LEGL4900 Test 3

patents

each country has its own registration system for ______________

Expropriations

government takes control of the business. Potential investors fear potential for government takings• FSIA means foreign govs often immune from suit in US courts• Get assurances through BITs, becoming a common part of FTAs• Often provide investor-state arbitration• ICSID is popular arbitration venue, run by World Bank

antiboycott laws

legal responses by governments that make it unlawful for their citizens or companies to participate in a boycott

Rules of origin

legal rules used to determine the country of origin of imported products

Sanctions

rarely successful, may hurt innocent citizens

copyright infringement

"Pirated / Bootlegged" movies, videogames, software are examples of __________________ __________________

Buy American Act

"substantially all" - 50% USA content and assembled in USA (Eisenhower) 95% for iron / steel and 55% for others, biggerpreferences (Trump, proposed)

field of use limitations

- restrict the application for which the licensee may employ the IPR - EX: laser tech used by licensee for medical use, but licensor retains the use for communication and other uses.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

1. Updates Paris and Berne treaties 2. Provides state-state dispute resolution 3. Has escape clauses for research and public welfare 4. Also regulates geographical indications - "Champagne"• U.S. doesn't recognize

Henrietta Lacks

11,000 patents were filed using cancer cells removed from her body at Johns Hopkins and used to create an immortal cell line she was never informed or compensated

Base Erosion and Profit Shifting (BEPS)

A term describing tax avoidance strategies whereby corporations and investors shift their profits to jurisdictions with low tax rates. Instill a 10% min tax on large multinationals Use tax haven, inversion, profit shifting, and creative IP accounting ex: Apple

ADC Affiliate et al. v. The Republic of Hungary

ADC were a foreign entity that invested in the expansion of an airport in Hungary. The Gov or Hungary owned the airport and it enacted a decree resulting in the privatization of the airport and terminated ADC's long term leases, so they sought to recover their investment. Arbitration occurred over the unlawful expropriation because the airport boomed after receiving ADC's investments. Raised questions of compensation based on time of taking or time of award

Export Control Classification Number (ECCN)

An alpha-numeric code, e.g., 3A001, that describes an item and indicates licensing requirements. All ECCNs are listed in the Commerce Control List (CCL) (Supplement No. 1 to Part 774 of the EAR)

International Traffic in Arms Regulations

Applies to weapons and military tech, controlled by State Dept Interesting current debate over whether 3-d printing and milling software should be controlled change from Obama to Trump admins

Principal Use; Essential Character

Better Home Plastics Corp. v. US(CIT 1996) was an example of a classification debate in which "____________ ____________" versus "___________ ____________" was argued in court

Better Home Plastics Corp. v. US(CIT 1996)

Better home plastics corps imported shower curtains and Customs classified the shower curtains as curtains and interior blinds, whereas Better Home Plastics argued that the classification should be based on the inner plastic liner for kitchenware and toilet articles. Decision: Better Home Plastics were misassigned under interior blinds and are instead the household article of plastic. The rule of relative specificity doesn't apply here because the shower liner imparted the essential character to the set

Bikram Yoga

Bikram Cloudhury claimed to have copyright on 26 yoga postures, sued competitors U.S. Copyright office said yoga postures (asanas) cannot be copyrighted, upheld by courts

Bank of America vs US

BofA conducted general banking business in Thailand, Philippines, and Argentina and paid each place the associated taxes. BofA demanded a credit on its income tax returns but the IRS wouldn't allow it so Bank of America appealed to a trial commissioner and the Court of Claims. Decision: the US Court of Claims dismissed the petition for a tax credit.

briggs and stratton corp v. baldridge

Briggs (engine manufacturer) was blacklisted because it had been dealing with Israel in the Arab League's eyes. Brigg's argued that because of US regulations, they were blacklisted and this affected its worldwide sales. Decision: the anti-boycotting regulations were upheld by the court despite the difficulties of compliance

copyright infringement

China was / is big problem regarding ___________ ______________, getting somewhat better after joining WTO and TRIPS

United States vs Zhi Yong Guo

Chinese engineer purchased thermal imaging cameras and tried to smuggle them to China. They were charged with attempting to export controlled items without a license. Decision: affirmed the initial decision and said that the regulations for EAR are neither vague nor complex

Kirksaeng v. John Wiley & Sons (2013)

Cornell student buys Thai texts resells to U.S. students SCOTUS says that's fine - "first sale" rule

substantial transformation

Country of origin is primarily determined by last place of _________________ ______________

