Doing Business In.. 2024 Comparisons

The United States is primarily governed by statutory civil law, although much of that statutory law comes from previous common law. The law is established independently at the municipal, state, and federal levels, with many overlapping requirements. Most of the time, the laws at the various levels do not conflict, but where they do, the higher level of governance prevails.

There are separate court systems for local, state, and federal laws. The judiciary for local laws is local. The judiciary for state laws begins locally, with appellate and Supreme Court review within the state. The federal judicial system begins at the state level, with appellate jurisdiction by assigned geographic circuit courts, and ultimate jurisdiction at the US Supreme Court.

All potential foreign investments in US companies are reviewed by the Committee on Foreign Investment in the United States (CFIUS). The rules regarding these investments apply to both direct and indirect foreign investment (eg, via funds with foreign partners, via US companies controlled by foreign persons, or into a foreign company that has a US subsidiary).

Prior to 2020, most transactions did not require prior approval; the primary concern was to ensure that technology or funds from an acquired US business would not end up in a sanctioned country as a result of being acquired by a foreign investor. In 2020, new regulations were issued, and the list of transactions requiring prior approval was significantly expanded to include non-controlling investments that provide investors with certain rights in a broad range of US businesses, as well as certain real estate transactions. Sectors affected by this expansion include hi-tech, biotech, healthcare, aerospace, advanced manufacturing, finance, insurance, and energy.

Where prior approval is not required, there is a risk that the parties may be required to unwind the relationship or go through forced mediation if it turns out that the transaction was not appropriate.

The steps for a foreign investor to obtain approval are as follows:

• Typically, CFIUS screens proposed investments for potential issues during an informal stage, with no deadline.
• Certain transactions involving foreign persons in which a foreign government has a “substantial interest” are subject to an initial Formal Review. Within 30 days, CFIUS will issue a declaration either determining that there is no risk or that any risk has been resolved (in which case no further action is taken), or that there needs to be a review.
• There is then a 45-day National Security Review to determine whether an investigation is necessary. Factors include:
1. whether other laws apply;
2. whether the investment poses a threat to national security, critical infrastructure, or homeland security; and
3. whether the entity is state-owned or controlled.

The lead agency for the review will depend on the industrial activity of the investment. There is also a review by the Director of National Intelligence during this time period. The parties can withdraw and resubmit a notification at any point in the process. As in the previous stage, ultimately there is either a determination that there is no risk or risks have been resolved, in which case no further action is taken, or there is a determination that there will be an investigation.

• The next step is a National Security Investigation, which can take 45–60 days. Depending on the results of that investigation, the parties may resolve outstanding issues, or CFIUS may negotiate, impose, or enforce an agreement or condition. Where appropriate, the parties may negotiate a mitigation agreement and develop interim protocols, with specific timelines for resubmitting the notice.
• If outstanding concerns are not resolved, a negative determination can be sent to the President, who has 15 days to make a final decision to permit the transaction or order divestment. CFIUS has a list of 12 factors the President must consider (the President can also consider other factors) in deciding to block a foreign acquisition, including national defence and security (including making sure that human resources, technology, supplies and services are available), effects of the transaction on US technological leadership, effect on critical infrastructure, and the like.
• There is no appeal of the President’s decision.

If at any time it appears that the parties cannot meet the required timeline, CFIUS will ask the parties to withdraw and refile.

If a party fails to seek approval where required, CFIUS can recommend blocking the proposed transaction or unwinding the completed transaction, even years after the fact. More often, CFIUS proposes restrictions, such as prohibiting participation in substantive decision-making, or taking other action, such as accessing intellectual property. In addition, civil penalties may result in up to USD250,000 per violation or the value of the transaction (whichever is greater) if there is a wilful violation of the regulations, mitigation orders, or conditions or agreements imposed by CFIUS.

Typically, the United States expects commitments as a condition of foreign investment by negotiating rules and market access commitments concerning foreign investment in free trade agreements, and bilateral investment treaties.

The United States currently has 20 free trade agreements around the world. While each country is different, typical commitments expected from the foreign investor include market access, reducing or eliminating tariffs, and providing “most favorable nation” status in various areas.

There is no review of a President’s denial. Investors cannot challenge such decisions in court.

The following are the most common corporate vehicles available.

