are not. It is easy to misinterpret your coverage. Countries have very specific mandates about the types of coverage you need to have and who is legally able to provide that coverage — Mexico is a good example. If you don’t have a Mexican insurance company and something goes wrong, you’re going to jail.
What are some of the risks involved with property exposure?
Typically, international property exposures are similar to domestic exposures. You need to know where the property is located, whether there are any nationally mandated coverages, availability of coverage subject to increased hazards, if the property is adequately covered while in transit, and if you are using the shipper’s coverage or purchasing your own.
Are there any time constraints regarding the arrival of your property? What if the goods arrive at the harbor and half of the product isn’t there? Or, has the product been substituted using trickery? What level of risk are you prepared to take on yourself? On the other hand, if you are exporting, what happens if the companies you are exporting to owe you money and disappear? Can you handle the financial loss or will you need credit insurance?
What key factors about liability exposure do companies need to be aware of?
If you’re manufacturing in the U.S. and your policy says you have worldwide coverage and protection, don’t let that lull you into a false sense of security. It probably means you’re only covered for lawsuits initiated in the U.S. Let’s say you sell something in Europe and someone gets hurt. You think you have worldwide coverage, but if you don’t have proper international liability in place, there could be terrible financial consequences.
Liability exposure for importers is another consideration. There are many domestic carriers who are not interested in covering imported products. So if you’re an importer and something goes wrong with the product you imported, you will be held accountable, as there is no domestic manufacturer to seek financial restitution from. It is very difficult to sue in other countries, which are often ‘developing.’ Who will you sue in that country? Are they even liable according to their laws? What if the products you’re bringing in and selling to your clients start to fail? This is a nuance of international business you can’t insure for, but you have to contemplate the risk.
What are some considerations for traveling overseas for business?
In today’s world, you do not want to be walking around a foreign country without proper risk assessment and coverage. Let’s say you’re a salesperson who travels to London for your boss; you and your boss decide you should live there temporarily. The employer needs to cover you for workers’ compensation in that country — it’s a human resource issue. Or let’s say you’re the CEO of your own business and you’ve excluded yourself from workers’ compensation insurance. You go to Europe and something happens to you — you have a car accident or a health event, or a political act takes place. Who will pay to bring you back to the U.S.? Kidnap and ransom are also real concerns. If you are an American traveling abroad, you are a target. There are hotter spots than others in terms of exposure, but it’s actually quite common and happens all over the world. For any executives who are traveling, you need to ensure that risk management techniques have been employed to help assure your safety and that the right coverage is in place.
How can companies ensure that they are protected properly?
Talk with your international attorney and a diligent insurance broker who will show you how to protect your interests. They will help you determine your own risk tolerance, where you are exposed, and what needs to be covered. Seek a broker familiar with international risk who will know the insurance vehicles available to cover international risk. Equally important, the broker will help you understand what is not covered. This is a very dynamic and fluid area so it’s important to keep in touch with your broker on a regular basis to ensure you are properly covered at all times.
DEBRA F. SCALICE is vice president, Millennium Corporate Solutions. Reach her at (949) 679-7139 or email@example.com.
As you make your business stronger financially, you may start looking at growth opportunities abroad. In doing so, you may also see all the challenges that present themselves — differences in not just culture but business practices and financial regulations, as well — and decide it’s just too much work.
“It’s just those first three to six months that are often challenging, frustrating and frightening, to certain degrees, and sometimes people say it’s just not worth it, but in today’s world, it is worth it,” says Bob Celata, executive vice president of PNC Bank. “The amount of economic growth outside the United States is huge.”
The key is to reach out to resources that can help you successfully prepare for and navigate international territory.
“Clearly, they should, first and foremost, speak with their primary bank and determine whether or not their primary bank has the skill set to assist them on the global side,” Celata says.
Another great resource is the U.S. Department of Commerce, which has programs ranging from basic to highly sophisticated to help organizations with these initiatives. Additionally, Celata says it’s important to talk to your accounting firm, which can help you with a lot of the logistics, and often trade organizations can assist with these endeavors, as well. These different resources combined can help you recognize the challenges and differences you may encounter.
“You have to be aware that there are different cultures,” Celata says. “Many countries take a break in the afternoon for a couple of hours. You have to be aware of the time differences in the world and communication networks.”
You also have to recognize that some payment services may work differently. For example, here, you may be able to do a wire transfer until 6 p.m., but in some countries, if it’s not submitted by mid-afternoon, then that transfer will go the next day.
“As companies look to do business overseas and they start to expand in individual countries, they just have to be prepared to think about it a little bit differently than they would in the United States,” Celata says. … “Once they have two or three cycles of the same transactions, it actually becomes pretty standard and pretty methodical, and it’s just continuing to follow the rules.”
How to reach: PNC Bank, www.pnc.com