Legal Enviornment of Business Final Exam Review

Import Controls- Prohibitions

•Under the Trading with the Enemy Act, no goods may be imported from nations that have been designated as enemies of the United States. •Other laws prohibit the importation of: -Illegal drugs - Agricultural products that pose dangers to domestic crops or animals -Goods that infringe on U.S. patents

Doing Business Internationally

- A U.S. domestic firm can engage in international business transactions in a number of ways, including: •Exporting its goods and services to foreign markets •Establishing foreign production facilities to be closer to the foreign market or markets in which its products are sold •Licensing its technology to an existing foreign company •Selling franchises to overseas entities

The First Sale Doctrine

- Under the first sale doctrine, the owner of a particular item that is copyrighted can, without the authority of the copyright owner, sell or otherwise dispose of it. - Once a copyright owner sells or gives away a particular copy of a work, the copyright owner no longer has the right to control the distribution of that copy

Sources of International Law

- There are three general sources of international law: 1.International customs 2.Treaties and international agreements 3.International organizations

Licensee

- The party obtaining the license is the licensee. - The licensee generally pays fees, or royalties, for the privilege of using the intellectual property

Licensor

- The party that owns the intellectual property rights and issues the license is the

The Principle of Comity

- The principle of comity basically refers to legal reciprocity

Licensing PT.2

- A U.S. firm may license a foreign manufacturing company to use its copyrighted, patented, or trademarked intellectual property or trade secrets. - Licensing allows the foreign firm to use an established brand name for a fee - The firm that receives the license can take advantage of an established reputation for quality - The firm that grants the license receives income from the foreign sales of its products and also establishes a global reputation - Once a firm's trademark is known worldwide, the demand for other products manufactured or sold by that firm may increase.

License

- A contract permitting the use of a trademark, copyright, patent, or trade secret for certain purposes. - A license grants only the rights expressly described in the license agreement

Comity

- A deference by which one nation gives effect to laws and judicial decrees of another nation

Trademark

- A distinctive mark, motto, device, or implement that a manufacturer stamps, prints, or otherwise affixes to the goods it produces so that they may be identified on the market and their origins made known. - Once a trademark is established (under the common law or through registration), the owner is entitled to its exclusive use.

Act of state doctrine

- A doctrine that provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory - This doctrine is frequently employed in cases involving expropriation or confiscation.

Dilution

- A doctrine under which distinctive or famous trademarks are protected from certain unauthorized uses regardless of a showing of competition or a likelihood of confusion.

Marks Need Not Be Identical

- A famous mark may be diluted by the use of an identical mark or by the use of a similar mark. - A similar mark is more likely to lessen the value of a famous mark when the companies using the marks provide related goods or compete against each other in the same market.

Patent

- A government grant that gives an inventor the exclusive right or privilege to make, use, or sell his or her invention for a limited time period. - Patents for inventions are given for a twenty-year period. - Patents for designs are given for a fourteen-year period. - The first person to file an application for a patent on a product or process will receive patent protection. - The period of patent protection begins on the date the patent application is filed, rather than when the patent is issued. - After the patent period ends (either fourteen or twenty years later), the product or process enters the public domain, and anyone can make, sell, or use the invention without paying the patent holder.

Confiscation

- A government's taking of privately owned business or personal property without a proper public purpose or an award of just compensation.

Employment Discrimination- Protected class

- A group of persons protected by specific laws because of the group's defining characteristics, including race, color, religion, national origin, gender, age, and disability

Collective mark

- A mark used by members of a cooperative, association, or other organization to certify the region, materials, mode of manufacture, quality, or accuracy of the specific goods or services. •Ex: The labor union marks found on tags of certain products; the credits of movies, which indicate the various associations and organizations that participated in the making of the movies

Certification mark

- A mark used by one or more persons, other than the owner, to certify the region, materials, mode of manufacture, quality, or accuracy of the owner's goods or services. •Ex: "Good Housekeeping Seal of Approval," "UL Tested"

Service mark

- A mark used in the sale or the advertising of services, such as to distinguish the services of one person from the services of others. - Titles, character names, and other distinctive features of radio and television programs may be registered as service marks.

