Using an Agent or Distributor

Qualified Austrian agents and distributors can be found for nearly every kind of product.  Because of Austria’s geographic location and history, many Austrian agents and distributors sell regionally, covering several markets in Central and Eastern Europe, in addition to Austria.

Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with both European Union (EU) and Austrian law.  Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. In essence, the Directive establishes the rights and obligations of the principal and its agents; the agent’s remuneration; and the conclusion and termination of an agency contract, including the notice to be given and indemnity or compensation to be paid to the agent. U.S. companies should be particularly aware that the Directive states that parties may not derogate certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law to be applied in the event of a dispute will likely be ruled invalid by European courts.  

The European Commission’s Directorate General for Competition enforces legislation concerned with the effects on competition in the internal market of "vertical agreements."  Most U.S. exporters are small- and medium-sized companies (SMEs) and are therefore exempt from the Regulations because their agreements likely would qualify as "agreements of minor importance," meaning they are considered incapable of effecting competition at the EU level but useful for cooperation between SMEs. Generally speaking, companies with fewer than 250 employees and an annual turnover of less than EUR 50 million are considered small- and medium-sized undertakings. The EU has additionally indicated that agreements that affect less than 10% of a particular market are generally exempted as well (Commission Notice 2001/C 368/07).

The EU also looks to combat payment delays with Directive 2000/35/EC. This covers all commercial transactions within the EU, whether in the public or private sector, primarily dealing with the consequences of late payment. Transactions with consumers, however, do not fall within the scope of this Directive. In sum, the Directive entitles a seller who does not receive payment for goods/services within 30-60 days of the payment deadline to collect interest (at a rate of 7% above the European Central Bank rate) as compensation. The seller may also retain the title to goods until payment is completed and may claim full compensation for all recovery costs.

Companies’ agents and distributors can take advantage of the European Ombudsman when victim of inefficient management by an EU institution or body.  Complaints can be made to the European Ombudsman only by businesses and other bodies with registered offices in the EU.  The Ombudsman can act upon these complaints by investigating cases in which EU institutions fail to act in accordance with the law, fail to respect the principles of good administration, or violate fundamental rights. 

For current web-links regarding the above information, please see Chapter 3 of our "Country Commercial Guide for U.S. Companies: Doing Business in Austria".

Establishing an Office

Establishing a business in Austria means navigating a bureaucratic maze, despite efforts by the Austrian government to reduce the paperwork involved.  Some regions have moved to set up one-stop shops for entrepreneurs, but it is unclear how much of the red tape these offices can really eliminate.

Most business activities in Austria are regulated and require that separate applications be made for a business license (Gewerbeschein) and for registration in the commercial register (Firmenbuch). Evidence of proficiency is required to operate most businesses.  Usually a passing score on an examination or evidence of prior experience in the field is sufficient.  For business activities that do not require proof of proficiency, the business license is granted automatically upon registration of the business.

There are several options available to the investor when deciding on the legal form of an Austrian office.  These include public corporations, limited liability companies, limited or unlimited commercial partnerships, silent partnerships, branches of foreign enterprises, cooperative societies, and sole proprietorships.  Most foreign-owned businesses choose to operate as a limited liability private company (Gesellschaft mit beschraenkter Haftung or Ges.m.b.H.).

The official investment office of the Austrian government is “ABA - Invest in Austria”.  It is an excellent source of information on all subjects related to opening an office or a production facility in Austria.  In addition, all nine Austrian provinces maintain official investment offices. To get into contact with these institutions, please consult the U.S. Commercial Service Vienna, Austria.

Franchising

Franchising as a business model is a relatively small factor in the Austrian economy compared to the dominance of franchising in the United States, accounting for an estimated 5% of retail sales.  After a period of stagnation in the late 1990’s, Austria’s franchising sector is again experiencing respectable growth: the franchise association estimates a yearly growth in the number of franchise systems at around 10%, and the number of new franchise unit owners to be growing at 16%.

Around half of the franchise businesses operating in this country are of local origin.  The top foreign participant in the Austrian franchising economy is Germany, with around 25% of franchises, followed by the United States, with about 10% of all franchises operating in Austria.  Most German franchisers either set up a headquarters in Austria or franchise directly over the border, whereas most American franchisers choose to expand their operations in Austria through a master franchise partner, a solution that has had mixed results.  Some of the best prospects for franchising include business and personal services, schooling and training, and specialty retailing.

