CH 7 MKTG 4633

** Common Law vs Code Law

COMMON LAW: •Based on tradition •Not all-inclusive •Ownership of intellectual property based on use •Agreements binding as long as proof of agreement is established •Acts of God interpreted as unforeseeable occurrences of nature CODE LAW: •Based on system of written rules •Catchall provisions with broad interpretations possible •Ownership of intellectual property based on registration •Agreements not enforceable unless properly notarized or registered •Acts of God interpreted as unforeseeable occurrences of nature and human acts

** Commercial Legal System

Found in the Marxist-socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, Whose legal system is based on the economic, political, and social policies of the state.

Are common law countries beginning to codify commercial law?

Yes

What are international conventions designed for?

for mutual recognition and protection of IP rights

Why is it so important to protect intellectual property?

•Among most valuable assets to a company •Companies spend millions of dollars on establishing property rights

** Islamic Law or Shari'ah-

•Based on interpretation of the Koran •Prescribes specific patterns of social and economic behavior for all people ---Property rights, economic decision making, economic freedom •Overriding objective is social justice and equality ---Emphasizes ethical, moral, social and religious dimensions •Prohibits investment in activities that violate Shari'ah

Why are jurisdiction of disputes and validity of contracts an unresolved issue in cyberlaw?

•Body of cyberlaw gradually being created •For now, there are two main troubling areas (1) Determining whose laws will prevail in legal disputes between parties located in different countries (2) Establishing contractual validity of electronic communications •Many countries working to address issues

** What do cybersquatters do to domain names?

•Buy and register website names using descriptive nouns, celebrity names, variations on company trademarks •Keep domain name to sell later at inflated price •Hope owner of trademark or name will pay huge dollar amounts to acquire the URL

** Prior Use versus Registration

•Common law: ownership established by prior use --- First to use is typically considered the rightful owner •Code law: ownership established by registration --- First to register is typically considered rightful owner --- Use of the property does not matter

** Litigation

•Commonly initiated by a lawsuit; held in formal court •Most try to avoid litigation

Global marketing laws

•Countries have unique laws in marketing --- Promotion, development, labeling, pricing, sales, distribution --- Laws vary in strictness by country and industry --- Discrepancies create challenges for marketers and traders •Hope of common commercial code across countries --- European Union attempting to standardize law

** Common Law

•Derived from English law ---- Found in England, U.S., Canada, and other countries once under English control •Based on tradition, practices, precedents -----Set by past courts' interpretations of statutes, legal legislation, and rulings Common law is based on historical or past practices. Therefore, under common law, all judgments in court are based on precedence. Common law seeks "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts." US is a common law country

** Code Law

•Derived from Roman law --- Found in Germany, Japan, France --- Non-Islamic and non-Marxist countries •Based on all-inclusive system of written rules of law ---3 main codes: commercial, civil, and criminal --- All laws are codified, but broad interpretations are possible

Why is internet law too vague?

•Does not address uniqueness of Internet --- Global in reach, no political or geographic boundaries •European Union, U.S., and other countries drafting legislation --- Will cover the myriad legal questions not addressed by current law --- Until complete, businesses at risk --- Might have to rely on host nation's laws

** Arbitration

the process or act of resolving a dispute •Disinterested and informed party chosen as referee ---Determine the merits of the case ---Make judgment both parties in conflict can honor •Many arbitral centers each with standardized procedures

Why do most try to avoid litigation?

•Fear of creating poor image and damaging public relations •Fear of unfair treatment in foreign court •Difficulty in collecting judgment that may otherwise have been in a mutually agreed settlement through arbitration •Expensive and requires a lot of time •Loss of confidentiality Litigation is the last resort and not a preferred option in most disputes, especially in countries where it is considered public humiliation. For all of the above reasons, disputes are best resolved through conciliation or arbitration

** Intellectual Property

•Global brand names and trademarks --- Used to symbolize quality of product or company --- Entices consumers to buy good or service

** Foreign Business Transaction Law

•No uniform international commercial law exists •Legal systems in different countries are both disparate and complex •Important to comply with the laws in each country in which the multinational corporation operates

On what two counts do arbitration clauses require agreement?

•Parties agree to rules and procedures of some arbitration tribunal •Parties agree to abide by the awards resulting from the arbitration ---Legally binding in most countries

** Marxist Socialist Tenets

•Pattern for development of economy differs by country ---Found in Russia, Eastern Europe, China, and other socialist states •Law is subordinate to prevailing economic conditions •Development of commercial legal system necessary ---Socialist countries trading with non-Marxist countries

What are the 3 main conventions?

•The Paris Convention for the Protection of Industrial Property •The Inter-American Convention •The Madrid Arrangement

Green Marketing Legislation

-Environmental protection of global concern -Extends beyond just pollution and hazardous waste -Focuses directly on environmental-friendliness of products -Germany has most stringent laws -Regulate management and recycling of packaging waste -"Ecolabel" in Europe for products that comply with criteria

Counterfeiting and Piracy

-Occurs in a range of industries -Costs companies billions of dollars in lost revenue -Counterfeit pharmaceuticals most dire; can cause death -Collusion between manufacturer and illegitimate sellers makes counterfeiting more possible -Some feel the intellectual property regime has gone too far in favor of firms; hinders creativity

** In what 3 situations do legal disputes arise?

1.Between governments 2.Between a company and government 3.Between two companies Situation 1: Resolved by The World Court at the Hague Situations 2 and 3: Handled by a court in one of the countries involved or through arbitration

** What are today's legal systems based on (four heritages of today's legal system)?

1.Common law 2.Civil or code law 3.Islamic law 4.Commercial legal system

** What is jurisdiction generally determined by (3)?

1.Jurisdictional clauses included in contracts 2.Where a contract was entered into 3.Where the provisions of the contract were performed

Inadequate protection of IP rights leads to what?

Loss of legal rights in profitable markets

** Conciliation

Method of nonbinding dispute resolution involving a third party who tries to help disputing parties reach a mutually agreeable decision; also known as mediation. •Resolve dispute by asking third party to mediate •Discussion during mediation is confidential ---May not be used in future litigation or arbitration •Not legally binding

Why are taxes an unresolved issue in cyberlaw?

•Traditional system taxes economic activity where it occurs •People can work from anywhere using the Internet •When and where should these taxes be collected? •Who should collect the taxes? In the past, a company was deemed to have a taxable presence in a country if it had a permanent establishment there. But whether the existence of a server or a website qualifies as such a presence is not clear. One proposal that has enthusiastic support from tax authorities is for servers to be designated as "virtual permanent establishments" and thus subject to local taxes. The EU Commission has implemented a directive to force foreign companies to levy value-added tax (VAT) on services delivered via the Internet, television, or radio to customers in the European Union.

** U.S Antitrust Laws that Apply in Foreign Markets

•Two main purposes in international commerce: 1.Protect American consumers by ensuring they benefit from products and ideas produced by foreign and domestic competitors 2.Protect American export and investment opportunities against any privately imposed restrictions •Defense of U.S. commerce against threatening foreign behavior of chief concern

** Antiboycott Law

•U.S. companies can't participate in unauthorized boycott --- Need to report any request to cooperate with a boycott •Response to Arab League boycott of Israeli businesses •Creates challenging situation for U.S. companies --- Blacklisted by Arab League if they trade with Israel --- Punished by U.S. if they participate in boycott

Patents, processes, trademarks, and copyrights are what (4 points):

•Valuable in all countries •Lack of adequate protection against foreign exploitation •Many cases of companies losing rights to own trademark and having to buy them back •Patent infringement is commonly used by competitors with no intent to compensate for use