The United States Patent and Trademark Office Issues its Final Rule Regarding Trademark Fee Changes

Published on November 18, 2024, the United States Patent and Trademark Office (“USPTO”) has issued its final rule setting or adjusting twenty-eight trademark-related fees. These changes become effective on January 18, 2025. Following, we will highlight some of those changes. The complete rule can be found in the Federal Register, here: final rule. We can provide a PDF copy of the final rule upon request.

After studying this rule thoroughly, we believe that the USPTO’s fee adjustments will make the filing of national trademark applications in the United States more complicated and increase costs for most applicants. There is a lengthy list of items that, if not fully complied with when the application is filed, will result in surcharges. Some of these surcharges will be very difficult to avoid, especially for foreign applicants. Please note that extensions of protection under the Madrid Protocol are currently exempt from most of the surcharges discussed below. We believe that under some circumstances the filing of U.S. trademark applications via the Madrid Protocol, where available, may result in overall cost savings for many foreign applicants.

For U.S. attorneys, the amount of work that will be required to prepare and file trademark applications will increase significantly. Applicants should expect that most attorneys will have to raise their flat fees to account for the increased time required.

For many applicants, three issues will be of the most significance:

1. Going forward, the USPTO encourages use of its list of pre-approved descriptions of goods and services as listed in the “Trademark ID Manual” (https://idm-tmng.uspto.gov/id-master-list-public.html). Failure to use the terms exactly as found in the ID Manual, by using the free-form text entry field, will result in an additional fee of $200 per class. Accordingly, the fee for a single class application would increase from $350 to $550.

2. The USPTO will charge a new fee of $200 for each class description that exceeds 1,000 characters (including punctuation marks). There will be an additional $200 fee for each additional 1,000-character block. Therefore, applicants would do well to limit their trademark applications to their core goods and services and to faithfully comply with the U.S. requirement that an applicant must have a bona-fide intent to use the trademark in the U.S. on all goods and services listed in the application.

3. The USPTO will charge a $100 surcharge if the applicant does not supply translations of words in the mark, if the words have a meaning in any language that is commonly spoken. Therefore, every coined word must be checked for its meaning in practically all living languages. This imposes a significant burden on applicants.

Application Fees:

This final rule replaces the two types of application fees—Trademark Electronic Application System (TEAS) Plus and TEAS Standard—with one base application fee for applications under Trademark Act §§ 1 and 44. Customers will also see new surcharges based on the complexity and completeness of their application. The USPTO states that it expects the majority of applicants will only pay the base fee and will not be subject to any surcharges. We do not believe this to be correct.

For Madrid Protocol applications under Lanham Act § 66, the USPTO is adjusting the existing application fee to a level that the USPTO believes corresponds with what applicants would expect to pay, on average, if filing national applications directly under the USPTO’s base application and surcharge system. However, we believe that there is a significant likelihood that requests for extension of protection under the Madrid Protocol into the U.S. will be more cost-effective in the future.

Initial Application Fees (all fees are per class of goods and/or services):

*Going forward, there will be only one type of application. TEAS Standard and TEAS Plus have been eliminated.

Surcharges:

The USPTO is introducing surcharges for applications that are incomplete or contain custom identifications of goods or services. This USPTO’s stated rationale is that it wishes to “encourage more complete applications, which will improve examination efficiency and help reduce pendency.” As already mentioned above, the additional fee for using custom descriptions of goods and/or services will be $200 per class.

WIPO is currently unable to collect surcharges prior to recording a § 66(a) application. The USPTO has stated that it will reconsider a base filing and surcharge system for Madrid Protocol applications in the future after WIPO develops the capacity to implement surcharges.

*The USPTO lists a total of nineteen items that, if missing or incomplete, would trigger a $100 surcharge. These are:

1. Missing or incomplete name and domicile address of the applicant.

2. Missing or incomplete identification of applicant's legal entity.

3. Failure to state the citizenship of each individual applicant, or the state or country of incorporation or organization of each juristic applicant.

4. If the applicant is a U.S. domestic partnership, failure to state the names and citizenship of the general partners, or if the applicant is a U.S. domestic joint venture, the names and citizenship (or jurisdiction where it is organized) of the active members of the joint venture.

5. If the applicant is a sole proprietorship, failure to indicate the state of organization of the sole proprietorship and the name and citizenship of the sole proprietor.

6. If claiming more than one basis for the application, the applicant must comply with the requirements of § 2.34 of the Trademark Rules of Practice for each asserted basis or a surcharge will apply.

7. If the application contains goods and/or services in more than one class, the applicant must comply with § 2.86 of the Trademark Rules of Practice or a surcharge will apply.

8. Failure to pay the filing fee for each class of goods and/or services, as required by § 2.6(a)(1)(ii) or (iii) of the Trademark Rules of Practice.

9. Failure to include a verified statement that meets the requirements of § 2.33 of the Trademark Rules of Practice, dated and signed by a person properly authorized to sign on behalf of the owner pursuant to § 2.193(e)(1) of the Trademark Rules of Practice (this rule eliminates the option of filing an unsigned application and submitting the signed declaration later).

10. Failure to attach a digitized image of the mark if it is a design mark. If the mark includes color, the drawing must show the mark in color.

11. If the mark is in standard characters, a mark must be only in characters in the Office's standard character set, typed in the appropriate field of the application.

12. If the mark includes color, failure to include a statement naming the color(s) and describing where the color(s) appears on the mark, and a claim that the color(s) is a feature of the mark.

13. If the mark is not in standard characters, failure to include a description of the mark.

14. If the mark includes non-English wording, failure to include an English translation of that wording (this is a possible trap, since an applicant may not be aware that the word has a meaning in another language).

15. If the mark includes non-Latin characters, failure to include a transliteration of those characters.

16. If the mark includes an individual's name or likeness, failure to include either (1) a statement that identifies the living individual whose name or likeness the mark comprises and written consent of the individual, or (2) a statement that the name or likeness does not identify a living individual.

17. If the applicant owns one or more registrations for the same mark, and the owner(s) last listed in USTPO’s records of the prior registration(s) for the same mark differs from the owner(s) listed in the application, failure to include a claim of ownership of the registration(s) identified by the registration number(s).

18. If the application is a concurrent use application, failure to include a verified statement setting forth certain aspects of the concurrent use situation, as provided for in the rules and regulations of the USPTO.

19. For an applicant whose domicile is not located within the United States or its territories, failure to designate a U.S. attorney as the applicant's representative and must include the attorney's name, postal address, email address, and state bar information.

** Failure to correctly classify the goods and/or services, with an identification of goods and/or services from the USPTO's ID-Manual within the electronic form will trigger an additional fee of $200 per class at the time of filing the application.

Post-Registration Maintenance Fees:

Petitions and Letters of Protest Fees:

Intent-to-Use Fees:

The USPTO states that it has not adjusted the amendment to allege use (AAU) and statement of use (SOU) fees since 2002. The examination time for these filings has also increased due to the volume of questionable specimens the USPTO receives, requiring the USPTO to issue more office actions.

Conclusion:

We believe that the new fee structure and especially the surcharge system will impose significant additional burdens on applicants and lead to an increase in the overall cost of obtaining a trademark registration in the United States. As stated above, foreign applicants should consider relying on the Madrid Protocol when filing in the United States, as those applications are currently exempt from the surcharge system. While the foreign applicant should still expect to receive office actions requiring significant modifications to the descriptions of goods and services, the overall cost of responding to those office actions, through a U.S. attorney, should remain essentially unchanged.  Under some circumstances, requests for extension of protection under the Madrid Protocol may prove to be a more cost effective way of obtaining trademark protection in the United States.

The above is only a general summary of this topic and not legal advice.

Please do not hesitate to contact us if you have any questions or concerns. We will be very happy to answer all of your questions.

Sincerely yours,

Thilo C. Agthe, Partner (thilo.agthe@wg-law.com)
Maria Luisa Palmese, Partner (maria.palmese@wg-law.com)
Kevin Murphy, Partner (kevin.murphy@wg-law.com
David T. Azrin, Partner (david.azrin@wg-law.com)
Carl M.R. van der Zandt, Partner (carl.vanderzandt@wg-law.com)
Michael J. Brown, Senior Counsel (michael.brown@wg-law.com)

About Wuersch & Gering LLP: Our firm provides legal services to international and domestic clients who appreciate the personalized attention they receive from our attorneys. We focus on international corporate and commercial matters, litigation, intellectual property, visa and immigration law, and tax issues. Because we understand the differences between U.S. and foreign business practices and legal concepts, we can bridge the gap between cultures. Because we are fluent in foreign languages such as German, French, Italian and Spanish, we can communicate effectively with our foreign clients.

Key Takeaways from the U.S. 2024 Presidential Election for Foreign Counsel and Foreign Clients

With Republican Presidential Candidate Donald J. Trump having been elected to a second term as President of the United States on November 5, 2024, and with Republicans also having secured control of the U.S. Senate and poised to retain their majority in the U.S. House of Representatives, foreign counsel and clients should expect major policy changes from the second Trump Administration and the likely Republican-controlled Congress.  Although many unknowns remain relating to specific policy proposals, the below are some key points that foreign clients and their counsel should keep in mind if they have transactions and/or matters that involve U.S. clients or parties.

