Transcript April 2011 CLE Workshop: Working with Foreign Partners

PARTNERING ABROAD
Opportunities
and Challenges
John S. Russell, Esq.
K&L Gates LLP
Opportunities to Partner
Abroad
• Research
– Scientific and Technical
– Clinical Trials
• Study Abroad
– Campuses
– Programs
• University-to-University Relationships
• Contracting Relationships
Advantages to Partnering
• Share Costs and Expertise
• Establish Regulatory Responsibility InCountry
• Obtain Foreign Government Grants or
Sponsored Research
• Own or Lease Real Estate
• Make Contracts
• Comply with National Laws regarding
Participation
Challenges to Partnering
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Project Control
Internal Resource Constraints
Increased Liability
Exposure to Foreign Courts
Hidden Costs
To Partner or Not To Partner:
General Considerations
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Organization of Entity or Venture
Taxes and Employment
Overseas Qualification
Internal Management
Intellectual Property Ownership
Case One:
Overseas Clinical Research
• OIG Report – 80% of Current Registrations for
FDA Drug Approval include Overseas Studies
• Who Is Sponsor?
• Investigator from U.S. – Exposure to Local Law
• Drug Action Liability under Local Law
• Access to Tissue Samples
• Transfer of Data
Case Two:
IP Co-Venturing
• Value of Confidentiality Agreements
• Background Property and Technology
under Development
• U.S. Patent Law Enforceable?
• Controls over Patent Filing and Licensing
Case Three:
Overseas Charters
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Specific Country Laws and Their Effect
Host Country Partner Advantages
Handling Resident Student and Staff Issues
Real Estate and Facilities
Local Management and Customs
SELECTED CONTRACT AND
COMPLIANCE ISSUES
Dispute Resolution
• Added Importance of Choice of Law and
Venue
• Preference for Arbitration
• Common Tribunals – ICC, ICDR/AAA
• Common Venues
• Drafting the Arbitration Clause -“Don’t try this at home…”
Privacy Laws
• Difference between U.S. and EU Approach
• Specific Statues – HIPAA and European
Privacy Directive
• Presence in EU
• Use of Data Transfer Agreements
Clinical Research: Research
Authority and Patient Consents
• Effect of Common Rule in U.S. and
Overseas
• IND and Equivalent Filings
• National Laws and Patient Consent
• Role of IRBs and Non-US Ethics Boards
• U.S. and Overseas Enforcement – Role of
FDA and Non-US Drug Agencies
IN-DEPTH CASE:
ANTI-BRIBERY LAW
Foreign Corrupt Practices Act
and UK Bribery Act
• Stepped-up Enforcement of FCPA – Impact
on Universities
• New Implementation of UK Bribery Act
• Broad Jurisdiction of UK Bribery Act
• Towards a Global Standard?
Major Differences between FCPA and
U.K. Act
• U.K. Bribery Act also covers “Commercial
Bribery”
• U.K. Bribery Act does not contain an
affirmative defense for promotional
expenditures and hospitality
• U.K. Bribery Act has no exception for
facilitation or “grease” payments
• There is no need to prove defendant acted
“corruptly” under the U.K. Act
Required Elements of an
FCPA Violation
• Corrupt
• Payment, offer or promise to pay
• Anything of value
• Directly or indirectly
– Includes acts of agents/representatives
• To a foreign official
• To obtain or retain business, or to gain any
improper advantage
Offenses Under U.K. Bribery Act
• 4 separate offences
– “Bribing”
– “Being bribed”
– “Bribery of a foreign public official”
– “Failure to prevent bribery”
• Also prohibits “consent or connivance” in
a company’s bribery offence by a senior
officer
Corruption Perception Index
(2010)
Red Flags: Agents, Consultants,
JV Partners
• A history of corruption in the country
• Family relationships with government officials
• Recommendation of joint venture partner or
agent by a government official
• Unusually high commissions
• Unusual payment arrangements (i.e, in third
country)
• Apparent lack of qualifications or resources
• Refusal to commit to abide by anti-corruption
requirements
Red Flags in Plain English
• “Please Pay Me in Cash”
• “Pay Me Through My Swiss Bank Account”
• “My Close Relative Is a Government Official, and
You Won’t Win This Bid Unless You Deal With
Me”
• “I Have No Staff or Facilities, But I’ll Get It Done”
• “I Have No Experience in Your Research, but I
Know the Right People”
• “While My Commission Is Twice The Market
Rate, I’m Well Worth It”
Anti-Corruption Compliance Programs
• Effort to reduce risk that a violation will occur
• May also affect prosecutorial decisions
– Effective compliance program may lead to
reduced or no charges under FCPA
– Adequate Procedures constitute a defense to
charges under the U.K. Bribery Act
– Lack of a robust compliance program will be
an aggravating factor under U.S. sentencing
guidelines
ADDITIONAL U.S.
REQUIREMENTS
U.S. Anti-Boycott Laws
• Unlawful under U.S. Export Administration Act to
participate in or cooperate with a boycott not
sanctioned by U.S. government
• Particular effect on Mideast projects because of
Arab League boycott of Israel
• Be wary of contract provisions guiding business
towards or away from specific vendors, or of
providing personal information regarding
associates or partners
• Contractual representations and warranties
useful
Bayh-Dole Act Compliance
• Good practice to highlight in contracts the
U.S. government's right to “march-in” on
funded projects
• Familiar provision in U.S., not so familiar
abroad
Export Control and Anti-Terrorism
Regulations
• Should be mindful of licensing restrictions
and procedures for sensitive technologies
• Counter-terrorism rules require
monitoring of funds to exclude direct or
indirect terrorist group contacts
• Representations and warranties useful
regarding technology in question and flow
of funds
For Further Information:
John Russell, Esq.
K&L Gates LLP
430 Davis Drive
Suite 400
Research Triangle Park, NC 27709
Email: [email protected]