Normal trade relations (NTR) status

- A status granted through an international treaty by which each member nation must treat other members at least as well as it treats the country that receives its most favorable treatment. •This status was formerly known as most-favored-nation status.

Civil Law Systems

- A system of law derived from that of the Roman Empire and based on a code rather than case law; the predominant system of law in the nations of continental Europe and the nations that were once their colonies - In a civil law system, courts interpret the code and apply the rules to individual cases, but courts may not depart from the code and develop their own laws - Civil law systems differ in a number of ways from common law systems - Judicial precedents are not binding, as they are in a common law system - Unlike judges in common law systems, judges in civil systems often actively question witnesses.

International organization

- A term that generally refers to an organization composed mainly of nations and usually established by treaty. - The United States is a member of more than one hundred multilateral and bilateral organizations, including at least twenty through the United Nations.

Trade name

- A term that is used to indicate part or all of a business's name and that is directly related to the business's reputation and goodwill. - Trade names are protected under the common law, but only if they are unusual and fancifully used. •Ex: Safeway -Trade names may also be protected under trademark law, if the name is the same as the firm's trademark. •Ex: Coca-Cola

Islamic Legal Systems

- A third legal system is common to Islamic countries, where law is often influenced by sharia, the religious law of Islam. - Sharia is a comprehensive code of principles that governs both the public and the private lives of persons of the Islamic faith. - Sharia directs many aspects of day-to-day life, including: •Politics •Economics •Banking •Business law •Contract law •Social issues

Distinctiveness of the Mark

- A trademark must be sufficiently distinctive to enable consumers to identify the manufacturer of the goods easily and to distinguish between those goods and competing goods.

What Is Patentable?

- Almost anything is patentable, except: •The laws of nature •Natural phenomena •Abstract ideas

Treaty

- An agreement formed between two or more independent nations - A bilateral agreement is an agreement formed by two nations to govern their commercial exchanges or other relations with one another - A multilateral agreement is formed by several nations.

Manufacturing Abroad

- An alternative to direct or indirect exporting is the establishment of foreign manufacturing facilities. - Typically, U.S. firms establish manufacturing plants abroad when they believe that by doing so they will reduce costs - Costs for labor, shipping, and raw materials may be lower in foreign nations, which can enable the business to compete more effectively in foreign markets.

The major difference between international law and national law is that government authorities can enforce national law

- By definition, a nation is a sovereign entity—which means that there is no higher authority to which that nation must submit. - If a nation violates an international law and persuasive tactics fail, other countries or international organizations have no recourse except to take coercive action. - Coercive action might include: •Economic sanctions •Severance of diplomatic relations •Boycotts •War against the violating nation

Common Law and Civil Law Systems

- Companies operating in foreign nations are subject not only to international agreements but also to the laws of the nations in which they operate - International disputes are often resolved through court systems of individual nations - Generally, legal systems around the globe are divided into: •Common law systems •Civil law systems

Patent Infringement Lawsuits and High-Tech Companies

- Companies that specialize in developing new technology are holders of numerous patents and are frequently involved in patent infringement lawsuits.

Compilations of Facts

- Compilations of facts are copyrightable. - A compilation is "a work formed by the collection and assembling of preexisting materials or data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship."

Registration

- Copyrights can be registered with the U.S. Copyright Office in Washington, D.C.; however, registration is not required. - A copyright owner no longer needs to place the symbol © or the term "Copr." or "Copyright" on the work to have the work protected against infringement.

Distinctiveness of the Mark- Secondary Meaning

- Descriptive terms, geographic terms, and personal names are not inherently distinctive and do not receive protection under the law until they acquire a secondary meaning. - A secondary meaning may arise when customers begin to associate a specific term or phrase with specific trademarked items made by a particular company. •Ex: "Calvin Klein" is associated with designer clothing and goods. • -Whether a secondary meaning becomes attached to a name usually depends on: - How extensively the product is advertised - The market for the product - The number of sales

Expropriation

- The seizure by a government of privately owned business or personal property for a proper public purpose and with just compensation.

