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InternationalMarketing TheInternationalLegalEnvironment PlayingbytheRulesChapter7 14thEditionPhilipR CateoraMaryC GillyJohnL Graham McGraw Hill IrwinInternationalMarketing14 e Copyright 2009byTheMcGraw HillCompanies Inc Allrightsreserved 7 2 WhatShouldYouLearn Thefourheritagesoftoday slegalsystemsTheimportantfactorsinjurisdictionoflegaldisputesIssuesassociatedwithjurisdictionoflegaldisputesandthevariousmethodsofdisputeresolutionTheuniqueproblemsofprotectingintellectualpropertyrightsinternationally 7 3 WhatShouldYouLearn HowtoprotectagainstpiracyandcounterfeitingThelegaldifferencesbetweencountriesandhowthedifferencescanaffectinternationalmarketingplansThedifferentwaysU S lawscanbeappliedtoU S companiesoperatingoutsidetheUnitedStatesThemanyissuesofevolvingcyberlaw 7 4 GlobalPerspectiveThePajamaCaper Nosingle uniforminternationalcommerciallawgovernsforeignbusinesstransactionsTheinternationalmarketermustpayparticularattentiontothelawsofeachcountryLawsgoverningbusinessactivitieswithinandbetweencountriesAnintegralpartofthelegalenvironmentofinternationalbusinessSecuringexpertlegaladviceisawisedecisionThefoundationofalegalsystemProfoundlyaffectshowthelawiswritten interpreted andadjudicated 7 5 BasesforLegalSystems FourheritagesformthebasisforthemajorityofthelegalsystemsoftheworldCommonlawCivilorcodelawIslamiclawMarxist socialisttenetsEventhoughacountry slawsmaybebasedonthedoctrineofoneofthefourlegalsystemsitsindividualinterpretationmayvarysignificantly 7 6 Lawyersper100 000PeopleinSelectedCountries Exhibit7 1 7 7 CommonandCodeLaw CommonlawSeeksinterpretationthroughthepastdecisionsofhighercourtswhichinterpretthesamestatuesAppliesestablishedandcustomarylawprinciplestoasimilarsetoffactsArerecognizedasnotbeingall inclusiveOwnershipisestablishedbyuseCodelawLegalsystemisgenerallydividedintothreeseparatecodesCommercialCivilCriminalOwnershipisdeterminedbyregistrationConsideredcompleteasaresultofcatchallprovisionsfoundinmostcode lawsystems 7 8 IslamicLaw ThebasisforIslamiclawisinterpretationoftheKoranIslamiclawdefinesacompletesystemthatprescribesspecificpatternsofsocialandeconomicbehaviorforallindividualsPropertyrightsEconomicdecisionmakingTypesofeconomicfreedomAmongtheuniqueaspectsofIslamiclawistheprohibitionagainstthepaymentofinterestTheIslamicsystemPlacesemphasisontheethical moral social andreligiousdimensionstoenhanceequalityandfairnessforthegoodofsociety 7 9 Marxist SocialistTenets Socialistcountriesarenowmoredirectlyinvolvedintradewithnon MarxistcountriesNecessitatedthedevelopmentacommerciallegalsystemthatallowedengagementinactiveinternationalcommercePatternfordevelopmentvariesamongcountriesEachhasadifferentbackgroundDevelopmentofmarket driveneconomiesatdifferentstagesPremiseisthatlawisstrictlysubordinatetoprevailingeconomicconditionsFundamentalpropositionsasprivateownership contracts dueprocess andotherlegalmechanismshavehadtobedeveloped 7 10 JurisdictioninInternationalLegalDisputes NojudicialbodyexiststodealwithlegalcommercialproblemsarisingbetweencitizensofdifferentcountriesLegaldisputescanariseinthreesituationsBetweengovernmentsBetweenacompanyandagovernmentBetweentwocompaniesJurisdictionisgenerallydeterminedonthebasisof JurisdictionalclausesincludedincontractsWhereacontractwasenteredintoWheretheprovisionsofthecontractwereperformedMostclear cutdecisionscanbemade