FBE 429 Final

Know-how

firm's intellectual property that is protected through secrecy and confidentiality agreements rather than through patents or copyright laws

fluctuation risk

possibility that currency of country in which U.S. investor has put its money will devalue against U.S. dollar

currency exchange rights

preferential access to hard currency by negotiating with gov't and offering to bring in industry to soft-currency nation

Blocking legislation

statutes containing provisions that block discovery of documents located in their countries and bar enforcement of foreign judgments there

Barter

direct exchange of goods for goods (or services)

Acquis Communautaire

"Which has been agreed upon by the community"

Consent agreement

Agreement which maintains the beneficial aspects of the deal while removing the anticompetitive elements - U.S. View: how mergers can go through if there are concerns

FCN treaties

Allows foreign employer to choose its own executives and experts to run its operations in other signatory countries

Currency swaps

Broad assortment of financial contracts purchased to hedge against fluctuation risk

Memoranda of understanding

Bilateral agreements that provide for coordination on cases, sharing of info, and dialogue concerning competition policy issues

Corruptness

Businessperson displays reckless or conscious disregard for consequences of personal actions

Knowing requirement

Businessperson must prove he did not know about the bribe and was reasonably unattached -- not just ignored the issue

Gray market

Importation of merchandise produced and sold abroad and then imported back in the U.S. for sale in competition with U.S. trademark owner

Leveraging theory

Company's ability to leverage dominance in one market to become dominant in another market

Evergreen contract

Continuing a contract after the stated term of the original contract -- continually renews after that

European Union

Created by Maastricht Agreement, expression of member states' underlying unity

Cybersquatting

Registering of domain name with intent to profit from goodwill of trademark belonging to another

EU regulation

EU rule that has general application, binding in its entirety, directly applicable to all member states

EU directive

EU rule that is binding as to the result to be achieved on each member state to which it is addressed, but shall leave to the national authorities choice of form and methods

Bona Fide Occupational Qualification (BFOQ) defense

Employer may engage in discrimination if it is reasonably necessary to normal operation of particular business or enterprise

Materiality

Facts of a financial magnitude that a prudent investor of the company should know

Clawback provision

Foreign companies can sue in their own country to recover against local U.S. assets all or part of the amount of antitrust judgment rendered in U.S.

Four freedoms

Free movement of goods, services, capital, and people

Informal consortia or parallel exchanges

Groups to trade local soft currency. Spread risk over larger group with hopes of reducing vagaries of local bureacracy

Currency inconvertibility

Inability to convert currency

Bad faith

Intentional wrongful behavior, even without intent

Active investment

Investor has ownership interests in foreign business

Counterpurchase agreement

Involves sale of goods to buyer (often foreign gov't) which requires as a condition of sale that seller buy other goods produced in that country

Aufsichtsrat

Large supervisory board in board of directors (German Approach) Represents shareholder interests Employees have direct representation

Caveat emptor

Let the buyer beware Founding concept of libertarian capitalism Government should not intervene in commercial relations. Buyers should investigate seller's claims. If they fail to do so and seller's claims turn out to be false, buyer has only himself to blame.

Royalty

Licensing fee

Grant back

Licensor grants back ownership (of new tech/improvement made by licensee)

License

Limited permission to use the firm's trademarks/copyrights/know-how

Geographical limitation

Limiting licensee sale within a nation

Vorstand

Management board in board of directors (German Approach) Manages the firm day to day

Import substitution rights

Manufacturing product in soft currency country that nation had previously imported

Permanent establishment

Office that a principal opens once it has hired a dependent agent within host country

Principal

Party in agency relationship who directs another party to perform a variety of functions

Agent

Party in agency relationship who performs a variety of functions on behalf and at direction of another party

Passive investment

Passive debt investment or passive equity investment Passive debt investment=making a loan to a foreign business Passive equity investment=purchasing equity interest in foreign business as portfolio investment

Nonobvious patent

Patent involving a inventive step

Design patent

Patent protecting ornamental features of article of manufacture

Useful patent

Patent that are capable of industrial application and are useful

Utility patent

Patents protecting a novel and useful process

Independent contractor

Perform general tasks for business, but retain substantial discretion and independence in carrying them out

Foreign compulsion defense

Permits U.S. firms flexibility when enforcement of U.S. employment laws overseas would result in violation of foreign law

Language laws

Policing of language in commercial advertising

Profit margin preservation (unitary index adjustment)

Price or payment to foreign investor will be adjusted periodically to maintain the same profit margin

Economic conditions alarm

Principal must notify agent if it expects that agent's volume of business (and commission) will be significantly lower than what agent normally expects

Just cause

Proof that breach affected principal in substantial manner such that breaking of contract is warranted

Buy-back agreement

Provider of equipment or tech used in manufacturing will receive, as its payment, portion of goods manufactured by supplier's equipment

Inconvertibility insurance (non-transfer insurance)

Purchase policies to insure against hard blockages (when gov't prevents conversion)

Accounting and record keeping provisions

Requirement of internal accounting controls sufficient to provide reasonable assurances that all transactions are properly authorized and that access to assets is tracked

Product liability

Responsibility to consumers for defects in product In context of product liability, agent-relationship relationship not critical b/c if you're in chain of distribution and likely to suit

Field of use limitations

Restrict applications for which licensee may employee IPR

Grease payments exception

Routine governmental action exception Any facilitating or expediting payment that secures performance of routine governmental action that is non-discretionary

Puffing

Vagueness and exaggeration in advertising

Qualified majority voting

Voting such that not all member states have to agree on proposals related to internal market. Allows institutions to make decisions even if there's objection

Hard blockages

When gov't prevents conversion or transfer

Commission override

Whenever a principal makes a sale in a territory that is reserved for the agent, the principal must pay the agent a commission, whether or not agent actually participated in sale

Geographical indications

Where a product is marketed by reference to a geographic region

Betriebsrat

Work council to represent plant's interest (German Approach)

Agency relationship

business arrangement in which agent performs functions for principal

Soft blockages

delays in processing conversion requests by local authorities

Countertrade

reciprocal arrangement between buyer and seller for sale of goods or services intended to minimize outflow of foreign exchange from buyer's country

inconvertibility risk

risk that gov't of country with soft currency will hinder foreign entrepreneur from trading the foreign currency back into U.S. dollars

Currency risk

risk that profits in foreign host country's currency will not translate into equivalent profits in investor's home country

Political risk

risk that profits will be affected by changes in the host country's political structure or instability