Law Final Exam
European Union
countries coming together to form a common market
geographical indications
where a product, particularly a wine or liquor, is marketed by reference to a geographic region.
double taxation
where the same item of income is taxed by two different tax authorities
pre approval
Hart-Scott-Rodino Act, under which mergers, joint venture agreements, and similar transactions of a certain size must be brought before the Department of Justice before they are concluded. Even if the DOJ gives the parties permission to conclude the transaction, the DOJ may later bring litigation relating to it.
consent agreement
If a proposed merger presents competitive concerns, firms often are able to work with the U.S. Federal Trade Commission (FTC) or U.S. Department of Justice (DOJ) to maintain the beneficial aspects of the deal while removing the anticompetitive elements
priority claim
If at least one of the applicants named in the PCT application is a national or resident of a PCT signatory, the PCT gives this on that invention in all signatory states (30 months)
currency risk
If the investment is in an enterprise that will be earning foreign currency, the business must consider the two forms of currency risk: fluctuation risk and inconvertibility risk.
EU regulation
Laws approved at EU level, they apply as they are in every country and dont need to be ratified by single nations. Immediately binding when published in the Official Journal of the EU
comity
good relations
countertrade
payments to the franchiser with goods instead of hard currency. local currency earnings are used to purchase local products, which are then exported to a hard-currency country.
insurance syndicates
people that work with the private political risk insurance
independent contractor
perform general tasks for the business, but retain substantial discretion and independence in carrying them out
agent
performs a variety of functions on behalf and at the direction of another party
cybersquatting
registering of a domain name with the intent to profit from the goodwill of a trademark belonging to another. Typically, offers to sell the domain to the company who owns the trademark at an inflated price.
Hukou
registration of households. Instituted in 1958, the system categorises citizens according to their place of residence, essentially dividing the population into agriculture and urban. It is a mechanism for determining social entitlements.
privatisation
the outright sale of assets or ownership interests in a state- owned enterprise being sold to private investors, by granting concessions that allow private entities to operate and derive a profit from state-owned infrastructure, through the widespread issuance of vouchers representing a right to profits to all citizens, or simply by allowing new private businesses to form in a sector formerly reserved to the government.
fluctuation risk
the possibility that the currency of the country in which the U.S. investor has put its money will devalue against the U.S. dollar.
profit margin preservation
the price or payment to the foreign investor will be adjusted periodically to maintain the same profit margin. This can disclose the foreign company's cost structure, information that is highly confidential, because it permits competitors to price effectively against the firm.
parallel imports
the process of gray market
buy-back agreement
the provider of the equipment or technology used in manufacturing will receive, as its payment, a portion of the goods manufactured by the supplier's equipment or the fac- tory in which the equipment is installed.
dependent agent
the retention of this type of representative often leads to principal liability and triggers tax and labor law requirements (EX: U.S. principal creates the marketing program in detail and the representatives simply carry it out)
political risk
the risk that profits will be affected by changes in the host country's political structure or instability.
nationalisation
the taking of an entire industry or a natural resource as part of a plan to restructure the nation's economic system. Do not have to compensate
per se
those that no amount of explanation can make legal
Alien Tort Statute
to permit non-U.S. citizens to bring private causes of action in U.S. courts based on torts (such as piracy) that violate norms of international law that are as widely accepted and definite as those recognized by Congress when the ATS was passed in 1789.
Intellectual property rights (IPR)
increasingly becoming an extremely important asset of any large corporation, whether in the US or in other countries
design patent
patents protecting the ornamental features of an article of manufacture
Four Freedoms
Goods, Services, People, and capital
currency swaps
A broad assortment of financial contracts may be purchased from financial intermediaries to hedge against fluctuation risk.
caveat emptor
According to this precept, government should not intervene in commercial relations. Buyers should investigate the seller's claims or obtain contractual representations and warranties. If they fail to do so and the seller's claims turn out to be false, the buyer only has himself or herself to blame.
utility patents
PCT only applies to these - patents protecting a novel and useful process, machine, manufacture, or composition of matter
non-transfer insurance
Protect from hard blockages
just cause
Regardless of whether the parties have reserved the right to terminate in the terms of their agreement, the Dealer's Act prohibits the principal from terminating the agreement or from refusing to renew if doesnt have this
tied-purchase clause
These clauses require the franchisee to buy certain goods from the franchiser
copyright
These include prohibi- tions against copying literary and artistic works and granting authors exclusive rights to adaptations and broadcasts of works. No filing requirement
import substitution rights
These rights are available when the new venture will manufacture a product in the soft-currency country that the nation had previously imported. However, an investor must still reach this agreement before actually committing capital to the soft-currency nation.
tax haven
a country where the effective tax rate on a relevant item of income is very low or zero.