The Austrian Franchise Association collects data, maintains an informative web site, and co-organizes seminars as well as a yearly trade show.

Direct Marketing

Within limits set by Austrian law, telephone and direct mail solicitation are very much in evidence in Austria.  Telecommunications regulations forbid most forms of e-mail direct marketing.  Some U.S. companies, including Tupperware and Amway, have established themselves in the Austrian market with multi-level marketing systems.

There is a wide range of EU legislation that impacts the direct marketing sector. Compliance requirements are stiffest for marketing and sales to private consumers. Companies need to focus, in particular, on the clarity and completeness of the information they provide to consumers prior to purchase and on their approaches to collecting and using customer data. The following gives a brief overview of the most important provisions flowing from EU-wide rules on distance selling and on-line commerce. Companies are advised to consult the information available via the hyper-links, to check the relevant sections of national Country Commercial Guides, and to contact the Commercial Service at the U.S. Mission to the European Union for more specific guidance.

Processing Customer Data

The EU has strict laws governing the protection of personal data, including the use of such data in the context of direct marketing activities. If you would like to find out more about these regulations, please consult our "Country Commercial Guide for U.S. Companies: Doing Business in Austria" (Chapter 3).  

Distance Selling Rules

Distance and Door-to-Door Sales

The EU’s Directive on distance selling to consumers (97/7/EC) sets out a number of obligations for companies doing business at a distance with consumers. It can read like a set of onerous "do’s" and "don’ts," but in many ways it represents nothing more than a customer relations good practice guide with legal effect. Direct marketers must provide clear information on the identity of themselves as well as their supplier, full details on prices including delivery costs, and the period for which an offer remains valid – all of this, of course, before a contract is concluded. Customers generally have the right to return goods without any required explanation within seven days, and retain the right to compensation for faulty goods thereafter. Similar in nature is the Doorstep Directive (85/577/EEC) which is designed to protect consumers from sales occurring outside of a normal business premises (e.g., door-to-door sales) and essentially assure the fairness of resulting contracts.  

Distance Selling of Financial Services

Financial services are the subject of a separate Directive that came into force in June 2002 (2002/65/EC). This piece of legislation amends three prior existing Directives and is designed to ensure that consumers are appropriately protected in respect to financial transactions taking place where the consumer and the provider are not face-to-face. In addition to prohibiting certain abusive marketing practices, the Directive establishes criteria for the presentation of contract information. Given the special nature of financial markets, specifics are also laid out for contractual withdrawal.  

Direct Marketing Over the Internet

The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers and the terms that must be met to qualify for them have to be easily accessible and clear. The Directive stipulates that marketing e-mails must be identified as such to the recipient and requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment. This is a matter for national law. Vendors of electronically supplied services (such as software, which the EU considers a service and not a good) must also collect value added tax.

Joint Ventures and Licensing

Joint ventures and licensed production arrangements in Austria offer U.S. firms several advantages, including access to the European Union market, improved access to Central and Eastern European markets, reduction of transportation costs to European destinations, and high quality production.  Joint ventures may be formed as companies, partnerships, or other legal entities.

Austrian companies are receptive to licensing arrangements, especially as a source of technology.  Royalty and license fee payments may be freely transferred out of Austria.

In addition to the assistance offered by the U.S. Commercial Service Vienna, U.S. firms seeking joint venture or license partners in Austria will receive valuable information from the Austrian Government’s investment organization: ABA - Invest in Austria.

Selling to the Government

The Bundesbeschaffung GmbH (BBG) was created in June, 2001 and acts as a central procurement agency for the federal government of Austria in compliance with EU legislation.  The agency is run as a limited liability company (thus is outside the federal budget), but is owned by the Austrian Ministry of Finance.  More information is available online (in German) at: https://bbg.portal.at/Internet/Startseite/_start.htm.

The Austrian Government adheres to the WTO (GATT) Agreement on Government Procurement.  Austria’s Federal Procurement Law complies with EU guidelines.  Austria does not have Buy National laws, but as with any political decision, the economic impact of any new contract is taken into consideration.  In addition, some major contracts are negotiated by invitation, and limited tenders and offset requirements are common in defense contracts.  For assistance with specific tenders, please contact the U.S. Commercial Service Vienna, Austria.

