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Jamille Cummins, Transworld Group - IP Strategies

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Jamille Cummins, Transworld Group
Jamille is a former finalist in the Australian Young Business Person of the Year Award, and as the CEO of the Transworld Group, he brings a variety of skillsets, knowledge and experience to lead the group in realising its vision and meeting its core objectives.

Prior to the Transworld Group, Jamille spent 10 years in sales & marketing and management in the Australian & UK retail sectors leading the business development of new and existing brands. As one of the founding members, Jamille was initially the director of business & project development of the group’s telecommunications service, whereby he led the commercialisation of the group’s retail VoIP and wholesale services.

Since then he has been involved in each of the group’s projects. This has allowed him to continue to develop his skillsets and knowledge across various industry sectors, and thereby enabling him to engage at a senior executive level in delivering;

corporate business administration & management,
international trade & commerce,
logistics, business systems development & integration,
product research & development,
corporate project & management,
global industries market research & analysis,
sales & marketing operations,
capital raising,
investor relations
jamille cummins, jamille cummins transworld, jamille cummins transworld group, Transworld Group, jamille, Isle of Man, Steve Cummins, Steve Cummins transworld, steve cummins transworld group

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Jamille Cummins, Transworld Group - IP Strategies

  1. 1. Cross-Border IP Strategies Jamille Cummins Transworld Group www.transworldgroup.im 1
  2. 2. Cross-Border Strategies? Jamille Cummins, Transworl d Group 2
  3. 3. Global Business Context  Increasing Technology Competition:  Semiconductor Design, Fabrication  Pharmaco-Genomics, Medical Devices  Wireless Telecom, Broadband Content  Strategic Intellectual Capital:  Defensive & Offensive Portfolio-Building  International I.P. Licensing and Litigation Jamille Cummins, Transworl d Group 3
  4. 4. Intellectual Property Rights Jamille Cummins, Transworl d Group 4
  5. 5. Intellectual Property Rights  Patents  Trade Secrets  Copyrights  Maskworks  Trademarks Jamille Cummins, Transworl d Group 5
  6. 6. Patents  Protects “unobvious” apparatus, method  Substantial application effort  Arises under federal, international law Jamille Cummins, Transworl d Group 6
  7. 7. Trade Secrets  Protects confidential business information  No registration process  Arises under state, federal, international law Jamille Cummins, Transworl d Group 7
  8. 8. Copyrights  Protects original literal works  Optional registration, marking  Arises under federal, international law Jamille Cummins, Transworl d Group 8
  9. 9. Maskworks  Protects semiconductor lay-out designs  Simple registration, marking  Arises under federal, international law Jamille Cummins, Transworl d Group 9
  10. 10. Trademarks  Protects distinctive marks, symbols  Optional registration, marking  Arises under state, federal, international law Jamille Cummins, Transworl d Group 10
  11. 11. Protecting Software / Data  Trade secret as default position  Copyright for original media content  Patent for algorithms, business method  Maskwork for chip implementation Jamille Cummins, Transworl d Group 11
  12. 12. US Patent Practice  First-to-invent rule  1-year bar-date rule  1-year foreign-filing rule  Export controls Jamille Cummins, Transworl d Group 12
  13. 13. Other Intangible Assets  Franchises  Covenants not to compete  Governmental permits  Informational base  Business goodwillJamille Cummins, Transworl d Group 13
  14. 14. US Tax Practice  Business Development Expense §174  Capital Gains for R&D/Patent Sale §1235  Trademark development generally non-expensable, unless advertising §162 may be amortizable §197  Copyright generally non-expensable, non-capital asset §1221 Jamille Cummins, Transworl d Group 14
  15. 15. Offshore Motivation  Globally-competitive development, manufacture, sales, or partnerships  Overall tax savings or deferral  Improve company balance sheet  Cross-border shifting of income, risk, control, or privacy Jamille Cummins, Transworl d Group 15
  16. 16. Strategic Options  Offshore technology/IPR development, co-inventorship, or improvement  Transfer domestic technology/IPR to offshore structure in favorable tax jurisdiction Jamille Cummins, Transworl d Group 16
  17. 17. Offshore Development  Impractical when technology rights already mature, commercialized  Export control restriction on sensitive technology  Favorable early fair market valuation Jamille Cummins, Transworl d Group 17
  18. 18. Offshore Transfer  Complex structural choices for offshore entity/ies  US tax regime substantial reach on cross-border transactions  Territorial practical considerations Jamille Cummins, Transworl d Group 18
  19. 19. Key Planning Objectives  Align IP ownership with development spend  Locate IP with market, manufacture  Consider incentives, depreciation, exit Jamille Cummins, Transworl d Group 19
  20. 20. Applicable Tax Regime  US person subject to tax on all income, whether source is domestic / foreign §1  Tax law of jurisdiction applicable where IP is used, income source §§ 861-862  Development  Manufacture  Sales Jamille Cummins, Transworl d Group 20
  21. 21. Transfer Pricing  IRS may reallocate income/deductions between taxpayers, when transactions conducted by controlled group §482  May require transfer pricing study/policy to validate arms-length economic relationships Jamille Cummins, Transworl d Group 21
  22. 22. Foreign Corporations  Controlled Foreign Corporation (CFC) §§ 951-964  Foreign Personal Holding Company (FPHC) §§ 541-547, 551-558  Passive Foreign Investment Company (PFIC) §§ 1291-1297 Jamille Cummins, Transworl d Group 22