CFIUS (Committee on Foreign Investment in the United States)

Created by an amendment to the 1950 Defense Production Act Can review and block any transaction with foreigner that impacts national security "Control" ambiguous - <10% passive interest may be ok

Lacoste v. Crocodile International

Crocodile trademark confusion. Lacoste hadn't used a logo in 3 years and should've had the trademark removed. The case was dismissed. Also happened with Lacoste suing Hema the children's brand (which was unsuccessful)

Inversions

Deferral Principle led to _____________, in which companies move their HQs out of US for tax purposes

Export Controls

Focus on what the product is and where it is going Administered by Commerce Dept

Substitution drawback

Duties paid on imported goods may be received by a U.S. firm that imports goods and then exports other goods of the "same kind and quality " Fungible goods (those that are interchangeable goods)

national security; trade competition

Export controls are often changing to maintain a balance between _________ and ____________

Biopiracy

Extracting plants and animals indigenous to the emerging nation for research, alter the plant or animal, and then obtain patents related to this research without providing the host country with compensation or affordable access to the inventions

Sanctions

Focus on problematic individuals and sometimes countries Administered by Treasury Dept.

Diamond vs Chakrabarty

GE engineer Chakrabarty developed genetically-modified bacteria that "eat" oil Initially denied patent - appealed to Supreme Court S.Ct. said bacteria were patentable - "manufacture" or "composition of matter"

Compaq v. Commissioner of Internal Revenue (US tax Court)

IRS requires "arms-length" tax accounting IRS loses this case, despite deference

Essential Character

If two or more headings or subheadings each describe only certain materials or components in composite goods, the article must be classified under the heading that describes the material or components that give the article its ______ ______

Foreign Direct Investment (FDI)

Investment made by a foreign company in the economy of another country can be direct or indirect

Apple vs Samsung Electronics

Jury awarded Apple money for Samsung infringement. Apple asked for more money but it was declined and Apple was hurt because Samsung now only had to pay half of what they were originally told to pay.

Use of production equipment in a free trade zone is consumption

Main takeaway from Nissan Motor Mfg. Corp., USA vs United States

Multinational treaties

Many export controls have been replaced by _____________, which allow individual countries to establish export controls as exceptions to free trade and promote cooperation for nonproliferation of weapons

Mobile Communication Service v. WebReg

Mobile Comm. Service, AKA Mobilcom said that WebReg, RN had infringed on its trademark by creating the website "mobilcom.com" even though there was no right or interests in that name, but rather in bad faith. Decision: WebReg, RN had to transfer the website to Mobilcom. Cybersquatting laws are now in place to protect URL's of trademarked company names

Nissan Motor Mfg. Corp., U.S.A. v. United States

Nissan imported production machinery of industrial robots and automated systems to assemble and test in the US assembly plant. If the machinery was unsatisfactory then it was replaced and scrapped; however, Customs said that the production equipment was not "merchandise" as ruled under the FTZ act, and was therefore taxable. Decision: machinery entering a FTZ for use in manufacture and assembly of automobiles is not "merchandise" and can still be taxed. Production equipment usage constitutes consumption

substantial transformation

Occurs when the original article loses its identity as such and is transformed into a new and different article of commerce having "a new name, character, or use" different from that of the original item

Deferral Principle

Parent companies are not taxed on the income of a foreign subsidiary until they actually receive a dividend from that subsidiary. Don't pay US taxes until repatriation

Natural resources looser regulations (labor, environmental, tax)• Cheap / specialized labor Avoid tariffs Broader customer access

Potential rewards of FDI

Currency risk (zimbabwe) Political risk (expropriations)

Potential risks of FDI

"Made in the USA"

Regulated by Federal Trade Commission, not Customs Mandatory for textiles, NAFTA auto % and assembly disclosure Otherwise voluntary, treated like false advertising "All or virtually all" - like "wholly-obtained" standard

Customer/Output Limitations

Restrictions on who can sell to, such as wholesalers only

customs enforcement

Right to Inspect, audit, 5-year record keeping

Tax Cuts and Jobs Act of 2017 (Trump Admin)

SHORT ANSWER 1. U.S. corporate tax rate dropped to 21% 2. No tax for repatriating foreign dividends -One-time payment on accumulated earnings 3.Global Intangible Low Tax Income (GILTA) -Tax on very large foreign earnings, assumes profit shifting 4. Foreign Derived Intangible Income - lower taxes on US IP earnings 5. Base Erosion and Anti-Abuse Tax (BEAT) - 10% minimum tax on large multinationals