The EU public procurement market, including EU institutions and Member States, totals around EUR 1,600 billion. This market is regulated by two Directives:

• Directive 2004/18 on Coordination of procedures for the award of public works, services and supplies contracts, and
• Directive 2004/17 on Coordination of procedures of entities operating in the Utilities sector, which covers the following sectors: water, energy, transport and postal services.

Remedies directives cover legal means for companies who face discriminatory public procurement practices. These directives are implemented in the national procurement legislation of the 27 EU Member States.

The US and the EU are signatories of the World Trade Organization’s (WTO) Government Procurement Agreement (GPA), which grants access to most public supplies and some services and works contracts published by national procuring authorities of the countries that are parties to the Agreement. In practice, this means that U.S.-based companies are eligible to bid on supplies contracts from European public contracting authorities above the agreed thresholds.

However, there are restrictions for U.S. suppliers in the EU utilities sector both in the EU Utilities Directive and in the EU coverage of the Government Procurement Agreement (GPA). The Utilities Directive allows EU contracting authorities in these sectors to either reject non-EU bids where the proportion of goods originating in non-EU countries exceeds 50% of the total value of the goods constituting the tender, or that they are entitled to apply a 3% price difference to non-EU bids in order to give preference to the EU bid. These restrictions are applied when no reciprocal access for EU companies in the U.S. market is offered. Those restrictions however were waived for the electricity sector.

For more information, please visit the U.S. Commercial Service at the U.S. Mission to the European Union website dedicated to EU public procurement. This site also has a database of all European public procurement tenders that are open to U.S.-based firms by virtue of the Government Procurement Agreement. Access is free of charge.

Distribution and Sales Channels

Austria enjoys a multitude of distribution and sales channels, including traditional agents, wholesalers and retailers, catalog and e-commerce channels, direct marketing, franchising, joint ventures, and other licensing agreements.  Manufacturer’s representative agreements as we know them in the United States, however, are uncommon.

It may be useful to think of Austria in terms of the following five marketing or distribution areas:

• Vienna and Vicinity: The business and government center as well as the most populous region.
• Pre-Alpine Provinces: These are Styria, Lower Austria, and Upper Austria, where most industrial and agricultural production takes place.
• Alpine Provinces: These are Carinthia, Tyrol, and Salzburg, which rely heavily on tourism.
• Vorarlberg: This province in the far western Alps on the Swiss border has a small but wealthy population.
• Burgenland: This province in the eastern flatlands of Austria is the least developed part of the country.

Many Austrian firms distribute to the neighboring markets of Central and Eastern Europe at the wholesale level, and some Austrian retail chains are beginning to build networks in those countries as well.  In the same way, German and international retail giants have been building a presence in Austria over the past several years.

Selling Factors and Techniques

Possibly because of the many years of shortage during World War II and the post-war period, and certainly because of Austria’s monarchical authoritarian history, the traditional buyer-seller relationship in Austria may seem strange to the American. The customer wants or needs something and is thus at a disadvantage, while the seller, who is holding the item that the customer wants, is in a position of power. Though it is true that this traditional interpersonal part of the commercial relationship is losing its hold here as the older generations move into retirement and more sophisticated communications and competition take hold, the sense that the customer is asking a favor of the seller still persists to some degree.

Why is this information important? Because it will help U.S. firms avoid making simple mistakes when communicating with potential partners and customers.  Two rules of thumb are worth remembering: First, companies should refrain from hard sell practices, which could backfire if the Austrian customer feels that the products are less desirable because the sales approach is so strong. And second, companies should stick to simple American friendliness and transparency, which usually make a good impression.  

In addition to cultural considerations, price has become a key factor in purchasing. More and more sectors are now price-driven, a development that has accelerated with the globalization of the local economy. Where product quality and personal relationships once played a larger role in purchasing decisions, the focus has shifted increasingly to pricing and the bottom line.