Employment at Will

- Employment relationships have traditionally been governed by the common law doctrine of employment at will. -Employment at will - Common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise. •Majority of U.S. workers continue to have the legal status of "employees at will." •Nonetheless, federal and state statutes governing employment relationships prevent the doctrine from being applied in a number of circumstances. •An employer may not fire an employee if doing so would violate a federal or state statute, such as a law prohibiting employment discrimination. •Courts have carved out various exceptions to the employment-at-will doctrine based on: •Contract theory •Tort theory •Public policy

Strong Marks

- Fanciful, arbitrary, or suggestive trademarks are generally considered to be the most distinctive (strongest) trademarks.

Patent Infringement and Foreign Sales

- Foreign firms can apply for and obtain U.S. patent protection on items that they sell within the United States, and U.S. firms can obtain protection in foreign nations where they sell goods.

Franchising

- Franchising is a well-known form of licensing worldwide - The owner of a trademark, trade name, or copyright (the franchisor) licenses another (the franchisee) to use the mark, name, or copyright, under certain conditions, in the selling of goods or services - Franchising allows the franchisor to maintain greater control over the business operation than is possible with most other licensing agreements - In return, the franchisee pays a fee, usually based on a monthly percentage of gross or net sales.

Section 102 Exclusions

- Generally, anything that is not an original expression will not qualify for copyright protection.•It is not possible to copyright an idea. - However, the particular way in which an idea is expressed is copyrightable. - Thus, an idea and its expression must be separable to be copyrightable.

Distinctiveness of the Mark- Generic Terms

- Generic terms that refer to an entire class of products receive no protection, even if they acquire secondary meaning. Ex: "Bicycle," "computer," "aspirin," "thermos"

Patent Infringement

- If a firm makes, uses, or sells another's patented design, product, or process without the patent owner's permission, that firm commits the tort of patent infringement. - Patent infringement may occur even though: •The patent owner has not put the patented product into commerce. •Not all features or parts of a product are copied

Remedies for Patent Infringement

- If a patent is infringed, the patent holder may sue for relief in federal court. - The patent holder can: •Seek an injunction against the infringer -Request damages for royalties and lost profits •If the court determines that the infringement was willful, the court can triple the amount of damages awarded (treble damages). •Seek reimbursement for attorneys' fees and costs

Trademark Dilution- Trademark Dilution Act

- In 1995, Congress amended the Lanham Act by passing the Federal Trademark Dilution Act, which allowed trademark owners to bring suits in federal court for trademark dilution

Statutory Protection of Trademarks-Trademark Dilution Revision Act (TDRA)

- In 2006, Congress further amended the law on trademark dilution by passing the Trademark Dilution Revision Act (TDRA) -Under the TDRA, to state a claim for trademark dilution, a plaintiff must prove the following: 1.The plaintiff owns a famous mark that is distinctive. 2.The defendant has begun using a mark in commerce that allegedly is diluting the famous mark. 3.The similarity between the defendant's mark and the famous mark gives rise to an association between the marks. 4.The association is likely to impair the distinctiveness of the famous mark or harm its reputation.

Common Law Systems

- In a common law system, the courts independently develop the rules governing certain areas of law, such as torts and contracts - Common law rules apply to all areas not covered by statutory law - Although the common law doctrine of stare decisis obligates judges to follow precedential decisions in their jurisdictions, courts may notify or even overturn precedents when necessary.

Manufacturing Abroad- Joint Ventures

- In a joint venture, the U.S. company owns only part of the operation - The rest is owned by local owners in the foreign country or by another foreign entity - All of the firms share responsibilities, as well as profits and liabilities.

direct exporting

- In direct exporting, a U.S. company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for goods.

International Law PT.2

- In essence, international law attempts to reconcile each country's need to be the final authority over its own affairs with the desire of nations to benefit economically from trade and harmonious relations with one another - Sovereign nations can, and do, voluntarily agree to be governed in certain respects by international law, usually for the purpose of facilitating international trade and commerce. - As a result, a body of international law has evolved.

Suggestive trademarks

- Indicate something about a product's nature, quality, or characteristics, without describing the product directly. •Ex: "Dairy Queen" suggests an association between its products and milk, but it does not directly describe ice cream

Indirect exporting

- Indirect exporting occurs when a U.S. company develops sufficient business in a foreign country and establishes a specialized marketing organization there by appointing a foreign agent or a foreign distributor.

