Chapter 13, Chapter 17, Chapter 18, Test 3 Court Cases

Commerce Control List/ Commerce Country Chart

used to determine if a license is needed for export; these documents identify items by an export control classification number, give reasons for control for each, and tell whether a license is required for export to specific countries

multilateral sanctions

these sanctions carry the backing of international law and the force of international moral opinion; they are generally more effective than sanctions without universal support

value added tax (VAT)

EU tax on purchases that is much higher than the US sales tax on retail goods

Compaq Computer Corp. Subsidiaries v. Commissioner of Internal Revenue

-Compaq manufactures PCs and set up a PCA subsidiary in Singapore (PCA is a part of the pc) -they purchased PCAs from its subsidiary at actual market prices based on the purchases of similar PCAs from unrelated subcontractors that were primarily located in the US, with a "turnkey" adjustment based on industry practices and not on actual transactions -IRS argued that this pricing resulted in too much profit being left in low-tax Singapore and a cost-plus approach should have been used -IRS declared a deficiency in compaq's returns and the company appealed to the tax court -court found that Compaq satisfied its burden of proving the prices in intracompany transactions were consistent with arm's length prices and told the IRS to reduce its deficiency notes accordingly

Briggs & Stratton Corp v. Baldrigde

-Arab nations boycott Israel- won't buy products from Israel or do business w/ anyone who does business w/ Israel -US forbid US companies from assisting w/ boycott on Israel -manufacturer (Briggs) of engines was shipping them around the world (including some Arab nations and Israel) and ended up on the blacklist from Arab nations -The Arab nations sent him a questionnaire to discourage him from doing business w/ Israel -the man was not required to answer under anti-boycott laws and was supposed to call the commerce department and inform the of the situation -he instead just answered back "no to the questions" and was removed from the backlist -he brought an action against the officials charged with enforcing the act and regulations because he was financially injured and said they violated the Constitution -the court said that the anti-boycott regulations apply to all US people/ businesses and it might have hurt him more than average, but that is not their fault and the government did not seize/ restrain his property or take away his rights

New Zealand- Comite Interprofessionel du Vin de Champagne v. Wineworths Group, Ltd.

-Australian company sought to sell sparkling wine in NZ with a bottle label that included the word champagne -The Comite Interprofessionnel du Vin de Champagne from Champagne, france sought an injunction to stop them from "passing" off their sparking wine as wine actually produced in the region -issue of geographical indications -court enjoined the Australian company from using the word in NZ

Bank of America Nat'l Trust & Savings Assn. v. US

-BOA conducted general banking business in Thailand, the Philippines, and Argentina and paid the jurisdictions various types of taxes -the company demanded a credit for most of these on its federal income tax returns or by a refund claim, but the IRS disallowed a number of the claims and they appealed to the trade commissioner -trade commissioner held for BOA w/ respect to some of the taxes -question was what are these taxes considered (foreign tax credit is a complex system w/ complex limitations) -court dismissed the petition for a tax credit

Lacoste v. Crocodile International

-Lacoste started by tennis player; Crocodile brand developed around the same time in Asia and there was no problem (30s and 40s) -after globalization, they start to overlap and sued e/o (unclear who started first, if they stole from e/o) -just because you own a symbol does not mean you own everything (Lacoste cannot claim all crocodiles)

US v. Mandel

-export controls case- these controls are run by BIS w/in Commerce -if you want to export product of concern to a place of concern, you must apply to BIS for license -people wanted to ship high tech equip, applied for license, were denied, and shipped anyways (They got caught) -argued it made no sense for their stuff to be restricted anyways (challenged Commerce on their "dangerous" claim) -court said they were not even going to get into it because it was a political question (other branch makes decisions on what to control) -exempt from judicial review

Apple, Inc. v. Samsung Electronics Co. Ltd.