United States Overseas Private Investment Corporation (POIC)
aim to promote exports by insuring domestic firms that do business abroad against expropriation (including creeping expropriation), nationalisation, revolution, insurrections, and currency inconvertibility
individual exemption
allowed performance of an agreement that would otherwise violate Article 101 because it had favourable economic effects overall
reinsurance treaty
an agreement among insurance companies that spreads the risk among its members. Under its terms, the lead underwriter can commit the resources of the entire group after negotiating the transaction with the U.S. investor
political risk analysis
another form of proactive management: the enterprise retains a firm or its own personnel to analyse a host country's risk of nationalisation/expropriation as it would study any other business problem
output or customer restrictions
another form used if the licensor plans to use the licensee as a source of products for the licensor's own distribution requirements
passive investment
can involve either a passive debt investment—making a loan to a foreign business—or a passive equity investment—purchasing an equity interest in the foreign business as a portfolio investment that does not allow for control of the business. tend to be the least regulated bc they do not raise the specter of "outsider" influence that often leads foreign governments to exercise greater governmental regulation.
Patent Cooperation Treaty (PCT)
centralised utility patent application process
gray market goods
completely unrelated party with whom the licensor has no anti-competition agreement will purchase the li- censed product and import it back into the United States. This importation of merchandise produced and sold abroad and then imported back into the United States for sale in competition with the U.S. trademark owner
principal
controls the agent
geographical limitations
limit a sale of a certain object within a certain nation
export credit agencies
promote investment from their own countries by giving political risk insurance
inconvertibility risk
risk that the govern- ment of a country with soft currency will hinder the foreign entrepreneur from trading the foreign currency back into U.S. dollars
value-added tax
sales taxes on retail goods - changes by EU country by country
Foreign Corrupt Practices Act
seeks to punish bribery of foreign officials through civil and criminal penalties and to establish internal accounting mechanisms that will prevent such bribery
counter purchase agreement
the sale of goods to a buyer, often a foreign government, which requires as a condition of the sale that the seller buy other goods produced in that country. These deals are usually structured as two separate contracts where each party is paid in currency when its pro- ducts are delivered to the other party.
condemnation
the government's power to take private property for public purposes - same as eminent domain
permanent establishment
For tax purposes, the principal is often viewed as having opened an office. once it hires a dependent agent within the host country. Upon such an establishment, the principal's transactions become subject to the host country's corporate tax laws.
antitrust law
US: the foundation of an economic system that relies on maximising competition to permit free-market forces to operate (Sherman Act and the Clayton Act)
Deferral Principle
a U.S. person is a legally separate person from any foreign corporation it may own. Thus, while the U.S. person will be subject to tax currently on any income it owns, it will not be taxed immediately on any income earned by the foreign corporation it owns
knowing requirement
any instance where 'any reasonable person would have realized' the existence of the circumstances or result and the [person] has 'consciously chosen not to ask about what he had reason to believe he would discover.' (ex: whenever an agent asks for an unusually large fee or commission,)
anti bribery
authorise criminal punishment. The law's prevention function is accomplished through provisions that seek to detect illegal payments by examining the accounting and record- keeping systems of the enterprise.
Berne Convention
deals with the granting of copyrights among signatory nations.. Each signatory nation must afford foreigners the same treatment as its own citizens.