Whencontractsorlegaldocumentssupportingabusinesstransactionincludeajurisdictionalclause 7 11 InternationalDisputeResolution Conciliation ConciliationisanonbindingagreementbetweenpartiestoresolvedisputesbyaskingathirdpartytomediatedifferencesSessionsareprivateAllconferencesbetweenpartiesandthemediatorareconfidentialAlthoughconciliationmaybethefriendlyroutetoresolvingdisputesItisnotlegallybindingAnarbitrationclauseshouldbeincludedinallconciliationagreements 7 12 InternationalDisputeResolution Arbitration ConductedundertheauspicesmoreformaldomesticandinternationalarbitrationgroupsOrganizedspecificallytofacilitatetheresolutionofcommercialdisputesThepopularityofarbitrationhasledtoaproliferationofarbitralcentersEstablishedbycountries organizations andinstitutionsInter AmericanCommercialArbitrationCommissionCanadian AmericanCommercialArbitrationCommission fordisputesbetweenCanadianandU S businesses LondonCourtofArbitration decisionsareenforceableunderEnglishlawandEnglishcourts AmericanArbitrationAssociationInternationalChamberofCommerce selectArbitration 7 13 InternationalDisputeResolution Arbitration ContractsandotherlegaldocumentsshouldincludeclausesspecifyingtheuseofarbitrationtosettledisputesArbitrationclausesrequireagreementontwocountsToarbitrateinthecaseofadisputeaccordingtotherulesandproceduresofsomearbitrationtribunalToabidebytheawardsresultingfromthearbitration 7 14 InternationalDisputeResolution Litigation ThebestadviceistoseeksettlementDeterrentstolitigationFearofcreatingapoorimageanddamagingpublicrelationsFearofunfairtreatmentinaforeigncourtDifficultyincollectingajudgmentthatmayotherwisehavebeencollectedinamutuallyagreedsettlementthrougharbitrationTherelativelyhighcostandtimerequiredwhenbringinglegalactionLossofconfidentiality 7 15 ProtectionofIntellectualPropertyRights ASpecialProblem CompaniesspendmillionsofdollarsestablishingbrandnamesortrademarksTosymbolizequalityanddesignToenticecustomersMillionsarespentonresearchTodevelopproducts processes designs andformulasIntellectualorindustrialpropertiesareamongthemostvaluableassetsNewtechnologiesdevelopedtopreventpiracy 7 16 CounterfeitingandPiracy LostsalesfromtheunauthorizeduseofU S patents trademarks andcopyrightsAmounttomorethan 100billionannuallyThepiracyindustryhasgrownsosophisticatedManycounterfeitgoodsareindistinguishablefromoriginalPiracyactuallycanservecomecompaniesMicrosoftCounterfeitpharmaceuticals2 ofthe 327billionworthofdrugssoldeachyear 7 17 PiracyRatesforComputerSoftwareTopandBottom20 Exhibit7 2 7 18 InadequateProtection FailingtoadequatelyprotectintellectualpropertyrightscanleadtothelegallossofrightsinpotentiallyprofitablemarketsTherehavebeenmanycaseswherecompanieshavelegallylosttherightstotrademarksandhavehadtobuybacktheserightsorpayroyaltiesfortheiruseMcDonald sinJapanManybusinessesfailtotakeproperstepstolegallyprotecttheirintellectualproperty 7 19 PriorUseVersusRegistration PriorUse whoevercanestablishfirstuseistypicallyconsideredtherightfulownerRegistration thefirsttoregisteratrademarkorotherpropertyrightisconsideredtherightfulownerAcompanythatbelievesitcanalwaysestablishownershipinanothercountrybyprovingitusedthetrademarkorbrandnamefirstiswrongandrisksthelossoftheseassetsItisbesttoprotectintellectualpropertyrightsthroughregistration 7 20 InternationalConventions ThreemajorinternationalconventionsParisConventionfortheProtectionofIndustrialPropertyInter