-started in N CA in 2011 -Apple brught suit in US for home advantage while Samsung did the same in Korea (worldwide constellation of litigation) -Apple got a billion dollar jury verdict in 2012 but the SC reversed it -Samsung was found liable in US courts but there was question as to the damages -courts originally looked at Patent act (seems to suggest if you steal a patent you pay what you made) but Samsung says they stole one piece of the phone and shouldn't have to pay profits from entire phone -penalties total hundreds of millions (small compared to profits)-- many settlements and jury verdicts

gray market/ parallel trade

The importation of merchandise produced and sold abroad and then imported back into the US for sale in competition with the US trademark owner

soft currency

a currency that is not easy to exchange for other currencies

countertrade

a form of trade in which all or part of the payment for goods or services is in the form of other goods or services

utility patent

a patent that protects the functionality of the invention; patent that protects a novel and useful process, machine, manufacture, or composition of matter

countertrade

a popular form of currency inconvertibility; reciprocal arrangement between the buyer and seller for the sale of goods or services intended to minimize the outflow of foreign exchange from the buyer's country

modern-traditional theory

a theory that dominates thinking on expropriation and nationalization in developed countries; permits takings but imposes certain requirements on the nation exercising its power; exercise of this right must be for a public purpose, nondiscriminatory, and accompanied by prompt, adequate, and effective compensation

traditional theory

a theory that dominates thinking on expropriation and nationalization in developed countries; prohibits all takings of foreign property

export

actual shipment or transmission out of the US in any manner or relating or transferring of technology or software to a foreign person in the US

export credit agencies

agencies in developed nations that promote investment from their own countries

reinsurance treaty

agreement among insurance companies that spreads the risk among its members; the underwriter can commit the resources of the entire group after negotiating the transaction with the US investor

validated end-user program

allows qualified exporters to pre-approve shipments to foreign trusted customers, business partners, and subsidiaries of American companies of certain high-technology or dual-use items without the need for individual export licenses

franchising

arrangement in which the licensor permits the licensee to sell certain goods under the licensor's trademark or service mark under the terms of a franchising agreement

useful

capable of industrial application; part of patent definition

tied-purchase clauses

clauses that require the franchisee to buy certain goods from the franchiser

dual-use items

commercial items that may also have military, terrorist, or "proliferation" uses (relating to the proliferation of nuclear, chemical, or biological weapons)

counter purchase agreement

common type of countertrade; involves the sale of goods to a buyer, often a foreign government, which requires as a condition of the sale that the seller buy the other goods produced in that country

Consolidated Screening List

compiled list of potential customers who are not allowed to receive controlled items; lists published by the Department of commerce, Department of state, and department of treasury

short supply controls

controls used to protect the US economy from excessive foreign demand for scarce materials (used for food, medicine, and natural resources)

national security controls

coordinated with US allies on the basis of the Wassenaar Arrangement; export controlled to particular countries for reasons of national security if the item would make "a significant contribution to the military potential of any other country or combination of countries which would prove detrimental to the national security of the US"

soft blockages

delays in processing conversion requests by the local authorities

exclusive rights

demanded when exploration of the licensed IPR requires significant financial or other resources of the licensee; enhances its chances of earning an adequate ROI

barter

direct exchange of goods for goods or services

foreign branch

division of the home country corporation that is not a separate legal person

creeping expropriation

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

Electronic Export Information (EEI)

electronic filing required for each export shipment leaving the US

unitary index adjustment factors

eliminates the problem of disclosing confidential information; parties provide for formulaic adjustment of payment terms based on an accepted unitary index

conscious avoidance

exporter purposefully avoided learning the truth about an end user or destination that might have had a bearing on his/her license application

extraterritorial jurisdiction

nation's ability to extend the power of its export control laws over its goods and technology once they have left territory

hard blockages

occur when the foreign government passes a law that prevents the conversion or transfer

parallel exchange

formed when foreign investors form a consortia to trade local soft currency; the investors, all committed to the local incontrovertibility risk, spread that risk over a larger group, with the hopes of reducing the vagaries of local bureaucracy

right of priority

from Paris Convention; provides that the date of a applicant's foreign application is deemed to be the same date as the date of the applicant's original application of the same invention, so long as the foreign application was filed before the first anniversary of the original application; principle prevented a race to the patent office in other countries after the original filing

priority claim

give applicant business 30 months after filing to begin the administrative processing of the application in the countries in which it wishes to obtain protection; allows applicant to lock in an application date while raising capital on the basis of the patent filing

