2. Kirkpatrick & Lockhart LLP Attorneys At Law www.kl.com Boston, Dallas, Harrisburg, Los Angeles, Miami, New York, Newark, Pittsburgh, San Francisco, Washington, D.C.

3. EUROPEAN REGULATORY LANDSCAPE Developing Your Business in Europe Breakfast Conference San Mateo, CA July 9, 2003

4. Common Issues  Distribution Agreements  Labor and Employment Issues  Intellectual Property  Privacy

5. Sources of Law  Treaties e.g.: Double-Taxation Treaties  European Union Law e.g.: European Antitrust Law Member States Laws e.g.: General Contract Law (Code Civil, France, or BGB, Germany)

6. General Contract Considerations  Contracts Are Generally Shorter  “Statutory” Legal System in Most EU Member States (Excluding U.K.) vs. “Common Law” System in The United States (and U.K.)  Court And Attorney Fees  Mandatory Provisions, e.g. Section 89B German Business Code (HGB)  Choice of Law

7. Distribution and Agency Agreements  Member States’ Law - Harmonized by Certain EU Directives  Generally Term And At-will Agreements Possible  At-will Agreements Generally Require Minimum Termination Notice (e.g. Germany: 1-6 months)

8. Distribution and Agency Agreements (continued)  Post-Contractual Non-Competition Clauses  Allowed if Reasonable  Minimum Payments Required  Generally Payment Upon Termination Required  Up to One Year of Average Commission

9. Labor and Employment Issues  No European Employment Law  Labor And Employment is Regulated by Individual EU Member States  Term Agreements Generally Disfavored  Heavily Regulated

10. Recruitment  Council Directive 91/533/EEC All Employees Have a Right to Receive a Written Statement of The Main Particulars of Their Terms And Conditions Within a Certain Period of Commencing Employment

11. The Written Particulars  Identity of Parties  Job Title  Start Date  Place of Work  Salary  Collective Agreements  Pension  Disciplinary Rules  Hours  Grievance Procedure  Vacation  Notice  Sickness  Overseas Posting

12. Vacation  Contractual – Typically 20-25 Days  Public Holidays – up to 14/15 paid bank holidays

13. Termination/Downsizing  Contractual Considerations - Notice Period  Statutory Considerations

14. Minimum Notice  Germany – Between One And Seven Months  UK – One Week Per Year of Service; max. 12 Weeks

15. Consultation Obligations  Consultation is Paramount  Consultation Means Discussing Ways of:  Avoiding Dismissals  Reducing Numbers Involved  Mitigating Consequences

16. Examples of Collective Consultation Thresholds  Germany – More Than Five Dismissals if Workforce Exceeds 20 Employees  UK – Dismissal of 20 Employees at a Time  France – Required if 1+. New Complex Rules if 10+ Dismissals in a Workforce of 50+

17. Social Plans  An Agreement Between The Employer And The Works Council  Aim: to Compensate Employees For Financial Hardship Suffered by Them as a Result of The Dismissals  Generally Social Plan Needs Approval by The Works Council And/or Labor Authority

18. Compensation  Germany – Between ½ And 1½ Month’s Salary Per Year of Employment (“PYS”) as a General Rule Depending on Age And Area Concerned  France – 1/5 Month’s Gross Salary PYS  Spain – Minimum of 20 Days Salary PYS  Remember to Check Policies And Collective Agreements

19. Trademarks  Community Trademark (“CMT”): One European Trademark Application Possible For All EU Member States  Trademark Protection Obtained by Registration Only  Filing Fee For CMT (Excluding Attorneys Fees)  No “Common Law” Trademarks  2,075 Euro For up to Three Classes  200 Euro For Each Additional Class

20. Trademarks (continued)  National Trademark Application Possible  National Application in Selected Markets May be Less Expensive as a First Step  Seniority May be Claimed For Future CMT Application Based on National Registration

21. Patents  One European Patent Application Possible For up to 20 Member States of European Patent Organization (“EPO”)  EPO Member States: All EU Member States, Plus: Cyprus, Liechtenstein, Monaco, Switzerland, And Turkey  Average Cost of European Patent: 30,000 Euro (According to EPO as of July 1, 1999, Based on an 8 Member State Application And 10 Year Maintenance Term)  Generally, European Patent Law Does Not Allow Software Patents or Business Method Patents

22. Copyrights and Other Intellectual Property Rights Considerations  No “European” Copyright Law Copyrights Are Regulated by Member States  Most EU Member States Are Members of The Berne Convention For Protection of Literacy And Artistic Works  U.S. Authors May Receive Automatic Protection For Works Registered as Copyrights in The U.S.

23. Copyrights and Other Intellectual Property Rights Considerations (continued)  Sale And Transfer of Copyrights or Rights to Intellectual Property Not Possible Under The Laws of Most EU Member States  Employee Inventions

24. Privacy Concerns  European Data Protection Directive  Regulates All Commercial Use of Personal Information  Transfer of Personal Information Out of EU only Allowed to Countries Where Privacy Protections Are “Adequate”  U.S. Does Not Have “adequate” laws

25. U.S./EU “Safe Harbor” Arrangement  Voluntary Sign-on For U.S. Companies  Presumption of “adequacy,” U.S. Businesses Allowed to Transfer Data Freely From EU  Must Consent to Jurisdiction:  Either FTC or EU

26. Questions?  Dirk Michels at 415.249.1022 [dmichels@kl.com]