• Sole proprietorships – anybody engaging in business activities but not registered as any other kind of business is considered a sole proprietor. While a sole proprietor does not get many of the advantages associated with other business models, the proprietorship can get a trade name. However, there is no separation between the proprietorship and the individual, so the individual can be held personally liable for the debts and obligations of the business. This model is best suited for low-risk businesses and owners who want to test their business idea before forming a more formal business.
• Limited partnerships and limited liability partnerships – the limited partnership has one general partner with unlimited liability, and additional partners (in any number) with limited liability. Profits are reported in personal tax returns, and the general partner must also pay self-employment taxes. The limited liability partnership (LLP) is similar to the limited partnership, but every partner is an owner with some liability. Each partner is only responsible for their own actions and will not be responsible for debts incurred by others in the partnership. Like sole proprietorships, partnerships are often established for groups who are contemplating becoming a more formal business. Partnerships are often used for professional groups with multiple owners (such as attorneys).
• Limited liability company (LLC) – this model borrows from both the partnership and corporate models. Personal assets, such as cars, houses, and personal bank accounts, are protected from the liabilities of the LLC, and the individual is not subject to corporate taxes for profits and losses that are passed through to personal income. However, each state has different rules regarding LLCs, and some require that the entity be dissolved and re-formed with ever change in membership. In some cases this can be addressed by the terms of the LLC agreement, but local laws and regulations should be considered before adopting this model.
• Corporation – there are many different types of corporations, with some commonalities. The laws regarding corporations differ from state to state. Generally, in this model, the corporation and the individual are entirely separate. Types of corporations include:
1. The most standard corporation, also called a C corps, is its own stand-alone entity. The corporation can be taxed on its profits and is financially responsible for its own wrongdoing. While individual owners usually are taxed on their personal income from the corporation and can be held legally liable for their own personal wrongdoing, the individuals are not responsible, either legally or financially, for the actions of the corporation. C corps are subject to regulations regarding record-keeping and reporting. The comings and goings of individuals do not affect the corporate structure.
2. Public corporations in many ways function like a C corps, in terms of their record-keeping and reporting requirements and their structure. But public corporations have outside shareholders and a board that is elected by those shareholders. This is an asset when it comes to raising money – the company sell stock or bonds. But it makes the corporate governance structure much more responsible to the outside stockholders, rather than just to the partners or working shareholders of the entity.
3. S corps, which are treated differently state by state (and are not recognised by some states), avoid the double taxation of a C corp, allowing some portion of the profits profits (and sometimes losses) to be passed through to the owner’s personal income.
4. Benefit corporations are legally treated like C corps for most purposes, but while they are for-profit corporations, they have as part of their mission the production of some public benefit in addition to a financial profit.
5. Close corporations are similar to benefit corporations, but they are more likely to be relatively small, with less structure than most corporations. Many states bar close corporations from public trading of their shares
6. Non-profit corporation – the purpose of a non-profit corporation (often called a 501(c)(3) after the tax code), as its name suggests, is not to make a profit, but rather to do work that benefits the public in some way. Its mission may be charity, education, religious, scientific, or some other similar purpose. Non-profit corporations are tax exempt, provided they have received a tax exemption from the Internal Revenue Service. Non-profit corporations are not allowed to distribute their profits to members or political campaigns.

• Co-operative – this is an organisation owned by, and operated for the benefit of, those using its services. Examples could include a neighbourhood food co-op, where every member pays in a certain amount, and then is entitled to distribution of a certain share of the food that comes in, or a local movie co-operative, where members pay in and then are entitled to view the movies for free.

As discussed above, some of these corporate structures limit the liability of shareholders. There is no minimum share capital or minimum number of shareholders for those structures which have shareholders; the companies can range from very small and closed to very large and open.

Partnerships, LLCs, and corporations are the most common structure for corporate activities that are going to include mergers and acquisitions, joint ventures, and the like. C corps and public companies are the most common corporate structure within the “corporate” category. Which will be the most appropriate in any given situation will depend on the nature of the venture and the circumstances.

The general steps for setting up a corporation are as follows.

