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This article suddenly reminded me of another link that was on front page a few weeks ago. That one was on how to incorporate a company in another country withou

by sigkill 14y ago

This article suddenly reminded me of another link that was on front page a few weeks ago. That one was on how to incorporate a company in another country without being there. People wanted to incorporate their software startups in the US due to ease of payment processing and stuff. After seeing these kind of patent trolls, I wonder if anyone would even think of incorporating the the US. If your product is international, and you're incorporated in the US and then a patent troll fucks you up, you'll have to waste so much time on all the procedures in addition to the money. And if anything goes wrong, then you'll have to pay hefty penalties/fines/royalties or close shop. If your company is incorporated outside the country, granted you might find it a little hard to get your payment processor set up, but atleast you know that patent trolls [which, unfortunately seem to primarily originate from the USA] would be able to only shut down your business in one country. And, as long as you had a website up, people will find ways to bypass the country restriction. [Hint - Amazon's free app of the day isn't just being enjoyed by people in the USA]

rprasad 14y ago
Logged in just to reply. European IP law makes US IP law look like a walk in the park. The RIAA and MPAA notwithstanding, the US has actually been the voice of restraint in the IP rights field. Enforcement and defense is also easier, as you do not have to contend with a variety of separate court systems as you do in Europe or Asia. That being said, if you are running an international operation, your IP should never been based in the US for tax reasons. It should be held by an Irish (or other low-tax jurisdiction) company dedicated to holding your IP (i.e., an "IP holding company").
Vivtek 14y ago
Which is why you would set up a subsidiary LLC in the United States, and dissolve it if it's sued.
- hmmmmmmmmmm 14y ago
  Would this be a viable way to escape some frivolous patent lawsuit? I've often wondered about this, and even tried to research it somewhat, but I'm still unsure about it. Suppose I have an LLC for my small (one-man) business in the U.S., and then I get targeted by a patent troll with some ridiculous claims. Can I simply start up another LLC in another country (one with saner patent laws), transfer my domains/hosting/whatever else to it, and dissolve the U.S. LLC? It seems too easy.
  - rprasad 14y ago
    The U.S. has jurisdiction over ICANN and thus over all TLD's that are not country TLDs (i.e., .co, .tv, .ly, etc.). But jurisdiction extends only to the domain itself, not to the company, unless you are doing business in the U.S., in which case you are subject to the jurisdiction of the U.S. to the extent of your business contacts. Transferring your U.S. assets will probably not spare you, as jurisdiction is established by past or present contacts (though past in this context means at the time of the tort/claim giving rise to the lawsuit).
    - hmmmmmmmmmm 14y ago
      Thanks for all your comments on this page, they're very illuminating. I understand why a lawsuit could target the American LLC, but even if I dissolve it or let it go under, why wouldn't I and my assets still be protected? I understand that once I switch to the foreign LLC I'd have to avoid any business ties to the U.S. (i.e. move my hosting overseas). I assume that I'd still have subscribers to my service in the U.S., but it doesn't make sense to me that that would constitute doing business there. By that rationale wouldn't every internet company be subject to the jurisdiction of every country on Earth?
      - rprasad 14y ago
        Jurisdiction for the lawsuit arises from (1) past contacts with the U.S. at the time of the claim from which the lawsuit arises or (2) current contacts with the U.S. For example, if your LLC is being sued for...say, slander, that supposedly occurred 6 months ago, and your LLC were conducting business in the U.S. 6 months ago, your LLC would be subject to the jurisdiction of the U.S. courts based upon your past contacts. (Otherwise, businesses would just leave the country to avoid jurisdiction.) On the other hand, if you are currently in the U.S., but were not in the U.S. 6 months ago, you are still subject to the jurisdiction of the U.S. courts based on your current contact with the U.S. Again, your personal assets would be protected. However, the LLC's assets would not be protected. Once you've been targeted by a lawsuit, there's no point in moving the LLC's assets overseas. If anything, you're more likely to have an enforceable court order freezing the LLC's assets in whatever jurisdiction you've moved to. I assume that I'd still have subscribers to my service in the U.S., but it doesn't make sense to me that that would constitute doing business there. By that rationale wouldn't every internet company be subject to the jurisdiction of every country on Earth? Accepting and continuing to do business with the U.S. subscribers constitutes doing business in the U.S. Under most double taxation (prevention) treaties, a software/online "service" is deemed performed where the customer uses the service, unless there is a significant human element to the service in which case the service is deemed performed where that particular human performs his tasks.