Electronic Commerce

In 2007, $66 billion or 12% of all business sales in Austria were made electronically, up 2% over 2006.  The distribution of electronic commerce is as follows: 2.9% of sales are via Internet (but not using an online shop), 2.1% are via online shop, and 7% flow through other electronic networks.  79% of Austrian companies have a website, and 98% use the Internet, a figure which has remained constant since 2006.  Shopping online is increasingly popular, and 37% of the population aged 16-74 reports having purchased something online in the past 12 months (up 1% over 2006).

In July 2003, the EU started applying Value Added Tax (VAT) to sales by non-EU based companies of Electronically Supplied Services (ESS) to EU based non-business customers. U.S. companies that are covered by the rule must collect and submit VAT to EU tax authorities. European Council Directive 2002/38/EC further developed the EU rules for charging Value Added Tax. These rules are currently set to expire at the end of 2008.

U.S. businesses mainly affected by the 2003 rule change are those that are U.S. based and selling ESS to EU based, non-business customers or those businesses that are EU based and selling ESS to customers outside the EU who no longer need to charge VAT on these transactions. There are a number of compliance options for businesses. The Directive created a special scheme that simplifies registering with each Member State. The Directive allows companies to register with a single VAT authority of their choice. Companies have to charge different rates of VAT according to where their customers are based but VAT reports and returns are submitted to just one authority. The VAT authority responsible for providing the single point of registration service is then responsible for reallocating the collected revenue among the other EU VAT authorities.

Trade Promotion and Advertising

After growing a respectable 4.5% in 2006, the advertising industry in Austria was able to book another excellent year in 2007, recording growth of 6.4% and a $4.41 billion result for the year. The relative distribution of advertising Euros among the various media and marketing channels has been changing slowly over the past several years.

Print Media:Daily papers, regional publications, magazines, industry publications, and other print media once accounted for more than half of all advertising spending.  In 2006, they held 44.7% of the pie, and in 2007 they were able to gain back a percentage point, reporting 45.5%.

Television:
TV also remained steady at just below 19%. Currently, 42% of Austrian households also receive satellite programming, and 37% are hooked up to cable, which means that advertising originating outside of Austria is reaching Austrian consumers.  This trend is being countered by the invention of special advertising windows directed at Austrian TV viewers.

Radio:
Radio advertising also remained the same at just under 6% of advertising spending.  All currently operating private radio stations are owned by large media concerns.  Austrian National Broadcasting operates several national and regional radio stations, including the national market leader.

Other Advertising Venues:
Direct mail and flyers together account for 20% of the advertising pie, up from 17% in 2006. Billboard advertising remains a constant feature of Austrian marketing, with around 6% of advertising spending.  The fastest growing venue for advertising is online advertising, which grew by 77% between 2006 and 2007 but still accounts for only 2% of the total.

Truth in Advertising:
A Consumer Forum has been established in the Austrian Economics Ministry to ensure truth in advertising.  The Forum is made up of representatives of political parties, business organizations, labor unions, and business associations.  A subcommittee for commercial advertising examines posters and TV, radio and newspaper ads, as well as entire sales campaigns, for their truthfulness, information value, and ethnic sensitivity.  The Forum can initiate proceedings against advertisers who make false claims.  Anyone transgressing established commercial usage laws may be sued.  The government recently lifted the regulation that prohibited comparative advertising, thus enabling advertisers to make direct comparisons between their products and services and those of their competitors.

Trade Promotion:
Annually, between 100 and 150 national and international trade fairs representing many industry sectors are organized in Austria.  Most of the Austrian fairs are open to the general public and thus fulfill an advertising function.  Austrian business entities generally attend the major European trade fairs, especially those that are held in Germany.

General EU Legislation

Laws against misleading advertisements differ widely from Member State to Member State within the EU. To respond to this imperfection in the Internal Market, the Commission adopted a Directive, in force since October 1986, to establish minimum and objective criteria regarding truth in advertising. The Directive was amended in October 1997 to include comparative advertising. Under the Directive, misleading advertising is defined as any "advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which for those reasons, injures or is likely to injure a competitor." Member States can authorize even more extensive protection under their national laws.

Comparative advertising, subject to certain conditions, is defined as "advertising which explicitly or by implication identifies a competitor or goods or services by a competitor." Member States can, and in some cases have, restricted misleading or comparative advertising.