  23. 23. CFC Rules  Total US shareholders owning at least 10% of company exceed 50%  10% shareholders taxed as if dividends paid, even if no cash distribution  Taxed on share of foreign company Subpart-F income, even if no cash distribution Jamille Cummins, Transworl d Group 23
  24. 24. IP Contributions  US person transferring IP to foreign corporation recognizes gain based on fair market value of receivable §367  Exceptions:  Active trade / business by foreign corporation  Domestic stock transfer, gain recognition agreement  Foreign stock transfer, corporate reorganization Jamille Cummins, Transworl d Group 24
  25. 25. Valuation Methods  Excess operating or premium profits  Premium pricing  Cost or royalty savings  Market comparison  Replacement cost Jamille Cummins, Transworl d Group 25
  26. 26. Inbound / Outbound Issues  Withholding tax on royalties?  Applicable tax treaty, rate?  Trade / business or permanent establishment in foreign jurisdiction? Jamille Cummins, Transworl d Group 26
  27. 27. Sale vs. License  Transfer “all substantial rights” ?  Sale gives rise to capital gains / loss, usually no withholding tax  License is ordinary income, royalties subject to withholding tax Jamille Cummins, Transworl d Group 27
  28. 28. Licensing Terms  IP grant  Improvements  Currency  Inflation rates  Withholding tax  Exchange controls  Royalties  Arbitration  Language  Political risk  Travel expense  Product liability  Indemnification  Applicable law Jamille Cummins, Transworl d Group 28
  29. 29. Country Selection  Entity structure  Funding type  Formation time, documentation  Shareholding meetings  Taxation  Foreign authority information exchange Jamille Cummins, Transworl d Group 29
  30. 30. Cayman Islands  Entity structure: Company unit trust ltd, partnership  Funding type: Open/closed-end class, hybrid scheme  Formation time/docs: 1-week memorandum, articles of association or deed of trust, minimum $33k equity or fund listed on approved stock exchange  Shareholding mtgs: None  Taxation: No individual income, corporate, capital gains or transfer tax payable by funds or shareholders; no tax treaties  Authority Info: Mutual legal assistance treaty with US to cooperate regarding narcotics, fraud Jamille Cummins, Transworl d Group 30
  31. 31. Bermuda  Entity structure: Company unit trust ltd, partnership  Funding type: Open/closed-end class  Formation time/docs: 3-5 weeks prospectus, memorandum of association or deed of trust  Shareholding mtgs: Annual meeting need not be in Bermuda  Taxation: No individual income, corporate, profit, withholding capital gains, estate, duty, or inheritance tax payable by funds or shareholders; no tax treaties  Authority Info: Mutual assistance act with US to cooperate regarding fraud Jamille Cummins, Transworl d Group 31
  32. 32. Ireland  Entity structure: Company unit trust ltd, partnership  Funding type: Closed-end, VC professional investor funds  Formation time/docs: 2-3 months, memorandum, articles of association or deed of trust  Shareholding mtgs: Annual meeting in Ireland  Taxation: Special tax zone exempts funds and shareholders from income and capital gains tax; tax treaty  Authority Info: Official secrets act maintain confidentiality except in limited circumstances Jamille Cummins, Transworl d Group 32
  33. 33. Luxembourg  Entity structure: Fixed capital company, variable capital unit trust, partnership  Funding type: Closed-end, VC funds  Formation time/docs: 3-5 months, prospectus, articles of incorporation or deed of trust  Shareholding mtgs: Annual meeting in Luxembourg  Taxation: No income, capital gains, withholding, or dividends tax on funds of non-resident shareholder; tax treaty  Authority Info: Banking secrecy statute Jamille Cummins, Transworl d Group 33
  34. 34. OECD List  Andorra  Anguilla  Antigua & Barbuda  Aruba  Bahamas  Bahrain  Barbados  Belize  British Virgin Islands  Cook Islands  Dominica  Gibraltar  Grenada  Guernsey  Isle of Man  Jersey  Liberia  Lichtenstein  Maldives  Marshall Islands  Monaco  Montserrat  Nauru  Netherlands Antilles  Niue  Panama  Samoa  Seychelles  St. Lucia  St. Kitts & Nevis  St Vincent & Grenadines  Tonga  Turks & Caicos Islands  US Virgin Islands  Vanuatu Jamille Cummins, Transworl d Group 34
  35. 35. Cross-Border Model Jamille Cummins, Transworl d Group 35 US Company Holding Company Foreign Subsidiary
  36. 36. Offshore Company Set-up US Company Holding Company Foreign Subsidiary  US Company sets-up Holding Company in low-tax/treaty(no- withholding) jurisdiction, limit US control/interest  File IP appropriately for offshore protection, enforceability Jamille Cummins, Transworld Group 36
  37. 37. Offshore IP Transfer US Company Holding Company Foreign Subsidiary  Holding Company pays US Company for fair- market-value stake in IP intangibles  Cost-sharing agreement for IP co-development, financing by US and Holding companies, jointly-owned per relative contributions Jamille Cummins, Transworld Group 37
  38. 38. Offshore Subsidiary Licensing US Company Holding Company Foreign Subsidiary  Holding Company licenses IP to Foreign Subsidiar(ies) to collect royalties from customers in other jurisdiction(s)  US Company receives royalty portion in US and accumulate portion offshore, actively licenses IP from Foreign Subsidiary Jamille Cummins, Transworld Group 38
  39. 39. Offshore Tax Benefits US Company Holding Company Foreign Subsidiary  US Company receives tangible asset as payments on balance sheet for sale of intangible IP  US Company deducts license to use intangible asset, may defer income repatriation to tax- efficient time Jamille Cummins, Transworld Group 39
  40. 40. Jamille Cummins, Transworld Group Transworldcapital.im Jamille Cummins, Transworl d Group 40

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