EU directive
define mandatory goals, but member states are free to decide on the legislations to achieve these goals
soft blockages
delays in processing conversion requests by the local authorities.
biopiracy
extract native or indigenous plants and animals for research (with the help of local knowledge), alter the plant or animal (such as through genetic engineering), and then obtain patents related to this research without providing the host country with compensation or affordable access to the inventions.
gensoku jiyu
free procedure of transfer of technology for example
hard blockages
occur when the foreign government passes a law that prevents conversion or transfer
Foreign direct investment
signifies a class of investments in a foreign host country that involves the investing business carrying on some significant portion of its physical operations in the host country itself
Independent Agent
someone with "continuing authority to negotiate the sale or purchase of goods" on behalf of the principal.
forum non conveniens
that the U.S. court was not a convenient forum to hear the claim.
single economic unit
under which the court imputes the behaviour of a controlled subsidiary to the parent. This concept also permits the court to consider the parent's level of market dominance in determining whether the subsidiary's actions are monopolistic.
Conditions in Modern Traditional Theory
(1) for a public purpose; (2) nondiscriminatory (not directed against a specific foreign person); and (3) accompanied by prompt, adequate, and effective compensation.
transfer pricing
Because the amount of tax to which an item of income is subject depends upon the source of that income, there can be a large incentive to shift income from high-tax jurisdictions to low-tax jurisdictions. Related parties are free to fix prices that they pay to one another on any basis they choose because market forces do not discipline the prices.
competition law
EU: Treaty on the Functioning of the European Union (TFEU) (formerly Articles 81 and 82 of the Treaty of Rome), the members of the European Union (EU) pledged to regulate anticompetitive actions and outlaw the abuse of dominant market power, both within the individual member states and in the Union as a whole
know-how
EU: is a firm's intellectual property that is protected through secrecy and confidentiality agreements rather than through patents or copyright laws.
political risk insurance
Entrepreneurs who are unwilling to hazard the risk of a foreign government taking will pay a premium to a public or private insurance company.
refus de vente
refusals to deal, even if the refuser has a relatively low level of market dominance (Germany and France)
currency exchange rights
If the investor proposes bringing a desired industry to the soft-currency nation, it can negotiate with the government in advance for preferential access to hard currency preventing inconvertibility problem
foreign-invested enterprise
In China: have to hire employees through labor agencies - need to pay them the same which was not done in the past
Aufsichtstrat
In Germany, a large supervisory board for employee representation and responsible for representing shareholder interests,
Betriebsrat
In Germany, each place of business with more than five employees must have a this works council
informal consortia or parallel exchanges
In this arrangement, the investors—all committed to the local incontrovertibility risk—spread that risk over a larger group, with the hoping of reducing the vagaries of local bureaucracy.
Common Agricultural Policy
Increase agricultural productivity, ensure fair standard of living for agricultural community, stabilise markets, guarantee regular supplies, ensure reasonable prices to consumers
eminent domain
the government's power to take private property for public purposes
inconvertibility insurance
Investors can purchase such policies to insure against hard blockages,
franchising
It is an arrangement in which the licensor permits the licensee to sell certain goods under the licensor's trademark or service mark. To prevent devaluation of its trademark, the licensor will typically condition its use on the licensee's observance of certain quality standards.
International Centre for the Settlement of Investment Disputes (ICSID)
The Convention provides a forum and a set of rules for the arbitration of disputes between U.S. citizens and signatory countries. Both the citizen and the host country agree that the Convention governs and that all disputes will be resolved`
right of priority
The Paris Convention - the date of an applicant's foreign application is deemed to be the same as the date of the applicant's original application on the same invention, so long as the foreign application was filed before the first anniversary of the original application
Royalty
The U.S. firm might grant a license for a fee to a foreign company
act of state
The doctrine was historically referred to as a principle under which—for reasons of comity (good relations) among nations—a U.S. court will refuse to inquire into the validity of any act of a foreign government.
language laws
The municipal government of Jakarta, Indonesia, worried about cultural invasion by ethnic minorities, bans language - difficult if many people speak it
grant back
The parties will also usually negotiate over owner- ship and use rights if the licensee develops improvements in the licensed technology or creates new inventions based on that technology - right to use—often without compensation—such new technology
economic conditions alarm
The principal must notify the agent if it expects that the agent's volume of business—and thus the agent's commission—will be "significantly lower" than what the agent "normally" expects. (protected by the EU)
materiality
The principal objection to the accounting provisions is that they fail to incorporate any concept of relative importance, known in financial circles
"grease payments' exception
The routine governmental action exception
territorial theory
a nation may clearly assert jurisdiction over a merger involving a firm based in its territory.
net book value
This value reflects the tax-related depreciated cost of assets (calculated using accounting conventions) without regard to whether there has in fact been true depreciation in value
exclusive rights
When exploitation of the licensed IPR requires significant financial or other resources of the licensee, it will often use this in the IPR within some geographic area in order to enhance its chances of earning an adequate return on its investment.
commission override
Whenever a principal makes a sale in a territory or a market sector reserved for the agent, the principal must pay the agent a commission, whether or not the agent actually participated in the sale, no matter what the agency agreement provides.