The EU’s Television without Frontiers Directive lays down legislation on broadcasting activities allowed within the EU.  From 2009 the rules will allow for US-style product placement on television and the three-hour/day maximum of advertising will be lifted. However, a 12-minute/hour maximum will remain.  Child programming will be subject to a code of conduct that will include a limit of junk food advertising to children.

Following the adoption of the 1999 Council Directive on the Sale of Consumer Goods and Associated Guarantees, product specifications, as laid down in advertising, are now considered as legally binding on the seller.

The EU adopted Directive 2005/29/EC concerning fair business practices in a further attempt to tighten up consumer protection rules. These new rules will outlaw several aggressive or deceptive marketing practices such as pyramid schemes, "liquidation sales" when a shop is not closing down, and artificially high prices as the basis for discounts in addition to other potentially misleading advertising practices. Certain rules on advertising to children are also set out.

Medicine

The advertising of medicinal products for human use is regulated by Council Directive 2001/83/EC. Generally speaking, the advertising of medicinal products is forbidden if market authorization has not yet been granted or if the product in question is a prescription drug. Mentioning therapeutic indications where self-medication is not suitable is not permitted, nor is the distribution of free samples to the general public. The text of the advertisement should be compatible with the characteristics listed on the product label, and should encourage rational use of the product. The advertising of medicinal products destined for professionals should contain essential characteristics of the product as well as its classification. Inducements to prescribe or supply a particular medicinal product are prohibited and the supply of free samples is restricted.

The Commission plans to present a new framework for information to patients on medicines in 2008. The framework would allow industry to produce non-promotional information about their medicines while complying with strictly defined rules and would be subject to an effective system of control and quality assurance.  

Food

Regulation 1924/2006, applicable as of July 1, 2007, sets new EU rules on nutrition and health claims. The annex to Regulation 1924/2006 lists the nutrition claims such as "low fat" and "light" that will be allowed throughout the EU and the conditions for using them. An EU positive list of health claims, based on generally accepted scientific advice such as "X is good for your bones," is yet to be established. The EU positive list will include health claims based on generally accepted science and well understood by the consumer, not those based on emerging science. New health claims and disease reduction claims will have to be assessed by the European Food Safety Authority (EFSA) and approved by the Commission.

Food Supplements

Regulation 1925/2006, applicable as of July 1, 2007, harmonizes rules on the addition of vitamins and minerals to foods. The regulation lists the vitamins and minerals that may be added to foods and sets criteria for establishing minimum and maximum levels.  

Tobacco

The EU Tobacco Advertising Directive bans tobacco advertising in printed media, radio, and internet as well as the sponsorship of cross-border events or activities. Advertising in cinemas and on billboards or merchandising is allowed though these are banned in many Member States. Tobacco advertising on television has been banned in the EU since the early 1990s and is governed by the TV Without Frontiers Directive.  

Pricing

Austrian prices are among the highest in the European Union, reflecting the high cost of labor, extensive agricultural subsidies, the small size of the market, and high taxes.  High labor costs include the cost of social benefits such as mandatory health insurance and pension fund contributions for employees.  The value-added tax (VAT) on most products and services is 20% and is charged at point of sale.  Special taxes are levied on luxury goods, fuel, drinks, tobacco, and other items.  These costs and taxes should be taken into account when pricing products for sale in Austria.

Sales Service and Customer Support

Customer service and support in Austria is gaining attention with EU integration.  Starting on January 1, 2002, the basic warranty for consumer purchases was increased from six months to two years, and the burden of proof was reversed.  The customer is no longer required to prove that he did not break the item; rather, the store must show that he did.  Despite this change in the warranty rules, a customer who purchases a defective product cannot in most cases bring it back to the store for replacement, but instead must wait while the product is shipped for repair. Stores often impose more restrictive exchange policies for articles purchased on sale or with a credit card. American-style guarantees and customer service are gradually becoming more common and publicizing them is a popular marketing tool.

Business customers demand a high level of support and most wholesalers or distributors offer excellent support.  If a part on a machine breaks, the customer will demand that it be replaced or repaired within 24 hours, which may present logistical problems for smaller U.S. suppliers who cannot warehouse replacement parts in Europe.

Conscious of the discrepancies among Member States in product labeling, language use, legal guarantee, and liability, the redress of which inevitably frustrates consumers in cross-border shopping, the EU institutions have launched a number of initiatives aimed at harmonizing national legislation. Suppliers within and outside the EU should be aware of existing and upcoming legislation affecting sales, service, and customer support.