1. Corporate: Expect increased M&A and capital markets activity in the U.S. as banks and private equity groups rush to take advantage of a lighter regulatory environment from U.S. policymakers.  All industries could benefit from a decrease in federal regulations but companies with a focus on technology, energy, AI, and cryptocurrency may benefit the most from the new regulatory landscape.

2. Antitrust and Regulatory Enforcement: Expect decreased antitrust enforcement from the DOJ, particularly involving big tech, and decreased regulatory enforcement from government agencies, such as the SEC and the FTC.   

3.  Tax Policies:  Expect proposals to substantially decrease corporate and individual income tax rates for U.S. companies and U.S. persons.  The exact scope of any proposed decrease will depend on the new Republican-controlled Congress but expect significant reductions in U.S. tax rates for U.S. businesses and individuals.

4. Tariffs:  Expect substantial tariffs on imported goods, particularly goods from China, or goods that involve industries that the Trump Administration wants to encourage to be manufactured in the U.S., such as autos or semiconductor chips.

5. Immigration: Expect major procedural and administrative changes to U.S. immigration laws, particularly for family-based visas and employment-based visas, including capping approvals of H-1B applications.     

Although significant details remain on how the second Trump Administration and the likely Republican-controlled Congress will approach policy issues that impact foreign businesses and foreign investors, particularly from European markets, if you have any questions and/or comments about how the U.S. 2024 Election could impact your clients and/or your business, please feel free to contact our team at Wuersch & Gering LLP.

This article has been prepared for general informational purposes only and does not constitute legal advice.  This article may be construed as attorney advertising.

Attachment in Aid of Arbitration under New York Law – Key Points to Remember for Foreign Counsel and Clients

You advise an international business based outside of the US.  You have just been informed by your client that its counterparty under a significant commercial agreement has breached its contractual obligations. The resulting damages are likely to exceed hundreds of millions of dollars.  Efforts to negotiate an amicable resolution have failed and substantial harm to your client’s business continues by the day.  The dispute resolution clause in the parties’ agreement provides for ICC arbitration in Zurich, Switzerland. The governing law is Luxembourg law. After further discussions with your client, you learn that the counterparty has bank accounts in New York. Your client fears that the counterparty is attempting to dissipate its assets held in New York.

What is the first thing you might advise your client?

1. You could advise them to initiate emergency arbitration in Switzerland and seek injunctive relief against the counterparty.  A perfectly sensible choice and one very much worth considering.

2. You could advise them to engage Luxembourg counsel to determine what remedies may exist under Luxembourg law. Another sensible choice that must be considered and eventually undertaken.

3.  You could advise them to engage New York counsel to seek injunctive relief and attach the counterparty’s assets in New York before they are possibly dissipated and out of your client’s reach.

Which of these three options seems the most appropriate? Given the title of this brief article, I think you know what I would recommend:  engage New York counsel to seek an injunction and attachment of the counterparty’s assets in New York.

Here is why I would recommend such an approach and would strongly recommend that you consider it if you have a client that may have a similar situation. One of our clients had such a situation for which we were recently engaged. 

First, New York law permits a party to seek injunctive relief and attachment in aid of arbitration. Under New York law, the arbitration must be “pending” or “to be commenced,” which generally means the arbitration must be started within 30 days after the court issues the attachment order.  See N.Y. C.P.L.R. § 7502(c).  In addition, New York law authorizes attachment when, among other things, the defendant (i) is a “foreign corporation not qualified to do business in the state” and (ii) “with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts.”  N.Y. C.P.L.R. §§ 6201(1) & (3).  Moreover, New York law also permits attachment on an ex parte basis, which means your client may be able to move quickly and successfully attach the counterparty’s assets in New York before they have notice of such attachment. N.Y. C.P.L.R. § 6211(a).

Second, although certain basic requirements must be satisfied, securing an attachment in New York is not overly burdensome. A plaintiff must show (1) there is a cause of action, (2) it is probable that the plaintiff will succeed on the merits, and (3) the amount demanded from the defendant exceeds all counterclaims known to the plaintiff. See Iraq Telecom Ltd. v. IBL Bank S.A.L., 43 F.4th 263, 269 (2d Cir. 2022) (citing N.Y. C.P.L.R. 6212(a)).  Ultimately, the court will have discretion whether to grant attachment, so nothing is ever guaranteed. A strong factual and legal showing must always be made.  But if your client has already started an arbitration (or intends to start an arbitration promptly, which by itself may constitute a “cause of action” under New York law), your client has credible contractual claims under the governing law, and such claims would exceed any potential counterclaims brought by the counterparty, you should advise your client to strongly consider seeking an attachment in New York. 

Third, successfully attaching assets in New York will only increase your client’s negotiating leverage and help them achieve a commercially favorable outcome. When dealing with counterparties that refuse to negotiate fairly or that make outrageous demands, you need to be aware of all the available tools at your disposal.  A successful attachment of a counterparty’s assets in New York, coupled with an arbitration (or emergency arbitration if necessary), will give you and your clients the confidence that if they ultimately receive a favorable award from an arbitral tribunal that they will be able to enforce and collect on that award.  This will often strongly incentivize a recalcitrant counterparty to return to the negotiating table.  So, please do not miss out on an opportunity to provide further value to your clients if you learn that one of their counterparties has assets in New York.

Please feel free to reach out to me by email (justin.lee@wg-law.com), by LinkedIn (linkedin.com/in/justinplee1), or by phone (212-509-6312), if you have any questions, comments, or feedback relating to the above article. We would love to hear from you and have your thoughts. 

This article has been prepared for general informational purposes only and does not constitute legal advice.  This article may be construed as attorney advertising.

Federal Court Blocks FTC Non-Compete Ban

This is an update to our previous alert regarding the Federal Trade Commission’s final rule of April 23, 2024, banning most non-competition agreements between employers and workers (the “Final Rule”). The Final Rule was scheduled to come into effect on September 4, 2024. On August 20, 2024, the U.S. District Court for the Northern District of Texas (the “Court”) in Ryan, LLC v. FTC, held that the Final Rule is unlawful, barring its enforcement nationwide.[1]

The Court issued a preliminary injunction temporarily enjoining the Final Rule on July 3, 2024, but only as applied to the plaintiffs in Ryan, LLC v. FTC.  In its August 20, 2024 decision, the Court held that (1) the FTC does not have the statutory authority to create substantive rules regarding unfair methods of competition, and (2) the Final Rule is arbitrary and capricious in violation of the federal Administrative Procedure Act because the FTC failed to justify its “one-size-fits all” sweeping ban of almost all non-competes with sufficient evidence, did not consider countervailing evidence, and did not address potentially less disruptive alternatives to a retroactive ban of all non-competes.  

The Court’s decision prevents the FTC from enforcing the Final Rule against any employer nationwide.   The FTC has 60 days from August 20th to appeal the Court’s decision.  Any such appeal will be heard by the U.S. Court of Appeals for the Fifth Circuit and possibly the U.S. Supreme Court.  Both of these courts have recently issued decisions curtailing the power of federal agencies. 

For the time being, employers will not be required to issue notices to workers that existing non-compete agreements are unenforceable by September 4, 2024, and can enter into new non-compete agreements with employees, although such agreements are still subject to any requirements and restrictions by applicable state law.

State legislatures continue to pass laws that restrict the permissible scope of non-compete agreements.  California has a long-standing ban on non-competes, as do Minnesota, North Dakota, and Oklahoma.  Other states restrict the use of non-competes in certain professions or below certain income levels.  In a number of states, bills have been introduced that if enacted, would further limit the use of non-competes.  The Ryan holding also does not prevent the FTC from scrutinizing non-competes through case-by-case enforcement actions.  Finally, there is some bipartisan support in Congress for a bill introduced in 2023, the Workforce Mobility Act of 2023, that if enacted, would institute a federal ban on most non-compete agreements.

We will continue to monitor the Ryan case and legislative and agency actions regarding non-compete agreements and post further alerts if there are further developments.

If you have any questions regarding non-compete agreements and other measures businesses are allowed to take to protect their interests to prepare for the case when workers leave employment, please reach out to your Wuersch & Gering attorney or to Orla McCabe at orla.mccabe@wg-law.com or 212-509-1910. 

This summary has been prepared for general informational purposes only and does not constitute legal advice.  It is intended only as a summary and does not contain all details applicable to the decision in Ryan, LLC v. FTC.  This summary may be construed as attorney advertising.

[1] Ryan LLC v. Federal Trade Commission, No. 3:24-cv-00986-E, ECF No. 211 (N.D. Tex. Aug. 20, 2024)

Successor Jurisdiction in New York for Buyers in Asset Deals: Lelchook v Société Générale de Banque au Liban SAL (2024)

Jascha D. Preuss, Partner  |  Marzia Schilleci, Foreign Associate

On April 18, 2024, the New York Court of Appeals, the highest court of the State of New York, set a new precedent on “successor jurisdiction”, holding that that when one entity acquires all the assets and liabilities of another, it inherits the seller’s contacts establishing personal jurisdiction of New York courts. The court’s ruling aims to prevent buyers from evading jurisdiction while enjoying the benefits of the seller's business in New York. See Lelchook v Société Générale de Banque au Liban SAL, 2024 WL 1661460, N.Y. App.