comity

good relations with nations

currency exchange rights

if investor proposes bringing a high desired industry to a soft currency nation, it can negotiate with the government in advance for preferential access to hard currency, resulting in this

currency inconvertibility

inability to convert currency

technology

information necessary for the development, production, use, or operation of items, and in almost any form

bad faith

intentional wrongful behavior; in the uniform Domain Name Dispute Resolution Policy (UDRP), it includes negligence without a finding of intent

prior approval

intrusive regulatory scheme and are indicative of relatively protectionist government policy; some delegate specific types of authority to government and contain relatively objective standards while in others, laws are written in general terms and vest broad interpretive powers in the bureaucracy

foreign direct investment

investor owns and actively controls productive assets of ongoing business concerns in a foreign country

export controls

laws and regulations that govern the licensing of certain goods and technology exported from the U.S. or released or transferred to anyone who is not a US citizen or permanent resident (Within or outside the US)

franchise tax laws

laws that impose taxes based not he franchiser's worldwide operations even if local operations fizzle; these are new laws in a few nations the are specifically directed at franchisers

anti boycott laws

legal responses by governments that make it unlawful for their citizens or companies to participate in a boycott

royalty

license fee

fair, reasonable, and nondiscriminatory (FRAND) licensing

licensing that can reduce the risk of patent hold-up and perceived advantages of litigation (ex: keeping competitors out of the marketplace); licensing applies only in limited circumstances and has not curbed litigation in a meaningful way

license

limited permission to use the US firm's trademarks, copyrights, or know-how in making products for sale in the vicinity of the foreign company's country

passive investment

minority investment that involves 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

Automated Commercial Environment (ACE)

online system of US CBP containing information about the shipment sent to various federal agencies upon receiving an export license

boycott

organized refusal of one or more nations, often backed by economic sanctions, to trade with one or more other nations

design patent

patent protecting the ornamental features of an article of manufacture

profit margin preservation provisions

price or payment to a foreign investor is adjusted periodically to maintain the same profit margin; can disclose the foreign company's cost structure, which is confidential information

insurance syndicates

private pools of money provided by investors to insure specific projects on a case-by-case basis

gray market goods/ parallel imports

products imported back through gray market

export management and compliance program

programs used to ensure compliance

copyrights

protection of literary and artistic works

patent

protection of products or processes considered new, nonobvious, and useful

deemed export

release or transfer of any item subject to control, including technology or software to a foreign person in the US

deemed reexport

release or transfer of na item from someone who was licensed to receive it to a different foreign person

fundamental research

research in science, engineering, or mathematics, the results of which ordinarily are published and shared broadly within the research community, and for which the researchers have not accepted restrictions for proprietary or national security reasons

field of use limitations

restrict the applications for which the licensee may employ the IPR

output or customer restrictions

restriction used if the licensor plans to use the license as a source of products for their own distribution requirements

active investment

results in the investor having ownership interest in the foreign business

import substitution rights

rights available when preferential currency exchange rights are not available; rights available when a new venture will manufacture a product in a soft currency country that the nation had previously imported

currency risk

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

political risk

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

notification registration

scheme more open to technological transfer; however, these countries make exceptions for areas of heightened concern and require specific approval of technology transfer agreements

foreign subsidiary

separate corporate entity organized under the laws of the foreign host country

nationalization

taking of an entire industry or natural resource as part of a plan to restructure the nation's economic system

expropriation

taking of an isolated item of property

transfer pricing

tax problem when related parties like a parent and subsidiary are free to fix prices to one another because the market forces do not discipline the prices

net book value

tax-related depreciated cost of assets without regard to whether there has in fact been true depreciation in value

foreign availability

the controlled item, or one of comparable quality, is "available-in-fact" from non-US sources in sufficient quantities so that any attempt to control for national security purposes would be ineffective

trade creditors

the entities that sell supplies or services to a venture

fluctuation risk

the possibility that the currency of the country in which the US investor has put its money will devalue against the US dollar

biopiracy

when a government extracts plants and animals indigenous to an emerging nation for research (with the help of local knowledge), alters the plant/ animal, and then obtains patents related to this research without providing the host country with compensation or affordable access to the inventions

repatriated

when income is paid out to the US person, typically in the form of a dividend

political risk analysis

when the enterprise retains a firm or its own personnel to analyze a host country's risk fo nationalization/ expropriation, as it would study another business problem