Product Liability

The principle behind product liability is different in the EU and the United States.  In the United States, product safety is achieved through aggressive product liability regulations and highly active civil courts.  In the European Union, product safety is ensured through extensive testing and marking/labeling requirements that attempt to block market entry to any products deemed unsafe. Under the 1985 Directive on liability of defective products, amended in 1999, the producer is liable for damage caused by a defect in his product. The victim must prove the existence of the defect and a causal link between defect and injury (bodily as well as material). A reduction of liability of the manufacturer is granted in cases of negligence on the part of the victim. 

Product Safety

The 1992 General Product Safety Directive introduces a general safety requirement at the EU level to ensure that manufacturers only place safe products on the market. It was revised in 2001 to include an obligation on the producer and distributor to notify the Commission in case of a problem with a given product, provisions for its recall, the creation of a European Product Safety Network, and a ban on exports of products to third countries that are not deemed safe in the EU.  

Legal Warranties and After-sales Service

Under the 1999 Directive on the Sale of Consumer Goods and Associated Guarantees, professional sellers are required to provide a minimum two-year warranty on all consumer goods sold to consumers (natural persons acting for purposes outside their trade, businesses or professions), as defined by the Directive. The remedies available to consumers in case of non-compliance are:

• repair of the good(s);
• replacement of the good(s);
• a price reduction; or
• rescission of the sales contract.  

Other issues pertaining to consumers’ rights and protection, such as the New Approach Directives, CE marking, quality control and data protection are dealt with in Chapter 5 of our "Country Commercial Guide for U.S. Companies: Doing Business in Austria".

Protecting Your Intellectual Property

Several general principles are important for effective management of intellectual property rights (IPR) in Austria.  First, it is important to have an overall strategy to protect IPR.  Second, IPR is protected differently in Austria than in the U.S.  Third, rights must be registered and enforced in Austria, under local laws.  Companies may wish to seek advice from local attorneys or IP consultants.  The U.S. Commercial Service can often provide a list of local lawyers upon request.

 It is vital that companies understand that intellectual property is primarily a private right and that the US government generally cannot enforce rights for private individuals in Austria.  It is the responsibility of the rights' holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors.  While the U.S. Government (USG) is willing to assist, there is little it can do if the rights holders have not taken these fundamental steps necessary to securing and enforcing their IPR in a timely fashion.  Moreover, in many countries, rights holders who delay enforcing their rights on a mistaken belief that the USG can provide a political resolution to a legal problem may find that their rights have been eroded or abrogated due to doctrines such as statutes of limitations, laches, estoppels, or unreasonable delay in prosecuting a law suit. In no instance should USG advice be seen as a substitute for the obligation of a rights holder to promptly pursue its case.

It is always advisable to conduct due diligence on partners.  Negotiate from the position of your partner and give your partner clear incentives to honor the contract.  A good partner is an important ally in protecting IP rights.  Keep an eye on your cost structure and reduce the margins (and the incentive) of would-be bad actors.  Projects and sales in Austria require constant attention.  Work with legal counsel familiar with Austrian laws to create a solid contract that includes non-compete clauses, and confidentiality/non-disclosure provisions.

It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IPR and stop counterfeiting.  There are a number of these organizations, both Austrian and U.S.-based.  These include:

• The U.S. Chamber and local American Chambers of Commerce
• National Association of Manufacturers (NAM)
• International Intellectual Property Alliance (IIPA)
• International Trademark Association (INTA)
• The Coalition Against Counterfeiting and Piracy
• International Anti-Counterfeiting Coalition (IACC)
• Pharmaceutical Research and Manufacturers of America (PhRMA)
• Association of Research-Based Pharmaceutical Companies (FOPI)
• Biotechnology Industry Organization (BIO)

Copyright

The EU’s legislative framework for copyright protection consists of a series of Directives covering areas such as the legal protection of computer programs, the duration of protection of authors’ rights and neighboring rights, and the legal protection of databases. Almost all Member States have fully implemented the rules into national law; and the Commission is now focusing on ensuring that the framework is enforced accurately and consistently across the EU.