AmericanConventionMadridArrangementWorldIntellectualPropertyOrganization WIPO ResponsibleforthepromotionoftheprotectionofintellectualpropertyandfortheadministrationofthevariousmultilateraltreatiesthroughcooperationamongitsmemberstatesPatentCooperationTreaty PCT EuropeanPatentConvention EPC TheTrade RelatedAspectsofIntellectualPropertyRights TRIPs 7 21 MarketingLaws AllcountrieshavelawsregulatingmarketingactivitiesPromotionProductdevelopmentLabelingPricingChannelsofdistributionDiscrepanciesacrossmarketscauseproblemsfortradenegotiators particularlyformanagersandtheirfirmsU S doesnotallowthebuyingorsellingofhumanorgansSomecountriesonlyhaveafewmarketinglawswithlaxenforcementOthershavedetailed complicatedrulesthatarestringentlyenforced 7 22 MarketingLaws ThereoftenarevastdifferencesinenforcementandinterpretationamongcountrieshavinglawscoveringthesameactivitiesLawsgoverningsalespromotionsintheEuropeancommunityCensorshipofadvertisingisaconstantconcernFormanyU S productswithmarketsinEurope meetingEUstandardsislessexpensivethandesigningproductsespeciallyforEurope 7 23 GreenMarketingLegislation GreenmarketinglawsFocusonenvironmentallyfriendlyproductsandFocusonproductpackaginganditseffectonsolidwastemanagementAntitrustForbetterpartofthe20thcenturyantitrustlawsNonexistentNotenforcedinmostoftheworld scountriesU S wasexceptionEUhasdealtseverepenaltiesforantimonopoly pricediscrimination supplyrestrictions andfull lineforcing 7 24 GreenMarketingLegislation TheU S interveneswhennon U S companiesattempttoacquireAmericancompaniesAttimes companiesaresubjecttoantitrustchargesinmorethanonecountryNestle sproposedacquisitionofDreyer sGrandIceCreamMicrosoftEnforcementofantitrustinEuropealmostnonexistentuntiltheearlystagesofEUestablishedlegislation 7 25 U S LawsApplyinHostCountries ForeignCorruptPracticesActMakesitillegalforcompaniestopaybribestoforeignofficials candidates orpoliticalpartiesNationalsecuritylawsProhibitaU S company itssubsidiaries jointventures orlicenseestosellcontrolledproductswithoutspecialpermissionfromtheU S AntitrustlawsEnforcementhastwopurposesininternationalcommerceProtectAmericanconsumersProtectAmericanexportsandinvestmentsagainstanyprivaterestrictionsThequestionofjurisdictionandhowU S antitrustlawsapplySectionsIandIIoftheShermanAct 7 26 U S LawsApplyinHostCountries AntiboycottlawU S companiesareforbiddentoparticipateinanyunauthorizedforeignboycottRequiredtoreportanyrequesttocooperatewithaboycottExtraterritorialityofU S lawsEspeciallyimportanttoU S multinationalfirmsForeigngovernmentsfeartheinfluenceofAmericangovernmentpolicyontheireconomiesthroughU S multinationalsWhenU S lawsconflictwiththoseofhostcountryWhenU S JusticeDepartmentrestrictsofforbidsventuresbecauseofanticompetitiveeffects 7 27 Cyberlaw UnresolvedIssues DomainnamesandcybersquattersCybersquatters CSQs buyandregisterdescriptivenouns geographicnames andnamesofethnicgroupsandpharmaceuticalsubstances andothersimilardescriptorsandholdthemuntiltheycanbesoldataninflatedpriceOthercybersquattingabusesthatcanposeaseriousthreattobusinessincludeparodysites protestsites andhatesiteswww walmartsucks orgTheInternetisnotalibel freezoneLawsuitsinvolvinglibel defamation andproductliabilitycausecompaniestovoluntarilyrestricttheirWebsitestoselectedcountries 7 28 Cyberlaw UnresolvedIssues TaxesInthepast acompa
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