Trade secret

- Information or a process that gives a business an advantage over competitors who do not know the information or process. - Trade secrets include, but are not limited to, the following: •Customer lists •Plans •Research and development •Pricing information •Marketing methods •Production techniques

Laws affecting the international legal environment of business

- International law - National law.

Civil Law

- The term "civil law" refers not to civil as opposed to criminal law but to codifiedlaw—an ordered grouping of legal principles enacted into law by a legislature or other governing body.

Sources of International Law PT.2

- International organizations adopt resolutions, declarations, and other types of standards that often require nations to behave in a particular manner. - Disputes with respect to these resolutions and declarations may be brought before the International Court of Justice - United Nations Commission on International Trade Law has made considerable progress in establishing uniformity in international law relating to trade & commerce - One of the commission's most significant creations to date is the 1980 Convention on Contracts for the International Sale of Goods (CISG) - The CISG is similar to Article 2 of the Uniform Commercial Code in that it is designed to settle disputes between parties to sales contracts - It spells out the duties of international buyers and sellers that will apply if the parties have not agreed otherwise to their contracts - The CISG governs only sales contracts between trading partners in nations that have ratified the CISG.

National law

- Law that pertains to a particular nation (as opposed to international law).

There are several ways in which an American firm can manufacture in other countries, including

- Licensing - Franchising - Investing in a wholly owned subsidiary or a joint venture

International Customs

- One important source of international law consists of the international customs that have evolved among nations in their relations with one another - Article 38(1) of the Statute of the International Court of Justice refers to an international custom as "evidence of a general practice accepted as law."

Licensing

- One way to avoid litigation and still make use of another's trademark or other form of intellectual property is to obtain a license to do so.

Employment Discrimination

- Out of the 1960s civil rights movement to end racial and other forms of discrimination grew a body of law protecting employees against discrimination in the workplace •Employment discrimination - Unequal treatment of employees or job applicants on the basis of race, color, national origin, religion, gender, age, or disability; prohibited by federal statutes.

International Principles and Doctrines

- Over time, a number of legal principles and doctrines have evolved in the international context - These principles and doctrines are employed—to a greater or lesser extent—by the courts of various nations to resolve or reduce conflicts that involve a foreign element

Protection of Trade Secrets

- Protection of trade secrets extends to both ideas and their expression. - There are no registration or filing requirements for trade secrets. - Businesses generally attempt to protect their trade secrets by having all employees who use a protected process or information agree in their contracts, or in confidentiality agreements, never to divulge it.

The Doctrine of Sovereign Immunity

- Sovereign immunity - A doctrine that immunizes foreign nations from the jurisdiction of U.S. courts when certain conditions are satisfied - In 1976, Congress codified this rule in the Foreign Sovereign Immunities Act (FSIA) - FSIA exclusively governs the circumstances in which an action may be brought in the United States against a foreign nation, including attempts to attach a foreign nation's property - When applicable, both the act of state doctrine and the doctrine of sovereign immunity tend to shield foreign nations from the jurisdiction of the U.S. courts - As a result, firms or individuals that own property overseas generally have little legal protection against government actions in the countries where they operate.

Statutory Protection of Trademarks

- Statutory protection of trademarks and related property is provided at the federal level by the Lanham Act of 1946.

Lanham Act of 1946

- The Act incorporates the common law of trademarks and provides remedies for owners of trademarks who wish to enforce their claims in federal court.

Copyright Act of 1976

- The Copyright Act of 1976 governs copyrights. - Works created after January 1, 1978, are automatically given statutory copyright protection for the life of the author plus 70 years. - For copyrights owned by publishing houses, the copyright expires 95 years from the date of publication or 120 years from the date of creation, whichever comes first. - For works by more than one author, the copyright expires 70 years after the death of the last surviving author. -When copyright protection ends, works enter into the public domain.

What Is Fair Use?

- The courts determine whether a particular use is fair on a case-by-case basis.

Copyright

- The exclusive right of authors to publish, print, or sell an intellectual production for a statutory period of time. - A copyright has the same monopolistic nature as a patent or trademark, but it differs in that it applies exclusively to works of art, literature, computer programs, and other works of authorship.