• Choose a business name – in most states, the business name will need to include a designation of corporate status, such as “Inc.” or “Co.” This step should include a trade mark search to make sure you are not infringing on a trade mark. You should also check with the state Secretary of State to make sure that the name is available. This step can be done quickly.
• If you are going to do business under a name that is different from the corporate name, you need to register a DBA (“doing business as:”). This step can be done quickly.
• Determine directors – the number of directors needed will vary state by state and may also depend on the number of owners your corporation has. This step can be done quickly.
• File your Articles of Incorporation – how much time this will take will depend on how detailed the Articles are. They must include the name and address of the corporation, the purpose of the corporation, the name and address of the registered agent, and the type and number of shares of stock to be issued.
• Write corporate by-laws – if you think of the Articles of Incorporation as your Constitution, the by-laws are all of the specific policies passed in order to conduct business. This does not need to include every policy the corporation may eventually have – that is what policy manuals are for. But it should include direction regarding how many shares of stock can be issued, how many directors are required, how directors are determined, how long they serve, how the Board is governed, and meeting and record-keeping procedures.
• Draft a shareholder agreement – this is not a required document, but it is helpful in the event of a change in shareholders, whether due to death or the departure of an owner who is transferring shares.
• Most of the above tasks can be handled relatively quickly if the founders of the corporation know what they want to do. Typically, legal advice is helpful for the corporate documents. The task may take longer if the entity is going to operate in multiple jurisdictions, each of which may have its own idiosyncratic requirements.
• Once the corporation is brought into existence, the corporation can issue stock, which will require establishing a record-keeping system.
• Obtain business permits and licences – these will depend on city, county, state, and federal laws, as well as any laws pertaining to the specific industry. The Small Business Administration is a useful source for this part of the process.
• Register your business – you will need tax ID numbers from both your state and the Internal Revenue Service.
• Open a corporate bank account – this is separate from the bank accounts of the owners. This step may require proof of some of the documents listed above, such as Articles of Incorporation and tax ID numbers.
• Check state law to make sure you have not missed anything.

Beginning 1 January 2024, the US Corporate Transparency Act (CTA) requires “reporting companies” to submit reports to the Financial Crimes Enforcement Network (FinCEN) regarding personal information about the company’s “beneficial owners”. The filing date for the reports depends on when the company was formed. Banks, “large operating companies” (more than 20 full time employees in the US, a physical office within the US, and more than USD5 million in gross receipts in the US), publicly traded companies, and tax-exempt entities, as defined by IRC Section 501(c). Companies have any other disclosure requirements as defined by individual states.

Management structures in law firms vary from entity to entity. A few common structures include:

• a CEO who reports to an elected Board;
• group leaders reporting to a CEO, who reports to an elected Board;
• partners who make joint decisions;
• executive committees chosen by management, who report to the CEO; and
• a CEO and COO who have equal authority.

Within these structures, there is significant variance in terms of how much leeway an executive has to act unilaterally (without day-to-day approval from the Board), as well as significant variance regarding terms of office for any particular position.

In general, directors and officers have protection from liability, so long as decisions are made and actions are taken in good faith based on what the actor believes is in the best interest of the company. The primary exception to this general rule is “piercing the corporate veil”. This occurs most often when the business is not distinguishable from its owners, so every action is, in essence, self-serving. Piercing the corporate veil happens almost exclusively in small, privately held corporations, where the line between business and personal intent is often blurred. There are no cases finding that the veil has been pierced in publicly held corporations, because of the large number of shareholders and the extensive requirement of public filings.

The rules governing employment relationships come from a number of sources.

• First, there are statutory laws, such as Title VII of the Civil Rights Act of 1964, which is the federal law that prohibits various forms of discrimination in the workplace, and the Americans with Disabilities Act (ADA), which specifically prohibits discrimination on the basis of disability and also affirmatively requires that certain accommodations be provided to individuals with disabilities. While the parameters of laws such as the Civil Rights Act have developed through case law expanding the legal expectations over time, more recently, laws like the ADA have not gone into effect immediately, and then have had fully developed federal regulations in place before enforcement begins.
• Employers are also governed by collective bargaining agreements, which are negotiated between the employer and the union (acting on behalf of the employees) and apply to all employees within the bargaining unit, as well as individual employment agreements entered into between the employer and an individual employee. Employers violating a collective bargaining agreement or employment agreement are typically found to be in breach of contract, with the contract governing the availability of damages. Employers violating a statute that protects employee rights may be required to pay additional damages, such as emotional distress.

In general, an employer and employee can enter into any contract to which they both agree, so long as nothing in the contract is requiring either party to act illegally. The parties can negotiate the monetary terms of the contract, any other mutually agreeable terms (such as working hours, job duties, reporting relationships, and the like), the duration of the contract, and the circumstances under which the contract may end, if any, prior to the anticipated end date. It is possible for a contract to be made verbally and be enforceable, but this is rare because of the likelihood of a subsequent dispute about the terms. A contract can have a set term determined by the parties, a term that is event-driven (eg, until a particular job is done), or can be open-ended (although it is common that there is some provision for what will allow one party or the other to end the contractual relationship).

The rules that will govern a salaried employee’s working time will depend on whether the employee is considered “exempt” (such that the employer does not need to pay overtime) under the Fair Labor Standards Act. Only certain kinds of employees (eg, executives, professionals, certain administrators, sales people, and certain computer workers) are considered exempt under the FLSA. An “exempt” employee cannot be paid hourly. A non-exempt employee can receive a salary so that the employee will receive a set amount and will not have reduced pay if the workday fluctuates and is sometimes less than a full day. However, if the employee exceeds a 40-hour work-week in any given week, the employee will be eligible for overtime even though they are salaried. Overtime is paid at 1½ times the usual hourly rate. If the employee is salaried, the salary will be converted to a 40-hour work-week to determine the overtime rate.

