Chapter 6: Intellectual Property Rights and Other Legal Forces Flashcards
Why should we care about the legal environment?
Bc if you get sued it doesn’t matter how much money you make, you’ll lose your money.
Even if you have the best type of legal system on paper, unless the _______ is done in a ______ manner, it won’t be worth the ink it’s printed on.
execution; fair
If wanting to do business in another country, the legal question you need to ask is:
How independent is the judiciary?
T or F: In the US, we have a legal system that is independent from the executive branch. So, the executive or legislative branch doesn’t tell the judiciary what to do. They operate on total and complete independence.
True
T or F: In many parts of the world, there’s a big overlap between the authority of the judiciary and the executive branch.
True (In some countries, the executive branch dictates the terms to the judicial branch)
When deciding to do business internationally, you need to not just know about the types of legal systems, but also ascertain the extent to which their system is _______, _______, and ________.
unbiased; fair; independent
What are the 3 main types of legal systems?
- Civil Law
- Common Law
- Religious Law
Which type of legal system is based on the English system?
Common Law
Which type of legal system is based on codification?
Civil Law
a systematic collection of laws designed to cover all areas of concern.
codification
Which type of legal system is the most widespread system globally?
Civil Law
Civil law is derived from ancient _______ law and influenced by _________ law.
Roman; religious
In what 4 examples is the legal system a Civil Law system?
- Germany
- France
- Italy
- Most of South America
What are two big differences between Civil Law and Common Law?
1. Has to do with judge
2. Has to do with civil wrongs
- Judge:
- Civil Law: Judge is typically on the side of the prosecution.
- Common Law: Judge is like the referee/arbitrator and doesn’t rlly get involved. - Civil wrongs:
- Civil Law: Sometimes civil wrongs are rectified by punishment.
- Common Law: civil wrongs are rectified by compensation (while crimes are punished)
Which type of legal system relies on previous court decisions and interprets statutes and regulations?
Common law
In the Common Law system, the relationship between judicial decisions and statutes can be complex due to _________.
precedents
T or F: Civil law is more adversarial (like having the prosecution and the defense and they go at it)
False; COMMON LAW
Which type of legal system is more flexible: Common or Civil Law?
Common Law
What are the 6 principles of Common Law Systems?
- The rights of the individual exist alongside those of the state.
- The trial is adversarial.
- The defendant is presumed innocent until proven guilty.
- Case law develops through judgements and precedents.
- Case law co-exists with statute law and–in most cases– a constitution.
- Crimes = punished and Civil Wrongs= rectified by compensation
In Religious Law, religious ________ or ________ are the basis of the legal system.
documents; sources
Some ________ law prohibits charging interest.
Give an example of a law that does this.
religious; ex: Islamic law
Religious law is found primarily in _______ countries.
Muslim
T or F: Islamic countries follow Sharia law.
False; MUSLIM countries
T or F: Muslim Law is completely spelled out in the Quran (their holy bible).
True
T or F: In Islamic Law, there is a prohibition on earning money on interests. (ex: banks can’t charge interest on loans, but the loophole is by calling it a fee). There’s also a prohibition on banks loaning you money for endeavors that aren’t considered to be in line with their teaching (ex: gambling).
True
country’s based on the Rule of Law encourage _______ ________.
foreign investment
T or F: Country’s based on Religious Law tend to protect the human rights of citizens, an increasing global concern.
False; country’s based on RULE OF LAW
Public international law governs relationships between ___________.
governments
What is an example of International Law?
Maritime Law
how much of the water of the U.S. is considered to be an integral part of the U.S. and what defines international waters from U.S. waters
maritime law (all of these things are agreed upon by governments)
(Public/private) international law governs relationships between individuals and companies that cross international borders.
private
agreements between countries.
This is a source of ________ law.
treaties (also called conventions, covenants, compacts, or protocols); international
What are 3 general legal concerns in global business?
