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