privatization

when the national sovereign transfers a government-owned asset to private parties

buy-back agreement

when the provider of the equipment or technology used in manufacturing will receive, as its payment, a portion of the goods manufactured by the suppliers equipment or in the factory in which the equipment is installed

double taxation

when the same item of income is taxed by two different tax authorities

geographical indications

where a product is marketed by reference to a geographic region; common with wine and spirits

reexport

refers to the shipment or transfer of American-controlled items or technology from one foreign country to another foreign country or foreign person

sanction

regulation that restricts or prohibits certain relationships with specified foreign countries, entities, or individuals because of their support for international terrorism, the proliferation of weapons of mass destruction, for international drug and narcotics trafficking, or other threats to national security

language politics

situation where laws require that companies conduct business in a certain language; these exist in regions of a few countries

grant back

something the licensor might seek if there is reason to believe the licensee would not have had the opportunity to develop these useful technologies without the know-how supplied by the licensor; seeks this for itself in ownership or at least the right to use (without compensation) the new tech

cybersquatting

the registering of a domain name with the intent to profit from the goodwill of a trademark belonging to another; the squatter generally offers to sell the domain to the company that owns the trademark at an inflated price

inconvertibility risk

the risk that the government of a country with soft currency will hinder the foreign entrepreneur from trading the foreign currency back into US dollars

geographical limitations

type of restriction of a license with specific limits on the country it can be used in

diversion

unlawful transfer, transshipment, rerouting or reexporting of controlled goods or technology from one destination to which the goods or technology were legally shipped to another destination or foreign person who has not been licensed to receive the items

OBB Personenverkehr AG v. Sachs

-CA resident Sachs purchased a Eurail pass on the internet from a Mass based travel agent -Sachs fell from a platform onto the tracks while attempting to board a train; the train crushed her legs and she sued OBB Personenverkehr, a Eurail group railway -she sued OBB in the US but they claimed sovereign immunity and moved to dismiss the suit for lack of subject matter jurisdiction -case dealing with claims "based upon" an act in the US where the Essence of the claim is outside the US-- put an end to this -she tried to present new argument to SC; in lower court, she based claims on the sale of the Eurail pass -SC reversed decision of Court of Appeals

In re Independent Service Organizations Antitrust Litigation CSU et al v. Xerox Corporation

-CSU sued Xerox, claiming that the copier manufacturer's refusal to sell patented parts and copyrighted manuals and to license the copyrighted software violated antitrust laws -the district court found in favor of the copier manufacturer and CSU appealed -Court of Appeals held that the manufacturer's refusal to sell or license its patented parts did not violate antitrust laws

Diamond v. Chakrabarty

-Chakrabarty sought to patent a genetically engineered bacteria but the USPTO rejected the claim to the bacterium because living things are not patentable -court decided the patent of living organisms was allowed and said this patent would not end genetic research so the patent was not harmful to development of research

Kirksaeng v. John Wiley and Sons

-Cornell student from Thailand buys Thai texts, resells them to US students (he knows they pay way more than necessary here) -textboook company said he wasn't allowed to take it from the market it was supposed to be in; student said he could bc he had no agreement w/ them, bought the books, and could do whatever he wanted -SC said it was fine- first sale rule (after first sale, you don't get to control market in which it lands); side w/ student

A. Bourjois & Co. v. Katzel

-French cosmetic company with a business in the US sold the business to a US company (Bourjois) along with its trademark for face powder; the company then reregistered the trademark and continued with the business, using the same packaging and trademark for the product -Katzel bought a quantity of the same powder in France and resold it in the US in boxes resembling theirs, but with its own labels-- the company sued for copyright infringement and sought a preliminary injunction restraining the defendant from infringing its copyrights (said he can't use it) -lower courts had decided not to grant the preliminary injunction, but the SC reversed the decision

ADC Affiliate et al. v. The Republic of Hungary

-Hungary nationalized private airport, terminating existing LT leases on different stores/ parts of the airport (business booms just after this) -these former owners were angry and wanted to be paid back for the money they would have been making -it is decided that yes they have to pay, but what do they pay (time of taking value or time of award) -international law says you base compensation at time of award; since they had no language in their BIT about timing of compensation, they went with the international rule (which is contrary to US practice/ belief)