- Extraterritoriality
- Performance of Contracts
- Litigation
A country’s attempt to apply its laws to nonresidents and foreigners, and to activities that take place beyond its borders (when the laws of the U.S. apply outside the U.S.)
extraterritoriality
T or F: Sometimes, US laws will govern American misbehavior outside the U.S. (ex: financial fraud, money laundering, child sex trafficking, and anything dealing with national security → can be prosecuted in the U.S. even if the crime is committed outside the U.S.)
True
What are 3 types of laws that have to do with extraterritoriality?
- Tax and employment
- Antitrust
- Environmental
One of the big issues when dealing with contracts is who has _________? The country that’s performing the work, the country where the work is performed, or a third country?
jurisdiction
T or F: No worldwide court has power to enforce its decrees.
True
UN International Court of Justice relies on _________ __________.
voluntary compliance
T or F: The litigation resolution process is quicker, less expensive, and more private.
False; the ARBITRATION resolution process
International lawyers help you with the __________ of __________.
performance of contracts
What are the 3 main ways to settle disputes?
- Litigation
- Arbitration
- Conciliation
T or F: Under conciliation, the decision is binding.
False; it is NOT binding (so, whatever you decide upon is not binding, you can still go to court)
when you get a neutral party to try to narrow the differences between the two sides and achieve some compromise
Conciliation
T or F: Under arbitration, you wave the right to go to court (the decision is binding).
True
T or F: The arbitrator, under the arbitration approach to settle disputes, has to be agreed upon by both parties and they negotiate, settle the dispute, and the decision is binding.
True
Legal proceeding conducted to determine and enforce particular legal rights.
litigation
Litigation is (complicated/uncomplicated) and (cheap/expensive).
complicated; expensive
There is a _______ process used to find facts relevant to litigation.
discovery
Cross-border litigation prompts the question of which law should apply (2 choices):
- Choice-of-law
- Choice-of-forum
T or F: It is wise to not use litigation, especially in third world countries.
True
a creative work or invention that is protectable by patents, trademarks, trade names, copyrights, and trade secrets.
intellectual property
Regarding intellectual property rights, _______ and ________ work to standardize the system.
TRIPS; WIPO
Intellectual property rights is a big issue in many parts of the world because of _________ on copyright laws.
infringement
Infringement is common in countries that have a _____ _____ ______.
brand new technology (Technology is a huge asset and when people steal/copy it and don’t compensate you for it, it’s a major loss.)
a government grant giving the inventor of a product or process the exclusive right to manufacture, exploit, use, and sell that invention or process.
patents
T or F: Country-specific laws vary widely for patents.
True
Patent ______ and _______ challenge the patent system.
trolls; pirates
a shape, color, design, phrase, abbreviation, or sound used by merchants or manufacturers to designate and differentiate their products; vary from country to country.
trademarks
The Madrid Agreement of 1891 administered by WIPO has to do with _________.
trademarks
a name used by a merchant or manufacturer to designate and differentiate its products.
trade names (ex: Taco Bell and Pizza Hut are trade names for Yum! Brands, Inc.)
Trade names are protected by _______ and _______.
WIPO; TRIPS
exclusive legal rights of authors, composers, creators of software, playwrights, artists, and publishers to publish and dispose of their work; protects tangible property
copyrights
any information that a business wants to hold confidential; includes formulas, processes, patterns, designs.
trade secrets
T or F: Trademarks are the most common type of IP protection.
False; trade SECRETS
Predefined commercial terms established by the International Chamber of Commerce.
incoterms
What are the 3 main incoterms?
- FAS (free alongside ship-port of call)
- CIF (cost, insurance, freight-foreign port)
- CFR (cost and freight-foreign port)
when you ship merchandise and the quoted amount includes the cost of the product, the insurance, and the transportation.