Copyright Infringement: "Fair Use" Exception

- The fair use of a copyrighted work is not an infringement of copyright for the following purposes: •Criticism and comment •News reporting •Teaching •Scholarship •Research - In determining whether the use made of a work in any particular case is a fair use, factors to be considered include: 1.The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes 2.The nature of the copyrighted work 3.The amount and substantiality of the portion used in relation to the copyrighted work as a whole 4.The effect of the use upon the potential market for or value of the copyrighted work

Trade dress

- The image and overall appearance of a product. •Ex: The distinctive décor, menu, layout, and style of service of a particular restaurant•Basically, trade dress is subject to the same protection as trademarks

International law

- The law that governs relations among nations. - International customs and treaties are generally considered to be two of the most important sources of international law. - International law may be created:•When individual nations agree to comply with certain standard •Ex: Signing a treaty - When industries or nations establish international standards for private transactions that cross national borders •Ex: A law that prohibits importation of genetically modified organisms

Remedies for Copyright Infringement

- Those who infringe copyrights may be liable for damages or criminal penalties. - Actual damages are based on the harm caused to the copyright holder by the infringement. - Statutory damages, not to exceed $150,000, are provided for under the Copyright Act.• - Criminal proceedings may result in fines and/or imprisonment. - A court can also issue a permanent injunction against a defendant when the court deems it necessary to prevent future copyright infringement.

Employment Discrimination: Title VII of the Civil Rights Act

- Title VII of the Civil Rights Act:•Prohibits job discrimination against covered employees, applicants, and union members on the basis of race, color, national origin, religion, gender - Bans discrimination at any stage of employment, including the hiring process, discipline procedures, discharge, promotion, and benefits•When Title VII applies to the employer, any employee—including an undocumented worker—can bring an action for employment discrimination. •The Equal Employment Opportunity Commission (EEOC) monitors compliance with Title VII.

What Is Protected Expression?

- To be protected, a work must be "fixed in a durable medium" from which it can be perceived, reproduced, or communicated. - Section 102 of the Copyright Act explicitly states that it protects original works that fall into one of the following categories: 1.Literary works (including newspaper and magazine articles, computer and training manuals, catalogues, brochures, and print advertisements) 2.Musical works and accompanying words (including advertising jingles) 3.Dramatic works and accompanying music 4.Pantomimes and choreographic works (including ballets and other forms of dance) 5.Pictorial, graphical, and sculptural works (including cartoons, maps, posters, statues, and even stuffed animals) 6.Motion pictures and other audiovisual works (including multimedia works) 7.Sound recordings 8.Architectural works

Treaties and International Agreements

- Treaties and other explicit agreements between or among foreign nations provide another important source on international law

State and Federal Law on Trade Secrets

- Under Section 757 of the Restatement of Torts, those who disclose or use another's trade secret, without authorization, are liable to that other party if either of the following is true: 1.They discovered the secret by improper means .2.Their disclosure or use constitutes a breach of a duty owed to the other party. -Trade secrets have long been protected under the common law. -The Economic Espionage Act makes the theft of trade secrets a federal crime. -Stealing confidential business data by industrial espionage, such as by tapping into a competitor's computer, is a theft of trade secrets without any contractual violation and is actionable in itself. -Nearly every state has enacted trade secret laws based on the Uniform Trade Secrets Act.

Arbitrary trademarks

- Use common words in an uncommon way that is not descriptive of the product •Ex: "Dutch Boy" as the name for paint

Fanciful trademarks

- Use invented words. •Ex : "Google," "Xerox"

Manufacturing Abroad- Wholly Owned Subsidiaries

- When a wholly owned subsidiary is established, the parent company maintains complete ownership of all the facilities in the foreign country, as well as total authority and control over all phases of the operation.

Copyright Infringement

- Whenever the form or expression of an idea is copied, an infringement of copyright has occurred. - The reproduction does not have to be exactly the same as the original, nor does it have to reproduce the original in its entirety.