The case is of interest to litigators representing parties in international litigation in New York and M&A lawyers representing buyers in asset deals involving targets with potential liabilities arising out of New York contacts. New York adopts a stance similar to other States aiming to ensure ongoing accountability for injuries caused by a seller’s actions prior to the closing of the transaction.

Lelchook triggers new legal considerations for buyers in M&A transactions involving a seller with contacts to New York. Buyers are advised to conduct a thorough due diligence of the seller to assess not only potential successor liability but also the seller’s jurisdictional contacts to New York, and to take mitigating measures in structuring the deal and during contract negotiation.  

Factual Background

The decision arises from a long-lasting litigation brought by plaintiffs who were harmed by a 2006 Hezbollah bombing in Israel. In 2008, the plaintiffs sued Lebanese Canadian Bank (“LCB”) in the federal District Court for the Eastern District of New York under the Anti-Terrorism Act of 1990 for allegedly providing extensive financing to Hezbollah in the years leading up to the attack. LCB was held to be subject to specific personal jurisdiction in New York under C.P.L.R. § 302 (New York’s long-arm statute) because it allegedly used New York correspondent accounts to make transfers to Hezbollah. In February 2011, the United States Department of Treasury designated LCB a primary money laundering concern. A few months later, Société Générale de Banque au Liban SAL, a Lebanese company (“SGBL”), and LCB entered into an agreement stating that, in exchange for a purchase price of $580 million, “[SGBL] … shall receive and assume from [LCB] all of [LCB’s] Assets and Liabilities.” LCB continued to exist as legal entity after the transaction but allegedly was defunct and insolvent. Largely the same plaintiffs then sued SGBL in the District Court on the basis of successor liability. The District Court dismissed the case against SGBL for lack of personal jurisdiction, determining that merely acquiring the assets and liabilities of the predecessor company does not impute successor jurisdiction on the acquiror and concluding that LCB’s contacts could not be imputed to SGBL. On appeal, the 2nd Circuit certified the question of personal jurisdiction over SGBL to the New York Court of Appeals.

Requirements for Personal Jurisdiction

To hear a case, a New York court must have general personal jurisdiction or specific personal jurisdiction over the defendant. Specific personal jurisdiction requires the defendant to have specific contacts with New York and a nexus between these contacts and the allegations in the complaint. Contacts may be limited, as long as they are purposeful. New York courts determine personal jurisdiction under applicable state law, here: C.P.L.R. § 302, and under the due process clause of the U.S. Constitution.

New York courts previously sparsely addressed the question of successor jurisdiction but determined when buyers of assets and liabilities may be subject to successor liability for the seller’s pre-closing acts and omissions. In so doing, courts identified four exceptions to New York’s general rule that a purchaser of assets is not liable for the seller’s torts where: (1) the buyer expressly or impliedly assumed the predecessor's tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation (i.e., following a corporate reorganization), or (4) the transaction is entered into fraudulently to escape such obligations. But New York lacked clear judicial guidance on successor jurisdiction over buyers in an asset deal.

The Court’s Rule 

The Court of Appeals outlined the theories supporting successor liability to determine if they should also inform the question of successor jurisdiction and held: “where an entity acquires all of another entity’s liabilities and assets, but does not merge with that entity, it inherits the acquired entity’s status for purposes of specific personal jurisdiction.” The court noted that ruling otherwise would allow a buyer to evade jurisdiction in the court in which the seller could have been sued and – in doing so – reap the benefits of the predecessor’s business in New York while shielding the acquired assets from being available to satisfy the claims in the forum. The injured parties might have to sue the successor in a less favorable forum, likely resulting in a devaluation of their claims and their personal absorption of costs. This would contravene the goal of having a “responsible party” available to compensate injured parties. The court also observed that the alternative defendant, the predecessor, might no longer have sufficient assets to satisfy a judgment against it in New York, as was the case with LCB.

It is not entirely clear if and how the buyer’s knowledge of the seller’s New York jurisdictional contacts factors into the test. In Lelchook, the court found that SGBL acquired LCB’s assets and liabilities after it would have been on notice of LCB’s exposure in New York in connection with the terrorist attacks because of the 2008 New York lawsuit against LCB. Even though the issue of successor jurisdiction was not settled in New York at that time, there was significant authority, including case law from other states, for the proposition that in successor liability cases the acquiror would also be imputed the seller’s jurisdictional contacts. Thus, the acquiror should have reasonably anticipated being subject to successor jurisdiction in New York.  The court reasoned that “[s]ophisticated corporate entities such as SGBL will undoubtedly engage in robust due diligence before agreeing to acquire all assets and liabilities of another entity. In doing so, they should understand where jurisdiction over such liabilities may lie and the potential cost if ultimately found liable, and will presumably negotiate a purchase price that is discounted by that prospect.” Therefore, under New York law, in an acquisition of all assets and liabilities, the buyer’s knowledge of the seller’s contacts to the forum and the resulting personal jurisdiction risk (i) is either assumed, because the buyer had the opportunity of due diligence, or (ii) is a factual question that may be answered differently depending on the facts of the case, and what the buyer actually knew or under the specific circumstances should have known about the seller’s forum contacts.

Note that in Lelchook, the Court of Appeals only answered the question of jurisdiction under New York state law. The 2nd Circuit will have to assess if jurisdiction over SGBL also satisfies the constitutional requirements of constitutional due process. Whether a defendant could foresee that it would have to defend itself against the claims in the forum state is one of the factors in determining the constitutionality of personal jurisdiction.

Consequences for Buyers in Asset Deals

Considering Lelchook, when performing a due diligence review in an M&A transaction, a potential buyer should evaluate not only the seller’s liability risks and whether the structure of the transaction may expose the buyer to successor liability but also whether the seller engaged in conduct that could expose it to specific personal jurisdiction in New York. Under New York law, even a single purposeful act in New York may suffice if the potential claims arise out of or are connected to the act. Cases in which New York courts have exercised specific personal jurisdiction over foreign companies who committed acts in New York include, for example, foreign banks allegedly misusing correspondent New York bank accounts (Al Rushaid v. Pictet & Cie, 28 N.Y.3d 316, 2016); and foreign sellers engaging in false advertising in New York (People by James v. JUUL Labs, Inc., 212 A.D.3d 414, 2023).

Under Lelchook, a buyer acquiring all of the assets and liabilities of such a company may find itself subject to jurisdiction of courts in New York due to the seller’s pre-closing actions even if the buyer has no relevant New York contacts of its own. A buyer should thus ensure a thorough due diligence process with sufficient disclosures, not only about the seller’s liability risks but also including the seller’s contacts to New York (or other states of the United States, see below). If a risk of successor liability and jurisdiction exists, the potential buyer who still wishes to proceed with the transaction should consider measures to protect itself, for example:

• negotiating a discounted purchase price considering the buyer’s successor liability and jurisdictional risks; 

• drafting a purchase agreement that includes relevant representations and warranties, indemnification provisions, and an appropriate holdback of a portion of the purchase price to satisfy claims arising from the seller’s pre-closing actions;

• acquiring only the seller’s assets or only certain assets; or 

• excluding the assumption of all or certain liabilities from the transaction.

Lelchook does not answer whether or under what circumstances a New York court would impute successor jurisdiction on a buyer acquiring only (certain) assets or specifically excluding (certain) liabilities from the transaction. As in the case of successor liability, even absent an assumption of liability, if the transaction results in the continuation of the legal personality of the seller, whether by merger or corporate reorganization, or if it is intended to fraudulently avoid the seller’s liability, a court may find that successor jurisdiction exists. While not in itself determinative, Lelchook indicates that New York favors the availability of an effective means of redress to an injured party and thus frowns upon transactions that result in removing a plaintiff’s ability to bring suit in a previously available New York forum.

Other States Jurisprudence

When answering the question of successor jurisdiction, most states adopt an approach similar to that of the New York’s Court of Appeals, imputing jurisdictional contacts whenever (1) the predecessor is subject to personal jurisdiction in the forum and (2) any of the bases for successor liability is found, such as in cases of assumption of liability, de facto merger, fraud, or “mere continuation” of the selling corporation, which has some of the same shareholders, directors, and officers. See, e.g., State ex rel. Stein v. E.I. du Pont de Nemours & Co., 382 N.C. 549, 556–558, 879 S.E.2d 537, 543–544 (2022);  Anotek LLC v. Venture Exchange, 2021 WL 2577604, *2 (Del. Sup. Ct. 2021); CenterPoint Energy, Inc. v. Superior Ct., 157 Cal. App.4th 1101, 1120, 69 Cal. Rptr. 3d 202, 218 (2007); Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 653 (5th Cir. 2002); City of Richmond, Va. v. Madison Mgmt. Grp., Inc., 918 F.2d 438, 454–455 (4th Cir.1990). Case law in other States follows different criteria, for example, imputing jurisdictional contacts under the “proper circumstances” (Jeffrey v. Rapid Am. Corp., 448 Mich. 178, 195–197, 205–206, 529 N.W.2d 644, 653–654, 657–658 (1995)) or upon express assumption of the predecessor’s liabilities by the successor (Williams v. Bowman Livestock Equip. Co., 927 F.2d 1128, 1131–1132 (10th Cir.1991)).

 * * *

If you have any questions regarding the Court of Appeals’ decision in Lelchook or successor jurisdiction generally, please reach out to Jascha Preuss at jascha.preuss@wg-law.com or 212-509-4718. 