CIF (cost, insurance, freight-foreign port)
laws that prevent inappropriately large concentrations of power and its abuse through price-fixing, market sharing, and monopolies. (making sure the system is fair and no one company has monopolistic power over another; Europeans tend to take this very seriously)
antitrust (or competition) laws
In regard to competition/antitrust laws, U.S. law includes ____ ____ concept.
per se
T or F: There is not very strong, robust competition laws in third world countries, therefore there can be companies or families that have monopolistic power in these countries.
True
Trade obstacles includes _________, ______, and _______ obstacles.
political; financial; legal
T or F: Packaging and language requirements is a trade obstacle.
True
What are 3 traditional trade obstacles?
- Tariffs
- Quotas
- Voluntary Export Restraints
an injury inflicted on another person, either intentionally or negligently.
tort
________ _________ standards hold a company, its officers, and directors liable and possibly subject to fines or imprisonment when their product causes death, injury, or damage.
product liability
______ _______ standards hold the designer or manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence in the product’s design or manufacture.
strict liability
T or F: all countries have tort law.
False; some countries don’t, which is why some companies decide to operate outside the U.S.
Employees working abroad are subject to (local/domestic) laws. Legal penalties may be ______.
local; harsh
T or F: The law of the home country plays no part in a foreigner’s arrest.
True
What act was signed by President Carter in the 1970s and the U.S. law prohibits payments to foreign government officials in order to receive special treatment; there are criminal and civil penalties if this happens.
Foreign Corrupt Practices Act (FCPA)
The enforcement of the FCPA decreased significantly during the ______ ________, and there are loopholes around it, but the law is still there.
Reagan Administration
T or F: Under the FCPA, facilitating payments are allowed.
True
New agreements to the FCPA include _________ signed in 2018.
UNCAC
Under accounting law, some investors are wary after worldwide financial scandals. This is called ______ of _______.
crisis of confidence
What act was set in place in response to world-wide scandals and sets higher standards for boards, management, and accounting firms?
Sarbanes Oxley Act (SOX)
6 worst countries to do business with because of corruption (going from worst to not as bad):
- Russia
- Mexico
- India
- China
- Brazil
- South Africa
T or F: The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in U.S. companies operating abroad is an example of extraterritoriality.
True
T or F: Intellectual property rights includes patents and trademarks, but not copyrights.
False
T or F: The European Patent Organization (EPO) makes filing for a patent in all 28 EU member states more difficult than it was previously.
False
T or F: The logo that allows consumers to identify a company or product is an example of a trademark.
True
Extraterritoriality refers to:
a. added territory as a result of dispute settlements in wars, such as the Sakalin Islands.
b. a citizen’s claim to government assistance in a foreign environment.
c. a nation’s attempt to enforce its law beyond its borders.
d. a taxable condition most international firms attempt to avoid.
c. a nation’s attempt to enforce its law beyond its borders.
If two English multinational companies had a dispute arising in NYC, and there were no choice of law or choice of forum clauses in their contract, it is likely that:
a. a New York court would hear their complaint.
b. they would bring their dispute to an English court.
c. the dispute would not get heard in court, but rather, in the boardrooms.
d. they would reach an agreement informally and develop an off-the-books settlement.
b. they would bring their dispute to an English court.
Arbitration is often preferred when contract stipulates U.S. law and one of the litigants is foreign because it is:
a. easier to influence an arbiter than a judge.
b. quicker, cheaper, and more private than litigation.
c. more discreet, although more costly than litigation.
d. less bureaucratic than litigating in any country.
b. quicker, cheaper, and more private than litigation.
Arbitration is a private solution that is:
a. only used in common law cases.
b. considered a last resort when settling a dispute.
c. common in religious law systems.
d. more private than litigation
d. more private than litigation
A patent gives the inventor:
a. the right to use the invention until development costs are recouped.
b. exclusive right to manufacture, exploit, use, and sell the invention for a given time period.
c. property rights for ten years.
d. the right to keep the patented process but not the product for five years.
b. exclusive right to manufacture, exploit, use, and sell the invention for a given time period.