Export

-Export - To sell products to buyers located in other countries. - Exporting is the simplest way to engage in international business transactions - Exporting can take two forms: 1.Direct exporting 2.Indirect exporting

Copyright Protection for Software

-Generally, copyright protection extends to: •Those parts of a computer program that can be read by humans, such as the "high-level" language of a source code •The binary-language object code, which is readable only by the computer •The overall structure, sequence, and organization of the program - Typically, copyright protection is not extended to the "look and feel" of computer programs, which includes: •The general appearance •Command structure •Video images •Menus •Windows

Export controls- Export quotas

1.Export quotas •Quota - A government-imposed trade restriction that limits the number, or sometimes the value, of goods and services that can be imported or exported during a particular time period.

Generally, copyright owners are protected against the following:

1.Reproduction of the work 2.Development of derivative works 3.Distribution of the work 4.Public display of the work

Export Controls-Restrictions on technology exports

2.Restrictions on technology exports •Under the Export Administration Act, the flow of technologically advanced products and technical data can be restricted.

Exporting Controls- Incentives and subsidies

3.Incentives and subsidies •The United States (along with other nations) uses incentives and subsidies to stimulate exports and thereby aid domestic businesses.

Intellectual property

Property resulting from intellectual, creative processes. •Ex: - Patents, trademarks, copyrights, trade secrets

Export Controls

•Article 1, Section 9, of the U.S. Constitution provides that "No Tax or Duty shall be laid on Articles exported from any State." •Thus, Congress cannot impose any export taxes. •Congress can, however, use a variety of other devices to restrict or encourage exports, including the following: 1.Export quotas 2.Restrictions on technology exports 3.Incentives and subsidies

Investment Protections- Expropriation

•Expropriation, which occurs when property is taken and the owner is paid just compensation, generally does not violate accepted principles of international law. •Confiscating property without compensation (or without adequate compensation), in contrast, normally violates international law. •Few remedies are available for confiscation of property by a foreign government. •Claims are often resolved by lump-sum settlements after negotiations between the United States and the taking nation. •Because the possibility of confiscation may term-86deter potential investors, many countries guarantee compensation to foreign investors if their property is taken.term-83 •A guaranty can be in the form of national constitutional or statutory laws or provisions in international treaties.

Regulation of Specific Business Activities

•International business relationships can affect the economies, foreign policies, domestic politics, and other national interests of the countries involved. •For this reason, nations impose laws to restrict or facilitate international business. •Controls may also be imposed by international agreements.

Import Controls- Quotas and Tariffs

•Limits on the amounts of goods that can be imported are known as import quotas. •Tariff - A tax on imported goods. •A tariff is usually a percentage of the value of the import, but it can be a flat rate per unit .•Tariffs raise the prices of imported goods, causing some consumers to purchase domestically manufactured goods instead of imports.

The World Trade Organization

•Most of the world's leading trading nations are members of the World Trade Organization (WTO). •To minimize trade barriers among nations, each member country is required to grant normal trade relations (NTR) status to other member countries.

Minimizing the Trade Barriers

•Restrictions on imports are also known as trade barriers. •The elimination of trade barriers is sometimes seen as essential to the world's economic well-being. •Various regional trade agreements and associations help to minimize trade barriers between nations.

Trademark Registration

•Trademarks may be registered with the state or with the federal government •To register for protection under federal trademark law, a person must file an application with the U.S. Patent and Trademark Office in Washington, D.C.•Registration of a trademark with the U.S. Patent and Trademark Office gives notice on a nationwide basis that the trademark belongs exclusively to the registrant. •The symbol ® indicates that a mark has been registered. •Under current law, a mark can be registered:1.If it is currently in commerce2.If the applicant intends to put it into commerce within six months •Registration is renewable between the fifth and sixth years after the initial registration and every ten years thereafter (every twenty years for trademarks registered before 1990).

Trademark Infringement

•Whenever a trademark is copied to a substantial degree or used in its entirety by another, intentionally or unintentionally, the trademark has been infringed (used without authorization) .•When a trademark has been infringed, the owner of the mark has a cause of action against the infringer. •To succeed in a trademark infringement action, the owner must show that the defendant's use of the mark created a likelihood of confusion about the origin of the defendant's goods or services. •The most commonly granted remedy for trademark infringement is an injunctionto prevent further infringement. •A trademark owner that successfully proves infringement can recover: •Actual damages •The profits that the infringer wrongfully received from the unauthorized use of the mark •Attorneys' fees