This article has been prepared as general information and does not constitute legal advice.  It does not contain all details applicable to the question of successor jurisdiction in an individual case.  This article may be construed as attorney advertising.

The Federal Trade Commission’s Final Rule Banning Non-Competes

On April 23, 2024, the Federal Trade Commission (the “FTC”) announced its final rule (the “Rule”) banning non-compete agreements for workers in the United States, with only limited exceptions.  The Rule’s effective date is 120 days after its publication in the Federal Register.  However, legal challenges brought by pro-business groups almost immediately after the announcement of the Rule could delay or prevent its enforcement.

What is a Non-Compete?

Section 910.1 of the Rule defines “non-compete clause” broadly as “[a] term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from” seeking or accepting work or operating a business after the end of employment.  Non-solicitation clauses are not covered by the Rule unless they are overbroad and function to prevent a worker from seeking or accepting other work or starting a new business after employment ends such that they function like a non-compete.

To Which Workers does the Rule Apply?

“Worker” is defined broadly and includes “a natural person who works or who previously worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status under any other State or Federal laws, including, but not limited to, whether the worker is an employee, independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor who provides a service to a person.”  Thus, the Rule may not only include employees on payroll but also consultants or other providers of services who work as independent contractors.  While the Rule will not cover franchisees, it may cover their employees.

To Which Non-Competes does the Rule Apply?

The Rule bans new non-competes with all workers entered into on or after the Rule’s effective date.  Existing non-competes, entered into before the Rule’s effective date with senior executives, can remain in force while those for other workers will become unenforceable.  The Rule defines “senior executive” as a worker earning more than $151,164 per year who is in a “policy-making position.”  A “policy-making position” means the president, chief executive officer or the equivalent, any other officer of a business entity or any other individual who has “policy making authority” for the business entity.  “Policy-making authority” means “final authority to make policy decisions that control significant aspects of a business entity or common enterprise,” but it does not cover a person whose role is limited to advising or influencing such decisions.

Are There Exceptions to the Rule?

The Rule does not apply to a non-compete agreement entered into in connection with the “bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.”  In addition, the Rule does not apply if a covered worker violated an existing non-compete before the effective date of the Rule.

What Should Employers Do?

Under the Rule, employers must provide clear and conspicuous notice to relevant workers by the effective date of the Rule that their non-compete clauses will not be, and cannot legally be, enforced against them.  The Rule provides model language for such notices that can be used by employers for this purpose.

Given that the Rule has not yet been published in the Federal Register and that its effective date may be delayed due to the legal challenges, we do not recommend providing notices to employees immediately, but consider alternative agreements with employees and contractors, such as confidentiality and non-solicitation agreements, in addition to non-competes that could potentially become unenforceable.

If you have any questions regarding the FTC’s final rule banning non-competes and what you can or should do, you should reach out to Orla McCabe at orla.mccabe@wg-law.com or 212-509-1910, and for questions specifically relating to franchises, David Azrin at david.azrin@wg-law.com or 212-509-4745. 

This summary has been prepared for general informational purposes only and does not constitute legal advice.  It is intended only as a summary of the FTC’s final rule banning non-competes and does not contain all details applicable to the FTC’s final rule banning non-competes.  This summary may be construed as attorney advertising.

Beneficial Ownership Reporting Requirements under the Corporate Transparency Act as of January 1, 2024

In 2020, Congress adopted the Corporate Transparency Act (the “CTA”) to strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use shell companies to launder money or hide assets.  Unless a newly formed or existing entity in the U.S. can claim an exemption, the CTA will require that they report to the U.S. government specified information about themselves and their controlling persons and owners. The CTA will go into effect on January 1, 2024. Existing companies will have to report by the end of 2024, and newly formed companies will have to report shortly after formation (90 days if during 2024, or 30 days after 2024).

On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued the final rule (the “Rule”) implementing the CTA’s beneficial ownership information (“BOI”) reporting provisions.  Among other things, the Rule details who must file a BOI report, what information must be reported, and when a report is due. On September 18, 2023, FinCEN released a Small Entity Compliance Guide explaining in detail the reporting requirements in the Rule.

Which companies must report?

The Rule applies to any domestic or foreign limited liability company (LLC), corporation or other entity that is registered to do business in any state or tribal jurisdiction.

The Rule requires a reporting company to report basic information about itself and its “beneficial owners.” These generally include any individuals who, directly or indirectly, either (1) exercise substantial control over the reporting company, or (2) own or control at least 25% of the ownership interests of the reporting company.

·         “Substantial control” captures anyone who is able to make important decisions on behalf of the reporting company.  This includes senior officers and directors, anyone with authority to appoint senior officers or directors, and anyone who has any other substantial control of the company through contractual arrangements, ownership of voting shares, or otherwise. 

·         “25% ownership” is determined based on economic ownership and control.  In most cases, determining 25% ownership will be simple.  However, if ownership is tiered, or held in a trust or through a mix of exempt and non-exempt entities, determining the 25% owners will require a more detailed analysis.

Exemptions:

Exemptions from the CTA reporting requirements are available for various entities, including (A) companies that have at least 20 full time employees in the U.S., and have filed U.S. federal tax returns reporting more than $5,000,000 in gross receipts or sales in the prior year, (B) government entities, (C) banks and other financial institutions, such as broker-dealers and registered investment companies, registered investment advisers, and insurance companies, (D) accounting firms, (E) tax exempt companies, and (F) reporting issuers under the Securities Exchange Act of 1934.

Further Information

Attorneys at our firm are available to assist with any questions you may have regarding the CTA and related legal guidance. For additional information, please contact the undersigned or any other attorney at our firm.

Jake Brown

Christophe Durrer

Travis L. Gering

Jascha D. Preuss

Carl van der Zandt

Daniel A. Wuersch

Rowena Duncga

Claudio A. Guler

This summary has been prepared for general informational purposes only and does not constitute legal advice.  It is intended only as a summary of the CTA and does not contain all details applicable to the CTA.  This summary may be construed as attorney advertising.

SEC charges FinTech investment adviser Titan for misrepresenting hypothetical performance of investments (and other violations)

On August 21, 2023, the Securities and Exchange Commission (the “SEC”) announced the settlement of charges against Titan Global Capital Management USA LLC, a New York-based FinTech investment adviser (“Titan”), pursuant to Section 206(4)-1 (the “Marketing Rule”) under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”).  Among other things, Titan was charged with marketing its Titan Crypto strategy using misleading hypothetical performance.  This case is the first reported by the SEC under the Marketing Rule, which became effective on May 4, 2021.

U.S. Supreme Court Holds that Section 1782 Discovery does not Apply to Private Foreign or International Arbitration Proceedings

On June 13, 2022, the U.S. Supreme Court issued a long-awaited opinion on the scope of 28 U.S.C. § 1782 (“Section 1782”), unanimously holding that only a governmental or intergovernmental adjudicative body constitutes a “foreign or international tribunal” for purposes of Section 1782.Thus, Section 1782 applications cannot be used to obtain discovery in aid of private arbitration proceedings abroad. The two consolidated cases before the Court both involved parties seeking discovery in the United States for the use in foreign private arbitrations, but involved different tribunals; one case involved a private commercial arbitration, while the other involved an ad hoc investment arbitration.

Corporate Transparency Act

On January 1, 2021, the Corporate Transparency Act (the “CTA ”) became law as the U.S. Senate voted to override former President Donald Trump’s veto of the National Defense Authorization Act of 2021. The CTA requires the U.S. Treasury Department to promulgate regulations implementing the CTA by January 1, 2022. The CTA constitutes a major shift in the U.S. anti-money laundering regime by requiring newly formed and existing U.S. entities that cannot benefit from an exemption to report certain beneficial owners to the U.S. government.

Click here to continue reading.

SEC Adopts New Marketing Rule for Investment Advisers

The Securities and Exchange Commission (the “SEC”) adopted, on December 22, 2020, a new Rule 206(4)-1 (the “New Marketing Rule”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The New Marketing Rule replaces both the existing Rule 206(4)-1, known as the advertising rule, and Rule 206(4)-3, known as the “solicitation rule”.

Click here to continue reading...

SEC Harmonizes Exempt Offering Rules

The Securities and Exchange Commission (the “SEC”) adopted a set of amendments to “harmonize registration exemptions, eliminating complexity and facilitating access to capital and investment while preserving or enhancing important investor protections,” according to the SEC’s press release.  Click here to continue reading.

SEC Considering a Proposed Exemptive Order for Finders

On October 7, 2020, the Securities and Exchange Commission (the “SEC”) voted to propose a new, limited, conditional exemption from broker registration requirements for “finders” who help issuers raise capital in private markets from accredited investors. (See https://www.sec.gov/news/press-release/2020-248). Under Section 15(a)(1) of the Securities Exchange Act of 1934, finders and solicitors of investors are required to register as broker-dealers.  Historically, the SEC has acknowledged that finders may be exempt from broker registration under certain very limited conditions, and the SEC staff from time to time has issued “no action” letters to such effect.  However, to date the SEC has never provided general exemptions for finders.  Because the broker-dealer registration requirements are onerous, the proposed rule is welcome news for would-be finders.

Please click here to read the entire article. 