Whether and how an individual employment contract can be terminated will depend on the nature of the contract. Employees without a contract are generally considered “at will”, which means that they can be terminated at any time, with or without notice and with or without cause, for any reason that is not unlawful or for no reason at all. Employees can be at will even if they have a written contract; in many cases, the contract says that the employee is at will, but addresses other issues, such as compensation or job duties. If the employee has a written contract that is not at will, then the terms of the contract will dictate under what circumstances the employee can be terminated (the contract may say “for cause”, in which case there may be a dispute about what constitutes “cause”, or the contract may specifically define “cause”). What compensation an employee gets upon termination will depend on the contractual language. An employer is required to fully pay an employee for the time they worked, but is not required to pay severance at all or in any particular amount unless the contract requires it. However, if the employer is asking the employee to sign a release, the employer will be required to give some consideration (which does not need to be monetary) for that release.

The US does not have any law regarding “collective redundancies”. What it has is a requirement relating to large layoffs. The WARN Act requires that, with limited exceptions, an employer with 100 or more employees (not counting those who have worked less than six months or have worked fewer than 20 hours/week) give at least 60 calendar days’ notice of a plant closing or a layoff affecting more than 50 employees at a single site of employment.

Employees are not required to be represented, informed, or consulted by management. If employees want to unionise, they can ask the employer to allow them to do so. Alternatively, if the employer does not choose to do so, the employees can show (by signing cards) that at least 30% of the workers who would be in the union want the union. If the employees make that showing, and the employer does not want to voluntarily recognise the union, then the National Labor Relations Board will hold an election to determine if more than 50% of the applicable employees want the union.

Employees are required to pay income tax, as well as Federal Insurance Contributions Act (FICA) taxes, which include Social Security and Medicare taxes. Employers are responsible for withholding these taxes from employees’ wages and remitting them to the Internal Revenue Service (IRS). Employers are required to pay their own share of FICA taxes and Federal Unemployment Tax Act (FUTA) taxes.

Federal income tax rates vary based on the type of taxpayer and their income level. The tax rates are progressive. The 2023 tax rates for a single taxpayer are as follows.

• 10% on income from USD0 up to USD11,000.
• 12% on income from USD11,001 up to USD44,725.
• 22% on income from USD44,726 up to USD95,375.
• 24% on income from USD95,378 up to USD182,100.
• 32% on income from USD182,101 up to USD231,250.
• 35% on income from USD231,251 up to USD578,125.
• 37% on income from USD578,126 and up.

Additionally, there may be state and local income taxes, which are imposed by state and local governments on the income earned by individuals within their jurisdictions. Thus, an employee may be required to pay state and local income taxes in addition to federal income tax.

With respect to FICA taxes, they are shared equally between the employee and the employer. The employee’s share is withheld from their wages by the employer, and the employer pays an equivalent amount. The current tax rate for Social Security is 6.2% for the employee and employer separately. Social Security tax has a wage base limit, which is the maximum wage that is subject to the tax for that year. Currently, the wage base is USD168,000. The current tax rate for Medicare is 1.45% for the employee and employer separately. Additional Medicare tax applies to an employee’s wages that exceed a threshold amount based on the employee’s filing status. Employers are required to withhold the 0.9% Additional Medicare tax on wages paid in excess of USD200,000 in a calendar year, regardless of the employee’s filing status. Medicare tax is not subject to a wage base limit.

FUTA taxes are paid exclusively by the employer. Employers are required to pay the standard FUTA rate of 6% on the first USD7,000 of wages paid to each employee annually. However, employers may receive a credit for state unemployment tax of up to 5.4%, which would result in a net FUTA rate of 0.6%.

A company generally must pay taxes to the federal government, its state of incorporation, and those state and local governments where it transacts business. Companies are subject to several types of taxes, including corporate income tax, employment taxes, and other specific taxes. The employment taxes that a company must pay are described in 5.1 Taxes Applicable to Employees/Employers and include FICA taxes, FUTA taxes, and federal income tax withholding. The other types of taxes a company must pay depend on the tax classification of the business entity.

