US law for technology companies

Before entering the US market, a strategic decision must be made: whether to set up a separate US company, establish a local presence, or initially sell through a distribution partner. Each option has different implications for liability, taxation and contract terms – setting up a separate company provides separation of liability and independent legal capacity, whilst selling through partners reduces the administrative burden but transfers control and margin.

We assess the options based on your business model, your investment plans and your operational timeframe, and lay the legal groundwork for your market entry – from company incorporation to your first distribution agreement.

Patents, trade marks and know-how protected in Germany and through the European Patent Office are not automatically protected in the US: US patent law has its own time limits, its own application procedures and its own rules regarding the priority of an invention. Anyone who files an application in the US too late or relies on European priority risks a US competitor beating them to it, or protection being incomplete at the crucial moment.

We support you with your strategy for filing patents and trade marks in the US and advise on where to focus your efforts in enforcing and defending your intellectual property in the US market – in line with your existing protection in Germany and Europe.

Development and integration contracts with US clients follow different contractual practices to those in Germany: Warranties are often narrowly defined and time-limited; limitations of liability are negotiated in detail rather than set on a flat-rate basis; termination rights often take effect at shorter notice; and in many US contracts, dispute resolution is handled through arbitration rather than the state courts. A German model contract that is simply translated into English does not reflect these differences and often weakens one’s own negotiating position.

We review and negotiate development and integration contracts with US clients from the perspective of US law – covering warranty, limitation of liability, termination rights and dispute resolution – whilst keeping your German contractual practices in mind.

Term sheets, investment agreements and shareholders’ agreements based on US models follow standards that differ from those under German venture capital law: Liquidation preferences, convertible loans based on the SAFE or convertible note structure, and anti-dilution provisions are structured differently in US funding rounds than in German investment agreements. With a view to a future exit, US investors also place great importance, even at the funding stage, on clauses that pave the way for a sale or an initial public offering.

We guide you through negotiations with US investors – from the term sheet to the shareholders’ agreement – and help you identify which clauses are key to your funding round and your future exit strategy.