SEC Adopts Amendments to “Accredited Investor” and “Qualified Institutional Buyer” Definitions and Regulation S-K

On August 26, 2020 the SEC adopted amendments that broaden the definitions of “accredited investor” and “qualified institutional buyer” set forth in Rule 501(a) and Rule 144A, respectively, under the Securities Act of 1933, as amended (the “Securities Act”).  In a separate release on the same day the SEC adopted amendments that modernize the description of business, legal proceedings and risk factor disclosures that registrants are required to make pursuant to Regulation S-K under the Securities Act.  All amendments will become effective 60 days after publication in the Federal Register.

Click here to continue reading this document. 

SEC Considering a Proposed Exemptive Order for Finders

On October 7, 2020, the Securities and Exchange Commission (the “SEC”) voted to propose a new, limited, conditional exemption from broker registration requirements for “finders” who help issuers raise capital in private markets from accredited investors. (See https://www.sec.gov/news/press-release/2020-248).

Under Section 15(a)(1) of the Securities Exchange Act of 1934, finders and solicitors of investors are required to register as broker-dealers.  Historically, the SEC has acknowledged that finders may be exempt from broker registration under certain very limited conditions, and the SEC staff from time to time has issued “no action” letters to such effect.  However, to date the SEC has never provided general exemptions for finders.  Because the broker-dealer registration requirements are onerous, the proposed rule is welcome news for would-be finders.

Wichtige Änderungen bei der Bearbeitung von deutschen Beibehaltungsgenehmigungsanträgen mit sofortiger Wirkung

Doppelte Staatsangehörigkeit - Voraussetzungen der Beibehaltung der deutschen Staatsangehörigkeit vor der US-Einbürgerung

Die Einbürgerung in die Vereinigten Staaten von Amerika unter Beibehaltung der deutschen Staatsangehörigkeit

Durch das zum 1. Januar 2000 in Kraft getretene Gesetz zur Änderung des Staatsangehörigkeitsrechts wurde für die in den USA lebenden Deutschen, die die US-Staatsangehörigkeit erwerben möchten, die Beibehaltung der deutschen Staatsangehörigkeit erleichtert.Wichtiger Hinweis: Wer durch Geburt in den USA die US-Staatsangehörigkeit und gleichzeitig durch Abstammung von einem deutschen Elternteil die deutsche Staatsangehörigkeit erworben hat, verfügt über beide Staatsangehörigkeiten, ohne dass es eines Antrages auf Einbürgerung oder auf Beibehaltungsgenehmigung bedürfte.

Bei einem Antragsteller, der seinen gewöhnlichen Aufenthalt im Ausland (USA) hat, wird insbesondere berücksichtigt, ob er fortbestehende Bindungen zu Deutschland hat und welche konkreten Nachteile er hat oder zu erwarten hätte, wenn er nicht als US-Amerikaner eingebürgert werden würde.

Das Verfahren ist erleichtert, wenn der Antragsteller das 60ste Lebensjahr vollendet und mindestens 10 Jahre in den USA gelebt hat oder jeden Alters ist und seit über 20 Jahren in den USA lebt, da er in diesem Fall ein erhöhtes Integrationsinteresse hat und nur die Bindungen zu Deutschland nachweisen muss.Anträge werden beim zuständigen deutschen Konsulat in den USA eingereicht. Zuständig für die Erteilung von Beibehaltungsgenehmigungen für im Ausland lebende Deutsche ist das Bundesverwaltungsamt (BVA) in Köln.Antragsverfahren: Der Antrag sollte (im Original und in einfacher Kopie) zusammen mit einem Anschreiben, das die Gründe des Antrags erklärt, die Nachteile einer Nichtannahme der US-Staatsangehörigkeit aufzeigt und die Bindungen zu Deutschland beschreibt, und den notwendigen Unterlagen, an die zuständige deutsche Auslandsvertretung in den USA gesandt werden. Von dort wird der Antrag mit einer Stellungnahme vom entsprechenden deutschen Konsulat an das BVA in Köln zur Entscheidung weitergeleitet.Leider haben sich die Voraussetzungen für eine deutsche Beibehaltungsgenehmigung kürzlich drastisch geändert, weil das BVA die maßgeblichen gesetzlichen Bestimmungen nunmehr deutlich enger auslegt. Dies gilt nicht nur für neue Anträge, sondern leider auch für bereits anhängige Anträge. Aufgrund des in Deutschland grundsätzlich geltenden Prinzips der Vermeidung der Mehrstaatigkeit und vermutlich auch aufgrund einer Flut von Anträgen, hat sich das BVA entschlossen, das bestehende Gesetz ab sofort sehr eng auszulegen und nur noch in  solchen Einzelfällen eine Beibehaltung der deutschen Staatsangehörigkeit zu genehmigen, in denen der Antragsteller konkrete Nachteile nachweisen kann. „Konkrete Nachteile“ bedeutet, dass der Nachteil in zeitlichem und sachlichem Zusammenhang mit der Annahme der US-Staatsangehörigkeit stehen muss.Ab sofort werden nur noch die folgenden nachzuweisenden konkreten Nachteile akzeptiert, die der Antragsteller ohne die US-Staatsangehörigkeit hat, und die der Antragsteller überzeugend und dokumentarisch in seinem Antrag darlegen muss:Berufliche NachteileZahlreiche Stellenangebote in den USA fordern als Voraussetzung die US-Staatsangehörigkeit (z.B. Homeland Security, Post, Flughafenbodenpersonal). Bisher wurde dem Antragsteller eine Beibehaltungsgenehmigung erteilt, wenn er glaubhaft machen konnte, dass er aufgrund seiner Ausbildung und beruflichen Qualifikationen für eine solche Stelle qualifiziert ist. Nunmehr vertritt das BVA die Auffassung, dass dies nicht mehr ausreiche, weil derartige Stellenangebote nur künftige Erwerbschancen seien und keine schon verwirklichte Geschäftsbeziehung.Um einen beruflichen Nachteil vorzubringen, muss der Antragsteller nunmehr im Einzelfall nachweisen, dass der Nachteil in zeitlichem und sachlichem Zusammenhang mit der Annahme der US-Staatsangehörigkeit steht. Dies ist nur möglich, wenn z.B. der Arbeitgeber des Antragstellers schriftlich bestätigt, dass dem Antragsteller eine Position in der Firma angeboten wurde, für die er sich qualifiziert, die aber die US-Staatsangehörigkeit des Antragstellers verlangt. Sicherheitsqualifikationen in den USA beinhalten in der Regel auch die US-Staatsangehörigkeit. Alternativ könnte ein anderer US-Arbeitgeber eine solche konkrete Stelle anbieten.Aufenthaltsrechtliche NachteileDas US-amerikanische Aufenthaltsrecht erlaubt einem „Permanent Resident“ (Inhaber einer Green Card) sich bis zu 180 Tagen im Jahr außerhalb der USA aufzuhalten, ohne seinen Aufenthaltsstatus zu verlieren. Eine Rückkehrberechtigung bei längerem Aufenthalt außerhalb der USA erlaubt einen Aufenthalt bis zu zwei Jahren außerhalb der USA. Sie wird jedoch unproblematisch nur einmal erteilt und liegt im Ermessen der US-Behörde. Dieser Nachteil wird nunmehr nur noch anerkannt, wenn der Antragsteller dokumentiert, dass es konkrete Pläne des Arbeitgebers gibt, ihn für mehr als sechs Monate ins Ausland zu entsenden, oder der Antragsteller aus wichtigen nachzuweisenden privaten Gruenden die USA fuer einen laengeren Zeitraum verlassen muss.Erbrechtliche Nachteile bei einem Vermögen über $5 Millionen Sollte das Einzel- oder Ehegattenvermögen des Antragstellers über $5 Millionen liegen, wobei zur Vermoegensmasse alle Vermögenswerte in Höhe des aktuellen Marktwertes gehören, inklusive Immobilien, Inventar, Lebensversicherungen, Geldanlagen, Kraftfahrzeuge, Schmuck, Antiquitäten, 401K, sowie Witwen-/Witwerversorgungen aus Betriebsrenten, und der Antragsteller eine Aufstellung des Vermögens einreicht, aus der ersichtlich ist, dass das zu versteuernde Erbe über dem Steuerfreibetrag von $5 Millionen liegt, wäre ein vermögensrechtlicher Nachteil akzeptierbar. Dieser Nachteil wird akzeptiert, da das gemeinsame Vermögen der Ehegatten in voller Höhe, und nicht wie sonst üblich nur zur Hälfte, in die Erbmasse fließt, wenn der überlebende Ehegatte kein US-amerikanischer Staatsbürger ist. Steuerrechtliche Nachteile bestehen nur für Ehepaare und beinhalten nur ein Vermögen, das im gemeinsamen Besitz steht.Nachteile bei der Vergabe von StipendienNicht-US-amerikanische Studenten sind bei der Vergabe von Stipendien benachteiligt. Das BVA akzeptiert diesen Nachteil, wenn dieser dokumentarisch nachgewiesen werden kann.Sonstige NachteileUS-amerikanische Gerichte übertragen in Scheidungsfällen das Sorgerecht in der Regel dem US-Staatsangehörigen. Um eine bessere Chance zu haben, das Sorgerecht zu erhalten, sollte der deutsche Ehepartner daher die US-Staatsangehörigkeit annehmen, sofern er vor oder in einem Scheidungsverfahren steht. Bisher hat das BVA diesen Nachteil akzeptiert, stellt sich jetzt aber auf den Standpunkt, dass auch dieser Nachteil nur dann ein akzeptierbarer Grund ist, wenn eine Scheidung anhängig ist. Ansonsten könnten Vermögensausgleichnachteile oder Nachteile im Sorgerecht durch eine entsprechende Vereinbarung der Ehegatten zum jetzigen Zeitpunkt geregelt werden, um spätere Nachteile zu vermeiden.Jeder Einzelfall ist spezifisch und der Antragsteller hat ggf. andere wichtige Nachteile, die er nachweisen kann. Daher ist es wichtig jeden Antrag im Vorfeld zu analysieren.Weitere Dokumente: Neben dem Antrag auf Beibehaltung der deutschen Staatsangehörigkeit sollten folgende Dokumente eingereicht werden: Beglaubigte Kopie des deutschen Reisepasses (nur Fotoseite), beglaubigte Kopie der US-Aufenthaltsberechtigung, Lebenslauf, Ausbildungszeugnis, Beispiele für US-Stellenangebote und Beschreibung der Bindungen zu Deutschland.Die Bindungen zu Deutschland sollten die Namen, den Verwandtschaftsgrad und die deutsche Adresse aller Familienangehörigen beinhalten und ggf. auch enge Freunde und Geschäftspartner einschließen. Zudem können die Bindungen an Deutschland durch Nachweise über ein Bankkonto, Versicherungen, Rentenanwartschaften oder Immobilien in Deutschland belegt werden. Legen Sie dem Antrag ggf. Bankunterlagen, Auszüge aus dem Grundbuch, Grundsteuerbescheide oder Renten- und Versicherungsunterlagen bei.Bearbeitungsdauer: Momentan dauert die Bearbeitung einer Beibehaltungsgenehmigung bis zu 18 Monaten.Wichtiger Hinweis: Der Antrag auf die US-Staatsangehörigkeit sollte erst dann gestellt werden, wenn die Beibehaltungsgenehmigung ausgehändigt worden ist.Anschlussurkunde: Die Beibehaltungsurkunde ist nur für zwei Jahre gültig. Sollte der Antragsteller seine US-Staatsangehörigkeit nicht innerhalb der Gültigkeit der Urkunde erlangen, muss er eine sogenannte Anschlussurkunde beim BVA beantragen. Dieser Antrag sollte sechs Monate vor Ablauf der Beibehaltungsurkunde eingereicht werden und erfordert gesonderte Antragsformulare. Abzuwarten bleibt, ob das BVA die neue Rechtsauslegung auch für Anschlussurkunden anwendet.Gebühren: Die Gebühren (momentan EUR 255), die im Verfahren über die Erteilung einer Beibehaltungsgenehmigung zu entrichten sind, werden nach Eingang der Entscheidung des BVA mit gesondertem Schreiben angefordert. Sollte der Antragsteller seinen Antrag aufgrund der neuen Rechtsauslegung zurückziehen, fallen Gebühren von EUR 127 an. Bei einem rechtsmittelfähigen Ablehnungsbescheid fällt eine Gebühr von EUR 191 an.Wichtiger Hinweis: Die gültige Genehmigung der Beibehaltung der deutschen Staatsangehörigkeit muss vor dem Einschwörungstermin für die US-Staatsangehörigkeit ausgehändigt werden, um die deutsche Staatsangehörigkeit nicht zu verlieren! Die Beibehaltungsgenehmigung ist für zwei Jahre gültig und kann u.U. verlängert werden.Antrag auf US-Staatsangehörigkeit (N-400): Sobald die Beibehaltungsgenehmigung ausgehändigt wurde, kann der Antrag auf US-Staatsangehörigkeit beim United States Citizenship and Immigration Services (USCIS) eingereicht werden.Mit dem N-400 Antrag bei der zuständigen Behörde sollten die folgenden Unterlagen eingereicht werden: Kopien der Green Card und des deutschen Reisepasses (nur Fotoseite), zwei Fotos (siehe https://travel.state.gov/content/travel/en/passports/how-apply/photos.html), eine Kopie des Führerscheines und ein Scheck über $725 (momentane Gebuehr, die sich aendern kann) zahlbar an das „Department of Homeland Security“.Bearbeitungsverfahren: Abhängig vom US-Wohnort können Antragsteller mit Bearbeitungszeiten von 4-24 Monaten rechnen. Nach der Stellung des Antrags wird der Antragsteller aufgefordert, seine biometrischen Daten abzugeben, und dann zum Interview gebeten. Während des Interviews wird der Antragsteller, in den meisten Fällen, einer Englischprüfung unterzogen und auf seine Kenntnisse der amerikanischen Geschichte geprüft. Nach bestandenem Interview findet in den meisten Bundesstaaten eine Einschwörung statt. Bei der Erteilung der US-Staatsangehörigkeit muss der Antragsteller seine Green Card im Austausch mit der Einbürgerungsurkunde aufgeben. Danach sollte der Antragsteller sofort den amerikanischen Pass beantragen, da dieser sein neues Reisedokument für die Einreise in die USA ist.Gerne stehen wir für etwaige Fragen zu der Beibehaltungsgenehmigung und der amerikanischen Einbürgerung zur Verfügung.HILDE HOLLAND, Esq. | PartnerWUERSCH & GERING LLP100 Wall Street, 10th | New York, New York 10005212-509-4715 (direct) | 212-509-5050 (firm) | 212-509-9559 (fax)