Corporate income tax is imposed on the taxable income of C-corporations. Taxable corporations must file an annual corporate income tax return. The federal corporate tax rate is 21%, and it applies to a corporation’s profits. The taxable income of a corporation includes revenue minus expenses such as the cost of goods sold, general and administrative expenses, selling and marketing, and other operating costs. Generally, the income of a corporation is taxed at two levels: at the entity level when income is earned, and at the stockholder level when dividends are distributed. S-corporations do not have to pay federal corporate income taxes. Instead, its income and expenses are passed through its shareholders, who must then report the income and expenses on their own tax returns. Partnerships, LLCs, and other entities also do not pay federal income taxes. Their income and expenses are reported by their owners on their own tax returns.

Companies may be subject to other specific taxes depending on their activities. For example, a company may have to pay excise tax, which is an indirect tax on specific goods, services, and activities. Federal excise tax is typically imposed on the sale of goods and services, such as fuel, heavy trucks, highway tractors, and other goods and services. Excise taxes are often passed on to consumers as part of the price of goods or services.

The US does not have a national VAT system. Instead, some state and local governments impose sales tax on the sale of certain goods and services. A company must collect sales tax from consumers and remit it to the state or local government in which it does business. Some states and local governments require a company to obtain a licence to sell or a sales tax permit prior to collecting sales tax from consumers. Depending on state and local laws, the sales tax rate and the types of goods and services that are subject to sales tax vary.

The main tax credits and tax incentives available through the federal government include those for renewable energy, research and development (R&D), education, and low-income housing.

Businesses and other entities, such as non-profits and local governments, may be eligible for tax credits for activities relating to renewable energy. Federal tax incentives for renewable energy include the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). The PTC provides tax credits for the production of renewable energy from sources such as wind, solar, biomass, geothermal, and hydropower. The credit is calculated based on the amount of energy produced and sold, and it is available for ten years from the date the equipment is placed in service. The ITC is a tax credit that reduces the federal income tax liability for a percentage of the cost of renewable energy property, such as solar energy systems. The credit can be claimed for 30% of the investment cost of the renewable energy property.

R&D tax credits provide a reduction of a company’s tax liability for domestic expenses. Organisations that engage in activities to develop new or innovative products, processes, software, formulas, or inventions are eligible to receive an R&D tax credit. Qualifying expenditures include the design and development of innovative products or processes. Generally, between 6% and 8% of a company’s annual qualifying R&D expenses can be applied, dollar for dollar, against its federal income tax liability. A company must claim the R&D tax credit by filing a form with the IRS.

Other federal tax credits and incentives exist for fostering social welfare. Tax credits for education include the American Opportunity Tax Credit and Lifetime Learning Credit. The Low-Income Housing Tax Credit offers credit for the development of low-income housing. Additionally, the Earned Income Tax Credit provides refundable credit to low-income workers.

Tax consolidation is available in the US. It allows affiliated groups of corporations to file a consolidated federal income tax return. When a US corporate group files a consolidated income tax return, it is treated as a single corporation for tax purposes. The consolidated income tax return reflects the consolidated income of all the corporations in the group, and the group has a single federal income tax liability. Transactions within the group are generally ignored, and the consolidated taxable income is based on the group’s transactions and dealings with the parties outside of the group. Each corporation in a consolidated group is severally liable for the tax liability of the entire group.

To be eligible for tax consolidation, a common parent corporation must directly own at least 80% of the total voting power and value of at least one other corporation in the group. Additionally, at least one of the other corporations in the group must directly own at least 80% of the stock in each of the remaining corporations in the group. Eligible corporations exclude S-corporations, foreign corporations, regulated investment companies, real estate investment trusts, tax-exempt corporations, life insurance companies, and domestic international sales corporations.

There are thin capitalisation rules in the US that apply to companies with high debt-to-equity ratios. The Tax Cuts and Jobs Act, enacted in 2017, introduced new thin capitalisation rules that limit the deductibility of net business interest expense. Under the rule, net interest expense can only be deducted up to 30% of the company’s adjusted taxable income, which is similar to EBITDA (earnings before interest, taxes, depreciation, and amortisation). Excess deductions can be carried forward indefinitely. The rule applies to any debt outstanding on 1 January 2018. After 2022, the adjusted taxable income is calculated similarly to EBIT (earnings before interest and taxes), making the limitation apply to a larger number of companies.

Transfer pricing rules in the US are governed by Internal Revenue Code (IRC) Section 482, which gives the IRS the authority to reallocate income, deductions, credits, and allowances among commonly owned or controlled businesses. Section 482 ensures that prices charged by one affiliate to another in an intercompany transaction yield results that are similar to the results that would have been realised if uncontrolled taxpayers had engaged in the same transaction. IRC Section 482 applies to transactions between a variety of entities, including those owned directly or indirectly by a common parent company, a partner and partnership, two partnerships owned by the same partners, a common parent of a group and a subsidiary, a partnership and corporation owned by the same persons, and an entity and each of its 50% of shareholders if the shareholders have the same business interests in the jointly owned entity.