US vs Mandel (9th Cir. 1990)

The defendants were charged with exporting high tech equipment illegally without a license. The gov said that a criminal defendant couldn't challenge the Secretary of Commerce's decision to place a commodity on the control list. Decision: reversed and remanded. The decision to put an item on the control list is not subject to discovery by the defendants and aren't material and the courts will not inquire into the national security policy reasons for control

"Wholly obtained" - common for ag products "Yarn-forward" - common for textiles and clothing "Tariff-shift" - more objective standard

Some products, by treaty, have different standards for country of origin; these include:

Geographical Indications (examples: champagne, parmesan, etc)

US doesn't recognize _____________ _______________ of TRIPS

Otter Products, LLC v. United States

There wasn't a clear designation of what a phone case should be taxed as. Customs classified the Otterbox phone cases as brief case with a 20% duty while Otterbox said they should be charged as "other article of plastic" at 5.3% instead; Decision: the court agreed with Otterbox's arguement

Defense Production Act of 1950

Trump threatened to enforce the ____________________ during COVID with companies like 3M (mask production) and General Motors (ventilator production) 3M refused, citing humanitarian reasons

Bhopal Gas Disaster (1984)

Union Carbide set up Indian subsidiary Required to partner with Indian government (49%) 500k injured, 3k died Avoided liability inU.S. courts

HTSUS (Harmonized Tariff Schedule of the United States)

Used around the world to determine tax rate. Items classified by number to make it more universal. Includes general rates, special rates for trade preference programs, and special tariffs for countries like Russia

Exclusive Rights/ a "turf"

When exploitation of a licensed IPR requires significant financial resources from a firm, they may seek _______ ______ to enhance chances of adequate return on investment; typically the licensor doesn't want to put all eggs in 1 basket though

Geographic Limitations

When the licensor agrees to provide services to facilitate the anticipated activities, such as assistance in setting up an assembly line or other training and technical support, this is one way it can restrict the licensee's use of the transferred IPR. e.g. within a specific nation

Carl Zeiss, Inc. v. United States

Zeiss imported microscopes, stands, and accessories for neurological use. Customs classified them as a photographing machine whereas Zeiss disagreed and said it was a medical or surgical apparatus. Decision: the court held for the government because of the rule of relative specificity was better applicable under what Customs had declared the microscopes as. Stereoscopic compound microscope won because it was more specific.

cybersquatting

_____________ laws protect URL of trademarked company names

same-condition drawback

a drawback of duties paid on imported goods that are re-exported in the "same condition" as they were imported, provided they were not significantly altered. It's rejected merchandise that is being sent back

Civil Fraud

a far more serious case of fraud than negligence occurs when there is clear and convincing evidence of intent to use false statements when importing goods to US

Drawback

a refund of duties already paid on imported goods when the goods are reexported or destroyed

manufacturing Drawback

a refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years. Input product pieces, doesn't leave the country in the same condition as it arrived

Sanctions

a regulation that restricts or prohibits certain relationships with specified foreign countries, entities, or named individuals because of their support for things that the US doesn't support. Administered by the Treasury Dept

rejected merchandise drawback

allowed for imported merchandise that was shipped without consent, is defective, or does not conform to specifications or to samples

Berne Convention

allows international recognition of copyrights

Patent Cooperation Treaty

allows international registration of patents through WIPO

formal entry

customs procedure for most big commercial shipments;

"Short Supply" Export Controls

apply to certain foodstuffs, medicines, basic metals, or natural resources. It protects US economy from excessive foreign demand for scarce materials. ex: France and Germany put controls on PPE or US restricts weapons trade for dual use

international emergency economic powers act

broad executive power to seize assets or impose trade embargos

Geneva Convention

central registration for design patents; US moved from 14 years to 15 years to comply

"dual use" items

commercial items that may also have military, terrorist, or "proliferation" uses. Must get a license from Commerce BIS (Bureau of Industry and Security)

European Patent Office

common system for EU regarding patents

Apple

company that pays virtually no taxes because of international tax avoidance strategies

Country of origin

country from which an imported good is said to have originated according to the specific legal rules called the rules of origin. It looks at the last place of substantial transformation