hilde.holland@wg-law.com | www.wg-law.com 

 This article is intended to provide general information only on the matters resented.  It is not a comprehensive analysis of these matters and should not be relied upon as legal advice.

SEC Proposes Amendments to Accredited Investor and Qualified Institutional Buyer Definitions

The Securities and Exchange Commission (the “SEC”) recently proposed amendments to the definitions of “accredited investor” in Rule 501(a) of Regulation D under the Securities Act of 1933, and “qualified institutional buyer” (QIB) in Rule 144A under the Securities Act. (See https://www.sec.gov/rules/proposed/2019/33-10734.pdf). The proposed rule would create additional categories of accredited investors, make the QIB categories more consistent with the accredited investor categories and codify some existing SEC staff interpretive positions relating to these definitions.Qualifying as an accredited investor is significant because accredited investors may participate in private investment opportunities not available to other investors, such as investments in startup companies and private investment funds. Qualifying as a QIB allows an investor to participate in certain investment opportunities available only to large institutional investors.

PROPOSED CHANGES TO “ACCREDITED INVESTOR” DEFINITIONS

The “accredited investor” definition is intended to identify financially sophisticated investors who can analyze investment opportunities with less government oversight. However, as the SEC notes in the proposed rule, in most cases the current accredited investor categories use “wealth” – measured by income level, net worth, or assets – as a proxy for sophistication. The proposed rule would create the following new categories of accredited investors – items (1) through (5) could be viewed as new exemptions for financially sophisticated investors who do not necessarily meet the current wealth thresholds, while items (6) through (8) could be viewed more as technical fixes to the rule:

1. Individuals who hold certain professional certifications, designations or credentials. These individuals would qualify as accredited investors without regard to any wealth requirements. The SEC would establish the exact certifications or designations satisfying this requirement from time to time through SEC order, and would make the list available on its website. This approach would allow the SEC to update the list without amending the definition. The SEC preliminarily expects that an initial SEC order accompanying the final rule would include FINRA Series 7 (licensed general securities representatives), Series 65 (licensed investment adviser representatives) and Series 82 (licensed private securities offerings representatives).

2. Registered investment advisers. SEC-registered investment advisers and state-registered investment advisers would qualify as accredited investors without regard to any wealth requirements.

3. Rural Business Investment Companies. USDA-licensed Rural Business Investment Companies would qualify as accredited investors without regard to any wealth requirements.

4. Knowledgeable employees. The proposed rule would create a new category for individuals who meet the definition of “knowledgeable employee” under the Investment Company Act of 1940 with respect to a private fund. “Knowledgeable employee” is an existing designation determined by an individual’s role for a private fund, and does not impose any wealth thresholds. Currently, an employee of an investment manager might qualify under the Investment Company Act to invest in a “3(c)(7) Fund” as a knowledgeable employee, but not qualify as an accredited investor. This change would eliminate that gap.

5. Family offices and family clients. The proposed rule would create a new category for “family offices” with at least $5 million in assets under management and their “family clients”, each as defined in the Investment Advisers Act of 1940. Currently, a family office might manage accounts for some family clients that do not separately qualify as accredited investors. This change would allow a family office and family clients to count their collective investments to satisfy the $5 million threshold, subject to a few additional conditions.

6. Limited liability companies. The proposed rule would codify a long-standing SEC staff interpretive position that includes limited liability companies in the enumeration of legal entities that qualify as accredited investors if they satisfy the other requirements of Rule 501(a)(3), i.e., they have not been formed for the specific purpose of acquiring the securities offered and have assets in excess of $5 million.

7. Catch-all provision. The proposed rule would create a new category for any entity owning more than $5 million in investments and which was not formed for the specific purpose of investing in the securities offered. This provision is intended to allow for new and foreign types of entities to qualify as accredited investors without being enumerated in Rule 501(a).