The method applied by the IRS to determine the appropriate income of an entity is to compare the prices charged between the entity and related entities for the transfer of goods, services, or intangible property with the prices that would be charged between unrelated entities. This is known as the arm’s length standard, which looks to market prices to determine the reasonableness of intercompany prices charged for the transfer of goods and intangibles and provision of services between related entities. Additionally, Section 482 provides a special rule regarding transfers or licences of intangible property. Under the rule, the income relating to the transfer or licence of intangible property must be commensurate with the income attributable to the intangible property. The rule allows the IRS to look to the actual income produced by an intangible asset.

There are several statutory provisions and regulations in the US aimed at preventing tax avoidance. In addition to IRC Section 482, discussed in 5.6 Transfer Pricing, the Base Erosion and Anti-Abuse Tax (BEAT) prevents tax avoidance. The BEAT acts as a minimum tax and is primarily focused on preventing foreign-parented corporate groups from reducing or eliminating US tax through deductible payments from US subsidiaries to foreign affiliates. The tax due equals the excess of a minimum tax rate applied to a corporation’s taxable income after adding back deductible payments made to foreign affiliates over the corporation’s tax liability at the regular corporate rate. The minimum tax rate is 10% between 2019 and 2025 and 12.5% in 2026 and later. The BEAT applies to certain corporations that have annual gross receipts for the prior three-year period of at least USD500 million and a base erosion percentage of 3% or higher.

There are also criminal felonies in the US aimed to deter tax evasion. Under IRC Section 7201, any person who wilfully attempts to evade any tax imposed by the IRC is guilty of a felony. Upon conviction, the individual may be fined up to USD100,000, and a corporation may be fined up to USD500,000. Additionally, imprisonment of up to five years may be imposed on any individual convicted under the provision. Section 7202 provides that failure to collect, account for, and pay any tax imposed by the IRC also constitutes a felony with similar penalties.

Not all mergers and acquisitions are subject to premerger notification under Federal jurisdiction, outlined by the Hart-Scott Rodino Antitrust Improvements Act of 1976 (HSR Act). However, notification may be required due to the size of parties, size of transaction, or it being a non-exempt transaction. The thresholds for when mergers or acquisitions are subject to notification are revised annually. If the transaction meets the required disclosure thresholds set forth in the HSR Act, it is subject to premerger notification regardless of whether it is a joint venture, acquisition of assets, equity or voting securities. If a premerger notification is required parties must file a notification with the Federal Trade Commission (FTC) and the Department of Justice (DOJ). The parties must provide detailed information about their market shares and business operations and wait for government review. Parties are subject to a waiting period prior to the finalisation of the transaction. Parties may also be subject to notification and review by state authority, including review by industry specific regulators or the state attorneys general.

While not all mergers and acquisitions require a premerger filing, those that do require a filing must begin the process by filing a Notice of Proposed Deal and a Notification. Both the seller and buyer must file the forms and provide relevant data about their business and the industry. Once the filing is complete the parties are subject to a 30-day waiting period (15 days if it is a cash tender offer or bankruptcy) or until the agencies grant early termination of the waiting period.

Although the proposed deal is filed with both the DOJ and FTC, only one agency will review it. The matter is cleared to one agency and subsequently reviewed by that investigative agency. The agency can either issue a request for additional information from each party (Second Request); allow the initial waiting period to expire; or terminate the waiting period early. If the waiting period is terminated or expires, the parties can conclude their deal.

If the agency requests additional information, the parties may be required to provide further documentation. Typically, this includes business documents, data pertaining to the company’s products or services, market conditions, and the likely effects of the merger. Once the parties comply with the Second Request, the agency is afforded 30 more days (ten days if it is a cash tender offer or bankruptcy) to review the necessary documentation.

The agency may then decide to either close the investigation and let the deal continue unchallenged, enter into an agreement with the companies to draft and adhere to provisions that will restore competition, or to stop the entire transaction and seek a preliminary injunction that will restore competition.

Under US Federal law, anti-competitive agreements and practices are governed by Federal antitrust laws. The FTC Act, the Sherman Act Section 1 and 2, and the Clayton Act are amongst those that work to prevent unfair business practices that are likely to reduce competition. Anti-competitive activities can generally be grouped into two categories: agreement between competitors (horizontal conduct) and monopolisation (single firm conduct).

