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EUROPEAN REGULATORY LANDSCAPE

Developing Your Business in Europe

Breakfast ConferenceSan Mateo, CA

July 9, 2003

Common Issues

Distribution Agreements Labor and Employment Issues Intellectual Property Privacy

Sources of Law

Treatiese.g.: Double-Taxation Treaties

European Union Lawe.g.: European Antitrust Law

Member States Lawse.g.: General Contract Law

(Code Civil, France, or BGB, Germany)

General Contract Considerations

Contracts Are Generally Shorter

“Statutory” Legal System in Most EU Member States (Excluding U.K.) vs. “Common Law” System in The United States (and U.K.)

Court And Attorney Fees Mandatory Provisions, e.g. Section 89B German Business Code (HGB) Choice of Law

Distribution and Agency Agreements

Member States’ Law - Harmonized by Certain EU Directives

Generally Term And At-will Agreements Possible

At-will Agreements Generally Require Minimum Termination Notice (e.g. Germany: 1-6 months)

Distribution and Agency Agreements (continued)

Post-Contractual Non-Competition Clauses

Allowed if Reasonable Minimum Payments Required

Generally Payment Upon Termination Required

Up to One Year of Average Commission

Labor and Employment Issues

No European Employment Law Labor And Employment is Regulated by Individual EU Member States

Term Agreements Generally Disfavored

Heavily Regulated

Recruitment

Council Directive 91/533/EEC

All Employees Have a Right to Receive aWritten Statement of The Main Particulars ofTheir Terms And Conditions Within a CertainPeriod of Commencing Employment

The Written Particulars

Identity of Parties Job Title

Start Date Place of Work

Salary Collective Agreements

Pension Disciplinary Rules

Hours Grievance Procedure

Vacation Notice

Sickness Overseas Posting

Vacation

Contractual – Typically 20-25 Days

Public Holidays – up to 14/15 paid bank holidays

Termination/Downsizing

Contractual Considerations - Notice Period

Statutory Considerations

Minimum Notice

Germany – Between One And Seven Months

UK – One Week Per Year of Service; max. 12 Weeks

Consultation Obligations

Consultation is Paramount

Consultation Means Discussing Ways of:

Avoiding Dismissals Reducing Numbers Involved Mitigating Consequences

Examples of Collective Consultation Thresholds

Germany – More Than Five Dismissals if Workforce Exceeds 20 Employees UK – Dismissal of 20 Employees at a Time France – Required if 1+. New Complex Rules if 10+ Dismissals in a Workforce of 50+

Social Plans

An Agreement Between The Employer And The Works Council Aim: to Compensate Employees For Financial Hardship Suffered by Them as a Result of The Dismissals Generally Social Plan Needs Approval by The Works Council And/or Labor Authority

Compensation

Germany – Between ½ And 1½ Month’s Salary Per Year of Employment (“PYS”) as a General Rule Depending on Age And Area Concerned France – 1/5 Month’s Gross Salary PYS Spain – Minimum of 20 Days Salary PYS Remember to Check Policies And Collective Agreements

Trademarks

Community Trademark (“CMT”): One European Trademark Application Possible For All EU Member States

Trademark Protection Obtained by Registration Only

Filing Fee For CMT (Excluding Attorneys Fees)

No “Common Law” Trademarks

2,075 Euro For up to Three Classes

200 Euro For Each Additional Class

Trademarks (continued)

National Trademark Application Possible

National Application in Selected Markets May be Less Expensive as a First Step

Seniority May be Claimed For Future CMT Application Based on National Registration

Patents

One European Patent Application Possible For up to 20 Member States of European Patent Organization (“EPO”)

EPO Member States: All EU Member States, Plus: Cyprus, Liechtenstein, Monaco, Switzerland, And Turkey

Average Cost of European Patent: 30,000 Euro (According to EPO as of July 1, 1999, Based on an 8 Member State Application

And 10 Year Maintenance Term)

Generally, European Patent Law Does Not Allow Software Patents or Business Method Patents

Copyrights and Other Intellectual Property Rights Considerations

No “European” Copyright Law Copyrights Are Regulated by Member States

Most EU Member States Are Members of The Berne Convention For Protection of Literacy And Artistic Works

U.S. Authors May Receive Automatic Protection For Works Registered as Copyrights in The U.S.

Copyrights and Other Intellectual Property Rights Considerations (continued)

Sale And Transfer of Copyrights or Rights to Intellectual Property Not Possible Under The Laws of Most EU Member States

Employee Inventions

Privacy Concerns

European Data Protection Directive

Regulates All Commercial Use of Personal Information

Transfer of Personal Information Out of EU only Allowed to Countries Where Privacy Protections Are “Adequate”

U.S. Does Not Have “adequate” laws

U.S./EU “Safe Harbor” Arrangement

Voluntary Sign-on For U.S. Companies

Presumption of “adequacy,” U.S. Businesses Allowed to Transfer Data Freely From EU

Must Consent to Jurisdiction: Either FTC or EU

Questions?

Dirk Michels at 415.249.1022 [dmichels@kl.com]