8. Spousal equivalents. Currently, a natural person may include a spouse’s resources when calculating income under Rule 501(a)(6) and net worth under Rule 501(a)(5). The proposal would amend those provisions to permit a natural person to include the income and net worth of a “spousal equivalent”, defined as “a cohabitant occupying a relationship generally equivalent to that of a spouse”.

PROPOSED CHANGES TO “QUALIFIED INSTITUTIONAL BUYER” DEFINITION

A “Qualified Institutional Buyer” or “QIB” other than a dealer registered with the SEC must in the aggregate own and invest on a discretionary basis at least $100 million in securities of issuers that are not affiliated with that QIB. Banks and other specified financial institutions are subject to an additional minimum audited net worth requirement of $25 million. Rule 144A specifies the types of entities that are eligible for QIB status if they meet the $100 million threshold. The proposed rule would expand that list to include several categories from the updated accredited investor definition, including the “catch-all” category described above.The SEC’s rationale is that an entity that meets the $100 million threshold is likely to have the financial sophistication and resources necessary to protect itself with less government oversight, and the exact type of entity is much less critical than the financial threshold.

OTHER MATTERS

Notably, the SEC considered but decided not to propose increasing the current financial thresholds or adjusting them for inflation.The SEC requests and encourages comments regarding the proposed rule amendments, specific issues discussed in this release and other matters that may affect the proposed rule amendments.This summary is intended to provide general information only on the matters presented. It is not a comprehensive analysis of these matters and should not be relied upon as legal advice.For further information please contact:Travis L. Gering: travis.gering@wg-law.com | (212) 509-4723Daniel A. Wuersch: daniel.wuersch@wg-law.com | (212) 509-4722Janet R. Murtha: janet.murtha@wg-law.com | (212) 509-6314Jake Brown: jake.brown@wg-law.com | (212) 509-4741Marco E. Palmese: marco.palmese@wg-law.com | (212) 509-6310

Doppelte Staatsangehörigkeit -Voraussetzungen der Beibehaltung der deutschen Staatsangehörigkeit vor der US-Einbürgerung

Durch das zum 1. Januar 2000 in Kraft getretene Gesetz zur Änderung des Staatsangehörigkeitsrechts wurde für die in den USA lebenden Deutschen, die die US-amerikanische Staatsangehörigkeit erwerben möchten, die Beibehaltung der deutschen Staatsangehörigkeit wesentlich erleichtert.

Wichtiger Hinweis: Wer durch Geburt in den USA die US-Staatsangehörigkeit und gleichzeitig durch Abstammung von einem deutschen Elternteil die deutsche Staatsangehörigkeit erworben hat, verfügt über beide Staatsangehörigkeiten, ohne dass es eines Antrages auf Einbürgerung oder auf Beibehaltungsgenehmigung bedürfte.

Bei einem Antragsteller, der seinen gewöhnlichen Aufenthalt im Ausland (USA) hat, wird insbesondere berücksichtigt, ob er fortbestehende Bindungen zu Deutschland hat, und welche Nachteile er zu erwarten hätte, wenn er nicht als US-Amerikaner eingebürgert werden würde. Das Verfahren ist erleichtert, wenn der Antragsteller im Rentenalter ist und mindestens 10 Jahre in den USA gelebt hat, oder jeden Alters ist und seit über 20 Jahren in den USA lebt, da er in diesem Fall ein erhöhtes Integrationsinteresse hat, und nur die Bindungen zu Deutschland nachweisen muss.

Anträge werden beim zuständigen deutschen Konsulat in den USA eingereicht. Zuständig für die Erteilung von Beibehaltungsgenehmigungen für im Ausland lebende Deutsche ist das Bundesverwaltungsamt (BVA) in Köln.

Antragsverfahren: Der Antrag sollte in zweifacher originaler Ausfertigung zusammen mit einem Anschreiben, das die Gründe des Antrags erklärt, die Nachteile einer Nichtannahme der US-Staatsangehörigkeit aufzeigt und die Bindungen zu Deutschland beschreibt, und den notwendigen Unterlagen, an die zuständige deutsche Auslandsvertretung in den USA gesandt werden. Von dort wird der Antrag mit einer Stellungnahme an das BVA in Köln zur Entscheidung weitergeleitet.

Akzeptiert werden die folgenden oft geltend gemachten Gründe für den Erwerb der US-amerikanischen Staatsangehörigkeit: Berufliche Nachteile, aufenthaltsrechtliche Nachteile, und Nachteile bei der Vergabe von Stipendien.

Berufliche Nachteile

Zahlreiche Stellenangebote in den USA fordern als Voraussetzung die US-Staatsangehörigkeit (z.B. Homeland Security, Post, Flughafenbodenpersonal). Macht der Antragsteller glaubhaft, dass er aufgrund seiner beruflichen Qualifikationen für solch eine Stelle in Frage käme, kann ihm eine Beibehaltungsgenehmigung erteilt werden. Einige Tätigkeiten bzw. berufliche Stellungen erfordern eine Sicherheitsüberprüfung (security clearance). Voraussetzung dafür ist jedoch die US-amerikanische Staatsangehörigkeit (z.B. im Ingenieur- und IT-Bereich). Zahlreiche Stellenangebote findet man unter www.usajobs.gov.

Aufenthaltsrechtliche Nachteile

Das US-amerikanische Aufenthaltsrecht erlaubt einem „Permanent Resident“ (Green Card Halter) sich bis zu 180 Tagen im Jahr ausserhalb der USA aufzuhalten, ohne seinen Aufenthaltsstatus zu verlieren. Eine Rückkehrberechtigung bei längerem Aufenthalt ausserhalb der USA erlaubt einen Aufenthalt bis zu zwei Jahren ausserhalb der USA. Sie wird jedoch unproblematisch nur einmal erteilt und liegt im Ermessen der US-Behörde. Verlobte oder Ehegatten von deutschen Staatsangehörigen mit Permanent Resident Card können zwar eine Aufenthalts- und Arbeitserlaubnis in den USA erhalten, aber die Bearbeitung kann bis zu 3-5 Jahre dauern. Schneller geht es nur, wenn der sich mit einer Permanent Resident Card in den USA aufhaltende deutsche Partner die US-Staatsangehörigkeit erwirbt, und für seinen Ehegatten dann eine Aufenthaltserlaubnis beantragt.

Nachteile bei der Vergabe von Stipendien

Ausländische Studenten sind bei der Vergabe von Stipendien benachteiligt. Auch bei der Vergabe von studienbegleitenden Praktika werden ausländische Studenten nachrangig berücksichtigt.

Sonstige Nachteile

US-amerikanische Gerichte übertragen in Scheidungsfällen das Sorgerecht in der Regel dem US-amerikanischen Staatsangehörigen. Um eine bessere Chance zu haben, das Sorgerecht zu erhalten, sollte der deutsche Ehepartner daher die US-amerikanische Staatsangehörigkeit annehmen, sofern er vor oder in einem Scheidungsverfahren steht.

Weitere Dokumente: Neben dem Antrag auf Beibehaltung sollten folgende Dokumente eingereicht werden: Beglaubigte Kopie des deutschen Reisepasses (nur Foto Passseite), beglaubigte Kopie der US-Aufenthaltsberechtigung, Lebenslauf, Ausbildungszeugnis, Beispiele für US-Stellenangebote, und Beschreibung der Bindungen zu Deutschland.

Die Bindungen zu Deutschland sollten die Namen, den Verwandtschaftsgrad und die deutsche Adresse aller Familienangehörigen beinhalten, und ggf. auch enge Freunde und Geschäftspartner einschliessen. Zudem können die Bindungen an Deutschland auch durch Nachweise über ein Bankkonto, Versicherungen, Rentenanwartschaften oder Immobilien in Deutschland belegt werden. Legen Sie dem Antrag ggf. Bankunterlagen, Auszüge aus dem Grundbuch, Grundsteuerbescheide oder Rentenversicherungsunterlagen bei.

Bearbeitungsdauer: Momentan dauert die Bearbeitung einer Beibehaltungsgenehmigung ca. 4-6 Monate. Eine beschleunigte Bearbeitung von Anträgen auf Beibehaltungsgenehmigung lässt das BVA nur in begründeten Ausnahmefällen zu.

Gebühren: Die Gebühren (momentan EUR 255), die im Verfahren über die Erteilung einer Beibehaltungsgenehmigung zu entrichten sind, werden nach Eingang der Entscheidung des BVA mit gesondertem Schreiben angefordert.

Wichtiger Hinweis: Die gültige Genehmigung der Beibehaltung der deutschen Staatsangehörigkeit muss vor dem Einschwörungstermin für die US-Staatsangehörigkeit ausgehändigt werden, um die deutsche Staatsangehörigkeit nicht zu verlieren! Die Beibehaltungsgenehmigung ist für zwei Jahre gültig, und kann u.U. verlängert werden.

Antrag auf US-Staatsangehörigkeit (N-400): Sobald die Beibehaltungsgenehmigung ausgehändigt wurde, kann der Antrag auf US-Staatsangehörigkeit beim United States Citizenship and Immigration Services (USCIS) eingereicht werden.