The on-line copyright Directive (2001/29/EC) addresses the problem of protecting rights holders in the online environment while protecting the interests of users, ISPs and hardware manufacturers. It guarantees authors’ exclusive reproduction rights with a single mandatory exception for technical copies (to allow caching), and an exhaustive list of other exceptions that individual Member States can select and include in national legislation. This list is meant to reflect different cultural and legal traditions, and includes private copying "on condition right holders receive fair compensation."

Patents

EU countries have a "first to file" approach to patent applications, as compared to the "first to invent" system currently followed in the United States. This makes early filing a top priority for innovative companies. Unfortunately, it is not yet possible to file for a single EU-wide patent that would be administered and enforced like the Community Trademark (see below). For the moment, the most effective way for a company to secure a patent across a range of EU national markets is to use the services of the European Patent Office (EPO) in Munich. It offers a one-stop-shop that enables rights holders to get a bundle of national patents using a single application. However, these national patents have to be validated, maintained and litigated separately in each Member State.  

Trademarks

The EU-wide Community Trademark (CTM) can be obtained via a single language application to the Office of Harmonization in the Internal Market (OHIM) in Alicante, Spain. It lasts ten years and is renewable indefinitely. For companies looking to protect trademarks in three or more EU countries the CTM is a more cost effective option than registering separate national trademarks.

On October 1, 2004, the European Commission (EC) acceded to the World Intellectual Property Organization (WIPO) Madrid Protocol. The accession of the EC to the Madrid Protocol establishes a link between the Madrid Protocol system, administered by WIPO, and the Community Trademark system, administered by OHIM. As of October 1, 2004, Community Trademark applicants and holders are allowed to apply for international protection of their trademarks through the filing of an international application under the Madrid Protocol. Conversely, holders of international registrations under the Madrid Protocol will be entitled to apply for protection of their trademarks under the Community Trademark system.

Designs

The EU adopted a Regulation introducing a single Community system for the protection of designs in December 2001. The Regulation provides for two types of design protection, directly applicable in each EU Member State: the registered Community design and the unregistered Community design. Under the registered Community design system, holders of eligible designs can use an inexpensive procedure to register them with the EU’s Office for Harmonization in the Internal Market (OHIM), based in Alicante, Spain. They will then be granted exclusive rights to use the designs anywhere in the EU for up to twenty-five years. Unregistered Community designs that meet the Regulation’s requirements are automatically protected for three years from the date of disclosure of the design to the public.

Trademark Exhaustion

Within the EU, the rights conferred on trademark holders are subject to the principle of "exhaustion." Exhaustion means that once trademark holders have placed their product on the market in one Member State, they lose the right to prevent the resale of that product in another EU country. This has led to an increase in the practice of so called "parallel importing" whereby goods bought in one Member State are sold in another by third parties unaffiliated to the manufacturer. Parallel trade is particularly problematic for the research-based pharmaceutical industry where drug prices vary from country to country due to national price Regulation.  Community wide exhaustion is spelled out in the Directive on harmonizing trademark laws. In a paper published in 2003, the Commission indicated that it had no plans to propose changes to existing legal provisions.  

Due Diligence

The Austrian economy is highly regulated, which means that there are checks and controls against fraud, though they do not stop all fraudulent activity. Due diligence is necessary, as it is anywhere. Basic information on a company, such as confirmation of registration, and confirmation that no bankruptcy proceedings are in process, is available from official and semi-official sources. More extensive commercial background checks on a company can be obtained through private sector resources. Please contact the U.S. Commercial Service Austria for assistance.

Local Professional Services

The same professional services that are available in other highly developed market economies are readily available locally in Austria. Business service providers known to this office (CS Vienna) are offered an online listing on the U.S. Commercial Service website. The website is a good source for such service providers.

Local service providers focusing on EU law, consulting, and business development can be viewed on the website maintained by the Commercial Service at the U.S. Mission to the European Union at: http://www.buyusa.gov/europeanunion/services.html

For information on professional services located within each of the EU member states, please see EU Member State Country Commercial Guides which can be found at the following website: http://www.export.gov/mrktresearch/index.asp under the Market Research Library.

Web Resources

For a complete listing of web resources for the above topics, please see Chapter 3 of our "Country Commercial Guide for U.S. Companies: Doing Business in Austria".