Consignment Inventory and Doing-Business Analysis

Consignment inventory can change the foreign qualification analysis by creating an ongoing in-state commercial presence. The key consideration is not ownership alone, but how inventory is managed, replenished, and used over time.

Consignment Changes the Doing-Business Facts

Shipping a device from one state to fill an accepted order is often treated differently from maintaining company-owned inventory inside the customer’s state.

In a consignment model, the manufacturer or distributor may retain title until the device is selected, implanted, used, or otherwise converted into a sale.

Retained title is not automatically decisive, but it can make the arrangement look less like a completed interstate sale and more like an ongoing in-state inventory program.

State statutes rarely provide a complete definition of “doing business.” Instead, they identify activities that, standing alone, do not require foreign qualification.

North Carolina, for example, excludes merely owning real or personal property, while California focuses on whether the company enters into repeated and successive intrastate transactions.

Those formulations illustrate the central issue: ownership of a device in the state may be protected “without more,” but recurring replenishment, control, service, and commercial use can supply the “more.”

HCP Consignment and Sizing Sets

Consider a manufacturer that places multiple sizes of an implantable or procedural device at an HCP site.

The HCP selects the appropriate size during a procedure, title transfers only when that unit is used, unused sizes remain available, and the manufacturer replenishes the set.

The analysis should consider who owns the devices, controls minimum and maximum quantities, performs inventory counts, replaces expired units, bears loss or damage, invoices after use, and can require the stock to be returned.

A single temporary evaluation set may present a different profile from standardized sets maintained across numerous facilities for months or years.

The latter arrangement creates continuity, a recurring commercial purpose, and a physical inventory presence tied directly to the company’s ordinary business—even if no employee or facility is located in the state.

Return-and-Reuse Models

A similar issue arises where a device is used by an HCP or patient, returned to the manufacturer or distributor for data extraction, cleaning, refurbishment, reconfiguration, or recharging, and then placed back into service.

The registration analysis should examine the entire operating cycle, not each shipment in isolation.

Repeated placement, retrieval, processing, and redeployment may establish an ongoing state-facing service and inventory program.

The result can also be affected by local field support, installation, training, maintenance, contracting authority, and whether the customer holds the device merely as bailee or uses it as part of a continuing commercial arrangement.

Structure Consignment Through a Controlled U.S. Channel

MDD Options can structure the U.S. channel so that inventory ownership, consignment control, invoicing, returns, and redeployment are handled through its hybrid distribution model rather than left as fragmented manufacturer activities.

Where appropriate, this can reduce the manufacturer’s direct in-state operating footprint.

Where retained-title or customer-site inventory remains necessary, MDD Options can map the corporate-registration, licensing, tax, and contractual implications before deployment.