"Wholly-obtained" standard

country of origin standard common for ag products

"Yarn-forward" standard

country of origin standard common for textiles and clothing

China

current focus of CFIUS

Foreign Trade Zone

designated geographic region through which merchandise is allowed to pass with lower customs duties (taxes) and/or fewer customs procedures. It's legally defined sites, like warehouses or manufacturing facilities, that are operated pursuant to legislation and under gov license, that are legally outside the customs territory of the country they are in. It saves time and allows you to assemble, repackage, and export without paying duties examples: ATL, Savannah, Brunswick

property sale/seizure where the wall was to be built

example of expropriation (kind of) during trump admin

1. Monsanto / Bayer Crops 2. "GloFish" 3. Aqua Advantage Salmon

examples of transgenic life you can patent (and have been patented)

NATO; sensitive military tech

export controls have roots in _________ and are often implemented to keep ______________ from China and Russia

patent trolls

firm that produces nothing but patents

trade secrets

important part of manufacturing process, especially tech and pharma. Countries that don't produce much IP are less likely to respect it. China is in transition for the right direction now.

180

importer has ____ days to challenge/protest liquidation assessment

Grey Market Goods

items manufactured outside a country and then imported without the consent of the trademark holder intended for one market, but not another

patriot act 2001

law in response to 9/11 strengthened search and seizure powers banks must issue SARs (report filed when bank notices suspicious account activity)

Importer's ignorance is no excuse in customs enforcement charges

main takeaway from U.S. v. Golden Ship Trading (CIT 2001)

market access

many countries limit foreign investment, especially in national security interests. ex: Ports or defense industries are usually off limits. In US, CFIUS regulates companies buying an interest in a company and can review or block any transaction with foreigners that impacts national security.

operation mega flex

movement under Trump for US customs and border protection agency to seize more illicit goods from places like China

Paris Convention

multilateral agreement to respect foreign patent filings

transfer pricing

multinational corps often do business with their subsidiaries

Madrid Protocol

now allows international recognition of trademarks

Criminal Fraud

occurs when not only intent is proven, but when there is material evidence of using false import statements more serious than civil fraud; must be proven beyond a reasonable doubt

transgenic organism

organism that is genetically engineered by inserting a gene from another organism

informal entry

personal and commercial shipments valued at $2,500 or less may be cleared through this customs procedure

tariff engineering

process of modifying or engineering a product prior to importation for the purposes of obtaining a lower rate of duty. You do things to try and get a tariff advantage

Trading with the Enemy Act of 1917

prohibited individual trade with an enemy nation and banned the use of the postal service for disseminating any literature deemed treasonous by the postmaster general it is now limited to wartime use

Companies trading Venezuelan oil• Banks working with Iran Russian election hackers Bitcoin addresses associated with NK hackers Huawei not listed (yet) Turkish officials recently "delisted"

recent adjustments to office of foreign assets control (OFAC) specially designated nationals (SDN) list

screwdriver plant

ship a product in pieces to your affiliate and then assemble it there for shipping. It's a type of transshipment pretending to have a substantial transformation

reexport

the shipment or transfer of American-controlled items or technology from one foreign country to another foreign country or foreign person

export

the actual shipment or transmission out of the US in any manner to a foreign person to the US

"tariff-shift" standard

the country of origin is the last country in which all "inputs" (raw materials, component parts, etc.) in the finished product underwent a defined change in tariff classification

Copyrights

the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit

liquidation

the final computation and assessment of the applicable duty on entered goods by customs. Customs has 314 days to make final determination

Extraterritoriality

the idea of a nation being able to extend the power of its export control laws over its goods and tech once they have left its territory.

intellectual property rights

the legal protection of the original works of inventors, authors, creators, and performers under patent, copyright, and trademark law. Such rights became a contentious area of trade negotiations in the 1990s.

Dutiable Status

the legal status of imported goods at the time of entry for purposes of compliance with the tariff and customs laws. Must list classification, customs value, and country/origin in order to decide how much to tax

Principal Use

the ordinary use to which articles of the same class and kind as those being imported are usually put and which is greater than any other single use of the article

Customs Value/Valuation

the process where customs authorities assign a monetary value to a good or service for the purposes of import or export

transshipment/"screwdriver plants"

the shipment of goods or containers to an intermediate destination, then to another destination

diversion

the unlawful transfer, transshipment, or rerouting of controlled goods or technology from one destination to which the goods or tech were legally shipped to another destination who doesn't have the license to receive the items

Ferrostaal Metals Corp v US

unpainted steel sheets from Japan were galvanized in New Zealand and the Plaintiff listed the country of origin as NZ but Customs said the country of origin was Japan. Decision: Japanese steel that had been galvanized in NZ was substantially transformed so that it had become a product of NZ and wasn't subject to voluntary restraint agreements btwn the US and Japan