US Contract Law
Contracts are mainly governed by state statutory and common (judge-made) law, and private law....
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CopyrightCopyright is a form of protection provided by the laws of the United States under ...
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TrademarksA trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. Throughout this website, the terms "trademark" and "mark" refer to both trademarks and service marks.
All trademarks are automatically protected under federal US common law in accordance with the Trademark Act of 1946. Therefore, it is actually not necessary to register a trademark. However, there are a number of benefits for doing so:
- Constructive notice nationwide of the trademark owner's claim.
- Evidence of ownership of the trademark.
- Jurisdiction of federal courts may be invoked.
- Registration can be used as a basis for obtaining registration in foreign countries.
- Registration may be filed with US Customs Service to prevent importation of infringing foreign goods.
When you decide to trademark something, you should immediately check if anyone else has using this trademark or a mark that is substantially similar to the one you’re thinking of using. So, the first step is to check other people’s applications to the US Patent and Trademark Office (USPTO). There are two key tests for “substantial similarity.” First, is it likely that the trademark causes confusion among consumers?...
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Software PatentsSoftware is patentable in the US. Software as a class is not patentable. What is patentable are processes and machines....
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PatentsA patent for an invention is a grant of property rights by the US Government through the US Patent and Trademark Office (USPTO). The patent grant excludes others from making, using, or selling the invention in the United States.
There are three types of patents:
- Utility Patents: are issued for four general types of inventions/discoveries: machines, human made products, compositions of matter, and processing methods
- Design Patents: protect certain designs in manufacturing or building, based on the unique appearance of the item
- Plant Patents: protects certain kinds of plants, and is granted on the entire plant
There are certain things that cannot be patented. It is for instance not available for natural processes, natural products, and business methods. To determine whether your invention is patentable, your invention should meet three requirements:
- Novelty: your invention must be new and different from anything that has been available to the public before
- Non-obviousness: your invention must not have been obvious to an expert in the field
- Utility: Your invention has to be useful for something
We recommend contacting a patent lawyer to find out if your product meets these requirements.
Anyone, including corporations, can apply for a patent for their invention, thereby protecting its design, product, application, and production process; regardless of the applicant’s nationality or country of residence.
Inventors may apply for one of two types of patent applications (1) A non-provisional application, which begins the examination process and may lead to a patent and (2) A provisional application, which establishes a filing date, but does not begin the examination process. The average patent application duration is 24.6 months. The terms "Patent Pending" and "Patent Applied For" are used to inform the public that an application for a patent has been filed. Patent protection does not start until the actual grant of a patent. The marking of an article as patented, when it is not, is illegal and subject to penalty. A patent cannot be obtained on a mere idea or suggestion. Patent applications are examined for both technical and legal merit. Prior to filing a patent application, a search of existing patents can be conducted at the USPTO Patent Search Room or at a Patent and Trademark Depository Library. Currently, the average patent application pendency is 24.6 months.
The US is based on a first-to-invent regime, while the modus operandi for the majority of the world is based on a first-to-file patent regime. Patents for products and production processes in the US are valid for 20 years; patents for designs are valid for 14 years. The “...
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IP Issues
A license agreement can potentially be an attractive way for a foreign corporation to market its products in the US market. However, all license agreements are subject to US antitrust and IP laws and regulations. The US patent and trademark system is well developed but the application process for trademarks, patents and copyright protection is costly (although the costs in the EU are three to five times higher) and time-consuming.
There are three types of intellectual property protection: Patents, Trademarks and Copyrights, each of which serve different purposes. Click on the links below to learn more about each topic.
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US Tax CodeTaxes in the US are collected by federal, state and municipal governments. Federal and state taxes include income-tax, excise duties and succession duties. In addition, many states and/or municipalities levy a franchise tax, property tax, sales tax and use tax.
The federal tax authority is the Internal Revenue Service (IRS), a division of the US Department of Treasury. The rules and regulations of the IRS are recorded in the Internal Revenue Code. The tax code is based on the principle of residence. For more information regarding income earned in more than one state we recommend you contact a tax attorney or accountant.
Income and Corporate Tax
Corporations
A corporation is a separate legal entity from its shareholders. The shareholders are not personally liable for corporate obligations. A corporation's net income is subject to federal income taxation. However, under some circumstances, a corporation can elect to be taxed as an "S" corporation for federal income tax purposes. The income of an "S" corporation is generally taxed to the shareholders as ordinary income and not to the corporation itself.
The federal corporate income tax varies between 15% (for earnings up to US $50,000) and 35% (for earnings above US $ 10,000,000). US taxes are calculated using tax brackets. The income tax levied by the state varies from state to state, but is normally between 0 and 10%, with most states collecting between 4% and 7%.
Partnerships
This is a type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are equally liable for its debts. The partnership is itself not subject to federal income tax. All of the income, deductions, and other tax attributes are allocated to the partners in accordance with the partnership agreement.
In a general partnership, each partner has unlimited personal liability for the debts of the partnership. In a limited partnership, those partners designated as limited partners only have exposure for liabilities to the extent of their contributions to the partnership. An increasingly important alternative to partnerships is the limited liability company ("LLC"). The owners of an LLC are not responsible for its debts, but it is treated as a partnership for federal income tax purposes.
Taxation of Non-Resident Companies
Foreign corporations are generally subject to US income tax in two categories of income:
- Income that is effectively connected with the conduct of a US trade or business, whether from US or foreign sources.
- Fixed or determinable annual or periodical (FDAP) income from US sources that is not effectively connected with a US trade or business, such as interest, dividends, rents and royalties.
Income effectively connected with a US trade or business is subject to tax on a net basis, after deducting expenses incurred to produce such income. Normal corporate graduated income tax rates apply. FDAP income not effectively connected with a US trade or business is generally subject to US income tax on a gross basis - without allowance for deductions - at a 30% or lower treaty rate.
Branch Profit Tax
Profits of foreign companies without a permanent presence in the US are also subject to branch profit tax. The object of the branch profit tax is to burden a foreign corporation's US business profits with the same taxes, whether the business is done through a domestic subsidiary or an unincorporated branch. If a foreign corporation is operated as a branch, income effectively connected with the US branch is taxed at the normal rates. However, profits of a US branch are not subject to a withholding tax when they are repatriated to the corporation's foreign head office because this payment represents a transfer within the corporation, as opposed to a dividend. The branch profit tax is generally a withholding tax on withdrawals from a US branch.
The branch profits tax is an annual tax of 30 percent of after-tax earnings (also known as the dividend equivalent). The amount deemed to be distributed from a branch's current earnings is measured indirectly as branch earnings less the portions of these earnings that are reinvested in branch operations.
A foreign corporation is usually exempt from the branch profits tax for the year in which it completely terminates its business. In addition, the branch profit tax may be reduced or waived by treaty if the foreign corporation is a “qualified treaty resident” of that country.
Branch Interest Tax
Interest paid by the US branch of a corporation is treated as if it’s paid by a US corporation. Thus, these interest payments are subject to a 30% withholding tax, unless a lower income tax treaty rate applies. Certain cases are exempt from US withholding tax under regular domestic rules, e.g. as portfolio interest.
Furthermore, a foreign corporation is subject to a 30% “excess branch interest tax,” (unless again a lower income tax treaty rate applies) on the excess of the US branch interest expense deduction over the interest paid by the branch.
For Dutch companies the 30% rate is reduced to 5% and is in some cases waived completely. Please check with an international tax attorney or accountant for accurate tax rates.
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