No Termination Payment for You!

I was recently asked whether the US had any regulations similar to the EU’s Commercial Agent Regulations–pursuant to which, upon termination or expiration of certain agency contracts, the agent would be entitled to an indemnity/compensation payment. The specific question related to a sales agency agreement, but the answer for the US is valid for agency, distribution and similar agreements.  The short answer is ‘no,’ the general rule in the US is that there are no termination payments due upon termination of a ‘commercial agent’ (or expiration of the term of the agency agreement). Notwithstanding that answer, I’d point out two things for an Irish/NI company potentially appointing a commercial agent in the US: (i) the underlying agency agreement should be clear on intellectual property rights in that the ownership of principal’s IP remains with the principal, the agent’s use of that IP inures to the benefit of the principal, and that the agent, even after termination/expiration, will execute whatever document are reasonably necessary to reflect the principal’s ownership of its IP; and (ii) the underlying agreement should also be clear that the agent must return all confidential materials/information to the principal upon termination/expiration of the term.