INA Corp. v. Islamic Republic of Iran

-INA Corp, an insurance company, acquired 20% of shared of Shargh, Iranian insurance company -proposed investment was approved by the government of Iran in 1977 -In 1979, Iran nationalized the insurance and credit enterprises and INA sued for what was the going value of their shares + interest and legal costs -issue was not if nationalization took place (duh) but the amount of compensation that should be paid to shareholders as a consequence (if any) -the Iran-US Claims tribunal awarded INA the amount it sought plus insurance from the date of nationalization -the Tribunal believed that with such a small investment amount shortly before nationalization, the international law admits compensation in an amount equal to the fair market value of the investment

US v. Mousavi

-Irani man moved to US and became legal citizen -ran a business that organized travel packages to Mecca for pilgrimages -during an audit, it was found that he had an unreported income from a Kuwait company to help develop his business in Iran (including a pipeline from Iran to Kuwait) and he had no license to transact business -he was convicted in court for violating sanctions against Iran but he argued that he did not willfully intend to violate a specific law or regulation (appealed) -court said it does not matter, the defendant acted with knowledge that his conduct was unlawful and the government did not have to prove he knowingly violated a specific prevision of law

Mobile Communication Service, Inc. v. WebReg, RN

-Mobile communication service did business under the name Mobilcom wanted the domain name mobilcom.com, which was registered by WebReg -Mobilcom wanted the rights to the name and claimed WebReg had no rights or legitimate claim to the name and that they were using it in bad faith -WebReg had offered to sell the name for $35,000 but Mobilcom said they had a pattern of doing this with domain names -court ordered the name be given to Mobilcom

National Thermal Power Corp. v. The Singer Co.

-National thermal power corp entered into a contract with Singer to supply equipment and complete some projects in India -dispute arose among the groups and Singer was granted an award from the ICC tribunal and sought to enforce the award under the Indian Foreign Awards act, which limits the role of Indian courts to recognition and enforcement of the foreign award -NTPC argues against it and claimed that because Indian law governed the contract, it was not a foreign award and the whole case should be retried in India (despite the fact that the contract claimed clear submission to the ICC) -Courts dismissed this claim and they appealed to India's SC -SC found that if Indian law governs a contract, international arbitration is void-- ordered a retrial of the case

W.S. Kirkpatrick v. Environmental Tectronics Corp.

-Nigerian govt awarded a military contract to Kirkpatrick and ETC, the losing bidder, investigated the circumstances under which the contract was awarded and learned the winner had bribed key govt officials -US DOJ confirmed the findings; ETC brought lawsuit against Kirkpatrick in US and Kirkpatrick moved to dismiss the claim on the basis that the Act of State Doctrine prohibited federal court from considering the matter (the court granted the motion, but the Court of appeals reversed the district court) -SC affirmed Court of Appeals decision, which permitted ETC to proceed with its lawsuit

TVBO Production Limited v. Australia Sky Net Pty Limited

-TVB based in Hong Kong owned a Chinese show called Twin of Brothers-- its subsidiary TVBO held the copyright to each episode in all countries except Hong Kong -the company filed a complaint against 4 respondents in the Federal Court of Australia and accused them of working together to intercept and rebroadcast the show in Australia in violation of Australia's Copyright Act and the International Copyright Regulations (the fourth respondent, a Taiwan-based company, refused to appear in the lawsuit) -court found the defendants guilty of copyright infringement and granted TVBO relief

US v. Zhi Yong Guo

-a man was receiving shipments of camera equipment- smuggling it without a license -he argued the whole thing was complicated and export restrictions were too vague/ complex to be enforceable, especially to an individual -courts agreed it was complex, but it was still enforceable (Too bad) -ignorance is not an excuse- he should have known he needed a license for the shipment and failed to get one

tax haven

country where the effective tax rate on a relevant item of income is very low or zero

inconvertibility or nontransfer insurance policy

investors can purchase these policies to insure against hard blockages or soft blockages (For a higher fee); type of political risk insurance

non obvious

involve an inventive step; part of patent definition