Furthermore, to determine whether a particular practice is anti-competitive, the actions will be analysed under the per se rule or the rule of reason. The per se rule applies to agreements and practices that are considered inherently harmful to competition and are presumed to be illegal without the need for a detailed analysis. Price fixing, group boycotts, and bid rigging are amongst the business practices that are considered per se illegal under the anti-trust laws. The rule of reason requires a further analysis of the actual impact on competition by looking at the (i) definition of the relevant product and geographic market, (ii) market power of the defendant(s) in the relevant market, and (iii) the existence of anti-competitive effects. The burden is initially on the plaintiff to establish the agreement produced anti-competitive effects, either through direct or indirect evidence.

Section 2 of the Sherman Act governs unilateral conduct and economic dependency. This section makes it unlawful to monopolise, attempt to monopolise, or conspire to monopolise. To determine if a party has a monopoly or is dangerously close, an analysis of the client’s market share in the relevant market is necessary. Typically, courts find that there is a probability of a monopoly when the defendant has a market share of 50% or more. Monopoly power or conduct will only be considered illegal if it is accompanied by anti-competitive intent and conduct that is exclusionary or anti-competitive. Section 2 of the Sherman Act pertains to monopolisation or attempted monopolisation that influences either interstate or foreign commerce. It is essential to evaluate the effects of the conduct to determine the applicability of Section 2.

A patent is a legal right granted by the United States Patent and Trademark Office (USPTO) that gives the patent holder the exclusive rights to an invention. Such rights include the exclusion of others from making, using, or selling the patented invention without permission. The USPTO is responsible for granting and issuing patents and disseminating information regarding patents and trade marks. The three types of patents processed by the USPTO are utility, design, and plant patents.

Patent-eligible inventions must be:

• able to be used;
• have a clear description of how to make and use the invention;
• new or “novel” in its nature; and
• “not obvious” as it relates to a change to something already invented.

To register a patent, an inventor (be it an individual, their representative, or a company to whom an inventor has assigned or is contractually obligated to assign an invention) must file an application with and pay a filing fee to the USPTO. The application must include a detailed description of the invention, claims defining the scope of the invention, and any necessary illustrations that further define the purpose and function of the invention. The USPTO examines the application to ensure that it meets all legal requirements. If the application is approved, the USPTO issues a patent, which is authenticated with the Office’s seal.

Certain patents may be valid and enforced for up to twenty years from the date the application was filed, while others are given a fifteen-year period from the date of grant. Certain maintenance fees must be paid to the USPTO to enforce the patent. Enforcement of patents involves legal actions against parties that infringe on the patent holder’s rights. Infringement can occur through unauthorised making, using, selling, or importing of the patented invention. Remedies for patent infringement include monetary damages and injunctions to prevent further infringing behaviour.

A trade mark is defined as a word, phrase, symbol, design, or a combination thereof that identifies and distinguishes the source of the goods or services of one party from those of another. The Lanham Act specifically defines a trade mark as any word, name, symbol, or device used by a person, or which a person has a bona fide intention to use in commerce. While one is not required to register a trade mark, doing so allows for more legal rights and protections under federal law.

For instance, a USPTO registered trade mark cannot be registered by another party without the original registrant’s permission and prevents other parties from using a trade mark that is similar to the registered trade mark’s associated goods and services. The length of protection for a trade mark can be indefinite, provided that the trade mark is continuously used in commerce and proper maintenance filings are made. Once a trade mark is registered, it can become incontestable after five years of continuous use, which provides stronger protection against challenges.

To register a trade mark, one must file an application with and pay a filing fee to the USPTO. The application must specify the legal or statutory basis for filing the application, which can be either “use in commerce” or “intent to use.” The former indicates that the applicant is already using the trade mark in interstate commerce, while the latter indicates that the applicant has a bona fide intention to use the trade mark in interstate commerce. The application is then examined by a Trade mark Examining Attorney to ensure that it meets all legal requirements. If an application is based on an intent to use the trade mark in commerce, the USPTO issues a Notice of Allowance to requisition a Statement of Use submission, which requires an applicant to include a real-life example showing how one would use their trade mark in commerce. Once the application is approved, the trade mark is published in the official gazette, allowing third parties to oppose the registration. If no opposition is filed, or if the opposition is unsuccessful, the trade mark is registered. Service marks, collective marks, and certification marks follow a similar registration process.

Enforcement of trade mark rights can be pursued through various means. Trade mark owners can file lawsuits in court to stop infringement and seek remedies such as monetary damages and injunctions. Typically, the more unique and creative the trade mark, the more effective and easier it is to protect.