License
a limited permission to use the U.S. firm's trademarks, copyrights, or know-how in making products for sale in the vicinity of the foreign company's country
objective territoriality
a state may exercise jurisdiction over conduct commenced outside its territory when the act or effect of the act is physically completed inside its territory
expropriation
a taking of an isolated item of property. Do not have to compensate.
memoranda of understanding
bilateral agreements that provide for coordination on cases, sharing of information, and dialogue concerning competition policy issues
bona fide occupational qualification (BFOQ) defence
both in Title VII and the ADEA, provides that an employer may engage in discrimination if it is "reasonably necessary to the normal operation of the particular business or enterprise."
rule of reason
can be legal if, upon analysis, they are found not to be anticompetitive
accounting and record-keeping provisions
devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances" that all transactions are properly authorised and that access to assets is tracked.
clawback provisions
foreign companies can sue in their own country to recover against local U.S. assets all or part of the amount of an antitrust judgment rendered in the United States.
counterfeit goods
goods, often of inferior quality, made or sold under another's brand name without the brand owner's authorisation.
dominant market position
have a monopoly almost and to be persecuted needs to be in abuse of it
national competition authorities (NCAs)
have increased responsibility for enforcement of Articles 101 and 102. When a transaction affects trade between member states, the national authorities must apply Articles 101 and 102, even if national law is also applied
language politics
his term describes the situation, found in regions of a few countries, where laws require that companies conduct business in a certain language.
franchise tax
impose taxes based on the franchiser's worldwide operations even if its local operations fizzle. A business may sometimes avoid such taxes by structuring the franchise agreement in accordance with local preferences.
expressio unis est exclusio alterius
instructs that where a law expressly describes a particular situation to which it shall apply, what was omitted or excluded was intended to be omitted or excluded
bad faith
intentional wrongful behaviour, but in the UDRP, it now includes some negligence without a finding of intent. For example, a negligent failure to conduct prior checks for third-party rights
agency relationship
is a business arrangement in which one party, the agent, performs a variety of functions on behalf and at the direction of another party, the principal. Most employees of a corporation
currency inconvertibility
is a reciprocal arrangement between buyer and seller for the sale of goods or services intended to minimize the outflow of foreign exchange from the buyer's country.
soft currency
is one that is not freely exchangeable for currencies of other nations. Generally, this is because international currency arbitrageurs view the currency's fluctuation risk as too great to maintain markets in it.
active investment
it ultimately will result in the investor having an ownership interest in the foreign business as either a foreign branch or subsidiary. If the business is held through a foreign subsidiary, the assets of the business will be legally owned by a business entity organized under the laws of the foreign host country.
Vorstand
manages the firm from day to day
Fair, reasonable, and nondiscriminatory (FRAND)
mandatory licensing for patented technologies that are essential to the implementation of a standard. significantly reduce the risk of patent hold-up and the perceived advantages of litigations
Acquis communautaire
membership negotiations conducted in chapters relating specific EU legislation, legal acts, and court decisions --> voted unanimously like membership accession
vertical arrangement
merger between firms and their distributors, customers, or suppliers
European Central Bank
mission to promote price stability and to define and implement the monetary policy of the Euro zone, conduct foreign exchange operations and promote smooth operation of payment systems
notification-registration
more open to technological transfer. The Japanese gensoku kinshi (prohibited in principle) system transformed over time into the gensoku jiyu (free in principle) system. simple registration procedure.
