International Business

As an international gateway for energy, life sciences, subsea engineering, aerospace, and logistics, Houston continues to be a premier destination for UK and Scottish companies entering the United States. However, expanding into the Texas market involves navigating a legal and commercial framework that differs fundamentally from Scots law, English common law, and broader UK regulations.

For inbound companies, commercial success depends on recognizing and mitigating key domestic legal risks early from corporate formation and contract structuring to trade secret protection and cross-border data governance.

The Dual Legal Architecture: Federal vs. Texas State Law

The United States operates under two distinct, co-existing legal systems:

• Federal Law: Controls nationwide and cross-border regulatory areas, including immigration, federal income taxation, international trade, customs, national export controls, patent/trademark registrations, and federal labor standards.
• Texas State Law: Governs internal corporate existence, local entity formation, commercial leasing, employment practices, state trade secret protections, UCC commercial sales, and day-to-day contract disputes.

While Texas is widely recognized for its predictable, pro-business judiciary—including the specialized Texas Business Courts established to handle high-stakes commercial disputes—state-level compliance does not eliminate federal exposure. Cross-border operations require a unified compliance framework addressing both authorities.

Corporate Risks in US Commerce

Foreign executives often encounter several domestic legal doctrines that significantly shift operational and litigation risk:

• Employment-at-Will vs. Statutory Redundancy: Unlike the UK, Texas is an employment-at-will state. Employers may terminate personnel at any time, with or without cause or notice. However, because there is no statutory redundancy framework, terminated employees frequently assert statutory claims alleging workplace discrimination, retaliation, or wage-and-hour violations under the Fair Labor Standards Act (FLSA).
• The “American Rule” on Attorney Fees: In the UK, the losing litigant generally reimburses a substantial portion of the winner’s legal expenses. Under the American Rule, each party bears its own legal fees win or lose, unless an applicable statute or written agreement explicitly shifts those fees. This dynamic makes defending against unmerited claims expensive and increases early settlement leverage for plaintiffs.
• Expansive Civil Discovery: US pre-trial discovery is far broader than disclosure rules in UK courts. Opposing parties can demand extensive email archives, internal communications, financial models, and depositions of senior executives located in the UK.

Data Protection, Privacy, and Cross-Border Transfers

Data governance and technical data flows require heightened scrutiny when establishing US operations:

• Texas Data Privacy and Security Act (TDPSA): Texas enforces comprehensive consumer privacy legislation. Companies that process or control personal data of Texas residents must maintain transparent privacy disclosures, establish data subject request workflows (access, correction, deletion, opt-outs), and document Data Protection Assessments for higher-risk processing activities.
• Transatlantic Data Flows: Transferring customer, operational, or HR data between Houston facilities and UK servers requires reconciling US state standards with the UK GDPR and International Data Transfer Agreements (IDTAs).
• Export Controls on Technical Information: In Houston’s specialized engineering, subsea, and energy sectors, sharing source code, blueprints, or technical specifications with non-US personnel—even UK parent colleagues—can trigger the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR). Technical data exports require rigorous internal classification before transmission.

Intellectual Property and Trade Secret Safeguards

For international technology and engineering firms, proprietary information represents their core balance sheet value. While trade secrets are protected under both federal law (the Defend Trade Secrets Act) and state law (the Texas Uniform Trade Secrets Act), statutory protection requires affirmative proof that the company maintained reasonable measures to preserve secrecy.

Core IP and Trade Secret Best Practices:

• Proprietary Information and Inventions Agreements (PIIAs): Under US law, IP generated by independent contractors—and in certain contexts, employees—does not automatically vest in the company without a written assignment. Every employee, contractor, and technical advisor must execute an assignment utilizing present-tense language (“hereby assigns and transfers”) rather than a promise to assign in the future.
• Tailored Non-Disclosure Agreements (NDAs): Execute US-governed, bilateral NDAs before disclosing technical or financial information to prospective partners, suppliers, or joint ventures. Agreements must clearly define confidential information, enforce explicit return/destruction terms, and establish non-use covenants.
• Operational and Physical Access Controls: Implement role-based data permissions, encrypted repositories, and strict departure protocols (including signed exit certifications confirming the return of all proprietary assets and credentials).
• Federal IP Filings: Secure US trademark and patent registrations through the USPTO, and register critical software code and technical manuals with the US Copyright Office to secure statutory damage remedies.

Commercial Contract Risk Allocation

Standard UK terms and conditions should never be repurposed for US transactions without local adaptation. Texas agreements require specific drafting to insulate against catastrophic liability:

• Indemnification & Energy Limitations: Structure clear indemnity provisions covering third-party claims, IP infringement, and regulatory non-compliance. In energy and industrial service contracts, drafting must comply with the Texas Oilfield Anti-Indemnity Act (TOAIA), which restricts indemnity and insurance covenants in certain oilfield operations.
• Consequential Damages Waivers: Explicitly disclaim indirect, incidental, punitive, special, and consequential damages, as well as lost profits and business interruption. Without an express disclaimer, these damages can multiply recovery amounts in US litigation.
• UCC Warranty Disclaimers: Texas commercial transactions follow the Uniform Commercial Code. Disclaimers of implied warranties—such as the implied warranty of merchantability or fitness for a particular purpose—must be clear, prominent, and formatted in conspicuous (bold or capitalized) typeface.
• Aggregate Liability Caps: Establish an explicit ceiling on financial liability (e.g., total fees paid over the preceding 12 months or a stated dollar cap) to prevent uncapped exposure.
• Governing Law, Venue, and Fee-Shifting: Specify Texas law and venue in Harris County (Houston), or designate binding international arbitration (such as the ICDR or AAA). Include an express prevailing-party fee-shifting provision to mitigate the American Rule.

Corporate Governance and Risk Mitigation

To safeguard foreign parent assets, companies should establish structured operating practices from inception:

• Preserving the Corporate Veil: Operate the US subsidiary as a standalone legal entity. Avoid intermingling bank accounts, execute formalized intercompany service and transfer-pricing agreements, and maintain independent board minutes and corporate records.
• Dedicated US Insurance Coverage: Domestic exposure requires policies calibrated for the US litigation environment, including Commercial General Liability (CGL), Directors & Officers (D&O), Employment Practices Liability Insurance (EPLI), and Cyber Liability.
• Preventative Legal Counsel: Involving US counsel before signing commercial leases, onboarding personnel, or executing customer contracts ensures structures remain compliant, tax-efficient, and protected from day one.

McCullough Huddleston and Woo represents international companies entering Texas, as well as domestic businesses growing globally. For inquiries regarding US market entry, cross-border corporate structuring, commercial contracts, or intellectual property protection, contact our Houston office at or visit mhwcounsel.com. Materials based on presentation to BABC / SNABC.