An industrial design is the ornamental design of a useful object, which is protected through the issuance of a design patent granted by the USPTO. An industrial design must be primarily ornamental (non-functional) and applied to an article of manufacture. For applications filed on or after 13 May 2015, industrial designs are granted a 15-year period of patent protection from the date of the grant. A fourteen year period is granted for industrial design patents filed before this date. Overall, the registration process, enforcement, and remedies available for infringement of industrial design patents are not dissimilar to those provided to plant and utility patents.

A copyright is a legal protection granted to the creator of an original work of authorship that is fixed in a tangible medium of expression. Types of works for which copyrights are registered include literary works, performing arts, visual arts, motion pictures, photographs, computer programs, databases, blogs, and websites. Copyright protection generally includes the life of the author and an additional seventy years after their death. For works made for hire, or which are contractually made for a company within the scope of employment, the copyright protection term can last up to either ninety-five years from the year of first publication or one hundred and twenty years from the year of creation.

To register for a copyright, an author must submit a copy of the work, an application form, and a fee to the US Copyright Office, the last of which varies depending on the nature of the original work (ie, a group of unpublished works, a group of newsletters, or a group of serials). Copyright registration is not mandatory but provides several legal benefits. For example, registered copyrights provide holders with the exclusive rights to reproduce, distribute, perform, and display their works, as well create derivative works. Commonly sought after remedies for copyright infringement include injunctions and monetary damages.

Software and databases are made up of different components, all of which can be subject to different kinds of intellectual property protection under federal law. Coding and data arrangement, for example, may be eligible for copyright once an applicant proves the originality of such technological work. Similarly, patents may be granted to protect a software’s function or technical processes, as well as a database’s structure or data maintenance and retrieval methods. Just as importantly, contractual agreements are a very helpful tool for protecting software and databases, as these agreements can specify the terms under which such works can be used, shared, or modified. Some can also contain provisions for software escrow to protect the licensee’s interests in case the licensor breaches his contractual obligations with respect to the work’s usage.

Trade secrets are defined as information that:

• has either actual or potential independent economic value by virtue of not being generally known;
• has value to others who cannot legitimately obtain the information; and
• is subject to reasonable efforts to maintain its secrecy.

The Economic Espionage Act of 1996 criminalises theft of trade secrets when:

• there is an intention or knowledge that the offense will benefit a foreign entity; and
• when there is an intention or knowledge that the offense involves a product or service in interstate or foreign commerce and benefits anyone other the owner of the trade secret while also injuring the owner.

Fines and imprisonment are often imposed on offenders of this law.

A trade secret owner can also establish a private civil cause of action for the unauthorised use or disclosure of a trade secret under the Defend Trade Secrets Act of 2016. Such claims can also be brought forth and enforced under the Michigan Uniform Trade Secrets Act (MUTSA), resulting in remedies such as injunctive relief, monetary damages, and payment of attorney’s fees. Courts may also issue protective orders to maintain the confidentiality of the trade secrets throughout a litigation, such as by sealing records, holding in camera hearings, and restricting disclosure without court approval.

The United States does not have a singular data protection law that addresses every category of data; however, the United States have several federal laws that protect specific types of data. There are four main federal laws that cover the main categories of data protection: US Privacy Act of 1974, HIPAA, COPPA, and the Gramm-Leach-Bliley Act.

The US Privacy Act of 1974 establishes the rules for federal agencies to collect, maintain, use, and spread personal information. This provides individuals the right to know what information is being used and collected. HIPAA sets the national standard for privacy, confidentiality, and consent for protecting an individual’s medical records. COPPA addresses data protection specifically for children under the age of 13. This law requires net operators to receive parental consent, communicate how the data is handled, provide access to the child’s guardian to keep or remove the child’s data. The Gramm-Leach-Bliley Act (1999) protects consumers’ financial information for commercial and investment banks, securities firms, and insurance companies.

Only a few states have tailored data privacy laws. Michigan, being one of them, follows the Michigan Privacy Act (2022) which is designed to protect data for Michigan users by establishing standard for businesses on how to collect and process personal data.

United States courts have established that foreign companies who target US consumers with its products or services must follow US data protection regulations, especially when its products or services can have a substantial effect on interstate commerce. However, foreign entities do not have to apply their own data protection laws while engaging US consumers. These rules provide protection to US consumers from unfair or deceptive practices.

There are two main government agencies that oversee enforcing data protection laws: the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC). The overall role of the FCC is to protects individuals from unwanted foreign communications, images, and other intrusions while ensuring that industries comply with its rules. The FTC enforces companies to implement data security programs to protect consumer information through the FTC Safeguard rule.

Right now, the legislator is doing very little with regard to legislative reform because the Senate and House have split control, there is a presidential election coming in November, and it is very difficult to get the necessary votes for anything.