by sigkill 14y ago

rprasad 14y ago

Logged in just to reply. European IP law makes US IP law look like a walk in the park. The RIAA and MPAA notwithstanding, the US has actually been the voice of restraint in the IP rights field. Enforcement and defense is also easier, as you do not have to contend with a variety of separate court systems as you do in Europe or Asia. That being said, if you are running an international operation, your IP should never been based in the US for tax reasons. It should be held by an Irish (or other low-tax jurisdiction) company dedicated to holding your IP (i.e., an "IP holding company").

Vivtek 14y ago

Which is why you would set up a subsidiary LLC in the United States, and dissolve it if it's sued.

hmmmmmmmmmm 14y ago
Would this be a viable way to escape some frivolous patent lawsuit? I've often wondered about this, and even tried to research it somewhat, but I'm still unsure about it. Suppose I have an LLC for my small (one-man) business in the U.S., and then I get targeted by a patent troll with some ridiculous claims. Can I simply start up another LLC in another country (one with saner patent laws), transfer my domains/hosting/whatever else to it, and dissolve the U.S. LLC? It seems too easy.
- rprasad 14y ago
  The U.S. has jurisdiction over ICANN and thus over all TLD's that are not country TLDs (i.e., .co, .tv, .ly, etc.). But jurisdiction extends only to the domain itself, not to the company, unless you are doing business in the U.S., in which case you are subject to the jurisdiction of the U.S. to the extent of your business contacts. Transferring your U.S. assets will probably not spare you, as jurisdiction is established by past or present contacts (though past in this context means at the time of the tort/claim giving rise to the lawsuit).
  - hmmmmmmmmmm 14y ago
    Thanks for all your comments on this page, they're very illuminating. I understand why a lawsuit could target the American LLC, but even if I dissolve it or let it go under, why wouldn't I and my assets still be protected? I understand that once I switch to the foreign LLC I'd have to avoid any business ties to the U.S. (i.e. move my hosting overseas). I assume that I'd still have subscribers to my service in the U.S., but it doesn't make sense to me that that would constitute doing business there. By that rationale wouldn't every internet company be subject to the jurisdiction of every country on Earth?
    - rprasad 14y ago
      Jurisdiction for the lawsuit arises from (1) past contacts with the U.S. at the time of the claim from which the lawsuit arises or (2) current contacts with the U.S. For example, if your LLC is being sued for...say, slander, that supposedly occurred 6 months ago, and your LLC were conducting business in the U.S. 6 months ago, your LLC would be subject to the jurisdiction of the U.S. courts based upon your past contacts. (Otherwise, businesses would just leave the country to avoid jurisdiction.) On the other hand, if you are currently in the U.S., but were not in the U.S. 6 months ago, you are still subject to the jurisdiction of the U.S. courts based on your current contact with the U.S. Again, your personal assets would be protected. However, the LLC's assets would not be protected. Once you've been targeted by a lawsuit, there's no point in moving the LLC's assets overseas. If anything, you're more likely to have an enforceable court order freezing the LLC's assets in whatever jurisdiction you've moved to. I assume that I'd still have subscribers to my service in the U.S., but it doesn't make sense to me that that would constitute doing business there. By that rationale wouldn't every internet company be subject to the jurisdiction of every country on Earth? Accepting and continuing to do business with the U.S. subscribers constitutes doing business in the U.S. Under most double taxation (prevention) treaties, a software/online "service" is deemed performed where the customer uses the service, unless there is a significant human element to the service in which case the service is deemed performed where that particular human performs his tasks.