Utility patent
one that has a broad range of potential applications
soft currency
one that is not freely exchangeable for currencies of other nations. Generally, this is because international currency arbitrageurs view the currency's fluctuation risk as too great to maintain markets in it.
evergreen contract
one that the parties may terminate only by a three-month written notice once the relationship has lasted for three years or more
monopoly
only player in the market
repatriated
paid out to the U.S. person, typically in the form of a dividend
modern-traditional theory
permits takings but imposes certain requirements on the nation exercising its takings power. This theory recognises the sovereign's right to nationalise foreign-owned property, that is, to exercise eminent domain over the property of foreigners just as it can over nationals.
foreign compulsion defence
permitting U.S. firms flexibility when the enforcement of U.S. employment laws overseas would result in a violation of foreign law.
Calvo Doctrine
placed the sovereign ahead of the foreign investor within the sovereign's territory. It challenged any intervention by foreign states in investment disputes as a violation of the sovereign's jurisdiction - free to determine the compensation for the taking
private political risk insurance
pools of money provided by investors to insure specific projects—provide such insurance on a case-by-case basis.
traditional theory
prohibits all takings of foreign property. Grotius' fundamental principle was that foreign investors—unlike local merchants— should be exempt from the sovereign's condemnation rights
non obvious patent
protection of any new inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step
useful patent
protection of anything capable of industrial application
de minimus exception
provides that Article 101(1) is not violated if (1) the aggregate market share of the parties to the agreement is less than 15 percent of any relevant markets affected where the parties are not competitors, or (2) the aggregate market share of the parties to the agreement is less than 10 percent of any relevant markets affected where the parties are competitors or where it is difficult to ascertain whether the parties are competitors. And, as noted previously, the EU Merger Regulation has a much higher Community dimension threshold.
qualified majority voting
rather than having unanimity, this is what was adopted by the SEA to make decisions
leveraging theory
refers to a company's ability to leverage dominance in one market to become dominant in another market. Looked into it by Merger Task Force
corruptness
requires that the businessperson display a reckless or conscious disregard for the consequences of personal actions. Even if payers do not have actual knowledge that they are making a payment to a government official, they are corrupt if they act as if they do not care whether it is going to a government official.
product liability
responsibility to consumers for defects in one's product
field of use limitations
restrict the applications for which the licensee may employ the IPR
prior approval
schemes delegate specific types of authority to government entities and contain relatively objective standards. In others, the laws are written in general terms and vest broad interpretive powers in the bureaucracy. All transfer- of-technology agreements are prohibited unless a specific reason can be found for them to be permitted.
commercial activities exceptions
state enters into a commercial contract and is acting as a private commercial party
blocking legislation
statutes containing provisions that block the discovery of documents located in their countries and bar the enforcement of foreign judgments there.
Friendship, Commerce, and Navigation treaties
the United States and other nations, which allow a foreign employer to choose its own executives and experts to run its operations in the other signatory nations, have come under greater scrutiny as to which levels and positions the foreign executives can occupy.
barter
the direct exchange of goods for goods (or services)
creeping expropriation
the effect of laws and regulations that subject the investor to discriminatory taxes, legislative controls over management of the firm, price controls, forced employment of nationals, license cancellation, and restrictions on currency convertibility. Creeping expropriation requires a careful fact-based determination to ascertain whether the sovereign has gone beyond its right to regulate industry.
trade creditors
the entities that sell supplies or services to the venture. To the greatest extent possible, the venture should buy locally in local currency, conserving hard-currency resources for repatriation.
jurisdictional rule of reason
took into account (1) whether the action had some effect on U.S. commerce, (2) whether the restraint was of a type and magnitude to be considered a violation of the U.S. antitrust laws, and (3) the comity (goodwill) interests of the foreign nation against the interests of the United States in antitrust enforcement
Gensoku Kinshi
transactions were presumed to be prohibited, but there were some exemptions. These exemptions were not based on law, but instead reflected an evolving bureaucratic tradition that decided what transactions should be exempt. Therefore, a foreign investor could only obtain key "legal" insights from someone familiar with the personalities who administered the process. Prohibitive procedure
European Court of First Instance (CFI)
ushered in a more hospitable climate for mergers within the European Community in vetoing the Merger Task Force's decisions blocking the unions
puffing
vagueness and exaggeration— in advertising.
negative clearance
was a confirmation that the proposed agreement did not fall within Article 101(1) at all. It required the Commis- sion's analysis of whether, in fact, the proposed agreement would impair competition