Mit dem N-400 Antrag bei der zuständigen Behörde sollten die folgenden Unterlagen eingereicht werden: Kopien der Green Card und der Foto Passseite, zwei Fotos (siehe http://travel.state.gov/content/passports/english/passports/photos), eine Kopie des Führerscheines und ein Scheck über $680 zahlbar an „Dept. of Homeland Security“.

Bearbeitungsverfahren: Momentan benötigt USCIS ungefähr sechs Monate für die N-400 Bearbeitung. Nach der Einlegung des Antrags muss der Antragsteller seine biometrischen Daten abgeben, für die er eine Aufforderung erhält, und wird dann zum Interview gebeten. Während des Interviews unterzieht er sich, in den meisten Fällen, einer Englischprüfung und wird auf seine Kenntnisse der amerikanischen Geschichte geprüft. Nach bestandenem Interview findet dann in den meisten Bundesstaaten eine Einschwörung statt. Bei der Erteilung der US-Staatsangehörigkeit muss der Antragsteller seine Green Card im Austausch mit der Einbürgerungsurkunde aufgeben. Danach sollte der Antragsteller sofort den amerikanischen Pass beantragen, da dieser sein neues Reisedokument in die USA ist.

Nach Erhalt der amerikanischen Einbürgerungsurkunde sollte der Antragsteller dem BVA eine Kopie der Einbuergerungsurkunde übersenden.

Gerne stehen wir für etwaige Fragen zu der Beibehaltungsgenehmigung und der amerikanischen Einbürgerung zur Verfügung.

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This article is intended to provide general information only on the matters resented.  It is not a comprehensive analysis of these matters and should not be relied upon as legal advice.

Hilde Holland:     hilde.holland@wg-law.com  | (212) 509 4715

U.S. Supreme Court Tosses Out the Physical Presence Requirement for Sales Tax Nexus: What Now?

In South Dakota v. Wayfair, Inc., et al., 585 U.S. __ (June 21, 2018), the U.S. Supreme Court overruled its 1992 decision in Quill Corp. v. North Dakota which held that a state cannot require an out-of-state sellers with no physical presence in the state to collect and remit sales taxes on goods and taxable services provided to customers located in the state. The Supreme Court noted that the physical presence requirement has become unworkable in the Cyber Age. However, the court's ruling not only affects online retailers, including foreign retailers, but all sellers of taxable goods and services who make sales into a state in which they lack a physical presence.           The specific question at issue in Wayfair was whether South Dakota may require remote sellers with more than $100,000 in annual sales in South Dakota or more than 200 transactions with South Dakota residents to collect and remit sales tax in the absence of any further connection with the state. Although the Supreme Court unequivocally decided that a physical presence is not necessary to create a "substantial nexus" (taxable presence) justifying the imposition of a sales tax, the Court declined to adopt a new sales tax nexus standard. Instead, by eliminating the physical presence requirement for sales tax nexus and upholding the South Dakota law, the Court established a threshold for the constitutionality of state nexus standards, but did not provide clear guidelines as to what other state nexus standards might be constitutional. Accordingly, there is no clear nexus standard today.IMMEDIATE EFFECTS FOR REMOTE SELLERSRemote sellers should refrain from hastily registering in each state in which they transact sales. There will be an adjustment period during which the Wayfair opinion is digested by the states and taxpayers alike to understand its practical implications. A number of states will likely issue legislative or administrative guidance outlining the principles pursuant to which they expect remote sellers to collect and remit the sales tax. Some states may decide to simply issue a bulletin informing remote sellers that they are now expected to register and collect sales tax. It should also be expected that states will generally increase audit enforcement in reaction to the Wayfair decision. Because there is still no clear nexus standard, there remain various potential arguments to challenge the states' authority to impose their laws on remote sellers, increasing the need for Federal legislation in this area. Ultimately, as states are increasingly able to require remote sellers to collect and remit sales tax, remote sellers who historically have not collected sales tax will now have to implement sales tax compliance procedures and will no longer maintain a competitive advantage over traditional retailers. ANTICIPATED STATE REACTIONSThe Supreme Court's decision will likely encourage states to adopt similar laws to South Dakota's because they would be able to do so with certainty that the law will withstand constitutional scrutiny. Specifically, in considering the constitutional validity of the South Dakota law, the Court summarized that the South Dakota nexus standard (1) requires businesses whose sales exceed the safe harbor threshold of $100,000 in annual sales or 200 separate transactions to collect sales tax; (2) does not apply retroactively; and (3) is effective in a state that is party to the Streamlined Sales and Use Tax Agreement (SSUTA). South Dakota is one of more than 20 states that have adopted the SSUTA, which standardizes taxes to reduce administrative and compliance costs. SSUTA requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the state. Sellers who choose to use such software are immune from audit liability.CURRENT STATE ECONOMIC NEXUS STANDARDSIn addition to South Dakota, seven other both SSUTA and non-SSUTA states - Illinois, Indiana, Kentucky, Maine, North Dakota, Vermont and Wyoming - have adopted economic nexus thresholds similar to those adopted by South Dakota. Thus, any remote seller that exceeds the South Dakota thresholds most likely has a sales tax compliance obligation in at least these eight states.Seven additional states - Alabama, Georgia, Iowa, Massachusetts, Mississippi, Ohio and Tennessee -have adopted economic nexus thresholds that vary from those adopted by South Dakota. It remains to be seen whether these laws will be enforced as is, or modified to reflect South Dakota-style provisions. As for the remaining 31 states that impose a state sales tax, they will have to determine whether their existing laws provide a sufficient "economic nexus" basis through which to assert jurisdiction over remote sellers of taxable goods and services, or whether they must amend their laws to adopt the South Dakota standard, or attempt an even lower threshold, perhaps even with retroactive application.Six states - Alabama (effective Jan. 1, 2019), Minnesota, Oklahoma, Pennsylvania, Rhode Island and Washington State have adopted marketplace nexus provisions, under which remote sellers, as well as marketplace facilitators (such as Amazon) are subject to notice and reporting requirements or may elect and to remit sales tax if they exceed certain annual sales thresholds ranging from $10,000 to $250,000, despite a lack of physical presence in the state. Pursuant to these laws, Amazon has agreed to collect and remit sales tax on behalf of all remote sellers for sales made on its platform.POTENTIAL FOR CONGRESSIONAL ACTIONNoting the concerns regarding the complexity of multistate sales tax compliance, the Supreme Court noted that "eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems.... And in all events, Congress may legislate to address these problems if it deems it necessary and fit to do so." Currently, there are several pieces of legislation before Congress that address multistate tax compliance issues of online retailers, and the chances for such legislation may be improved by the Wayfair decision. These include the following:

• The Marketplace Fairness Act (MFA), as presented in its revised version by Senate legislators in 2017, would give states more power to collect sales taxes from businesses that do not have a physical location within their borders, so long as the state participates in the Streamlined Sales Tax Project (which developed the SSUTA), or implements the simplification requirements and liability provisions of the MFA. The MFA is completely voluntary for states, provides a small seller exception, and would require a minimum six month waiting period before a state can begin requiring remote sellers to collect sales tax.

• The Remote Transactions Parity Act (RTPA) of 2017, presented by legislators in the House of Representatives, authorizes states to impose sales tax collection obligations on certain remote sellers for sales, regardless of physical presence, so long as the state participates in the Streamlined Sales Tax Project, or implements the simplification requirements and liability provisions of the RTPA. The RTPA is also completely voluntary for states, provides a small seller exception, and would require a minimum six month waiting period before a state can begin requiring remote sellers to collect sales tax.

Neither the MFA nor the RTPA addresses how the legislation applies to remote sellers in foreign countries.It is likely that Congress will wait to see how the states and taxpayers respond to the Wayfair decision before it takes any action, a process that could take several years. In the meantime, remote sellers, including foreign sellers, should determine whether a sales tax nexus exists or the risk of nexus has materially changed because of the Wayfair decision. Specifically, they should consider their historical sales by state; and nexus creating activities under existing state nexus provisions (e.g., affiliate marketing programs). If they come to the conclusion that a substantial risk of non-compliance exists, the Wayfair decision should serve as a wake-up call to (1) resolve any historical exposure proactively (and anonymously through Voluntary Disclosure Agreements); (2) implement sales tax compliance software solutions and processes; and (3) implement processes for tracking sales activity to determine when they exceed sales thresholds in states that adopt economic nexus standards. For further information please contact:Maureen R. Monaghan: maureen.monagahn@wg-law.com; (212) 509-6312

Patent litigation in the United States: overview

By Maria Luisa Palmese

US patent laws stem from the patent clause in the US Constitution, which provides that Congress has the power "to promote the progress of … useful arts, by securing for limited times to … inventors the exclusive right to their … discoveries". Therefore, patents are exclusively governed by federal law and state law has little or no role in patent litigation, except, for example, where the issue is one of contract or ownership. The principal source of federal law governing patents is Title 35 of the US Code.The US has a common law system that relies on judicial precedent. Therefore, federal court decisions also play a vital role in US patent law and litigation, by interpreting the Constitution and federal statutes, and in some cases, creating law themselves. For example, the "doctrine of equivalents", which was first adopted by the US Supreme Court, has no independent statutory basis. Federal courts have exclusive jurisdiction over patent infringement cases, and the Federal Rules of Civil Procedure and the Federal Rules of Evidence apply in these proceedings. In addition, many district courts have instituted local rules specific to patent litigation.To continue reading: Follow this link to the article