Chapter 7 Study Questions

(p. 215) Which of the following indicates the exportability status of the item based on the ECCN? A. Commerce Control List B. Entity List C. Common List D. Priority Export List E. International Trade List

A The ECCN leads to a description in the Commerce Control List (CCL), which indicates the exportability status of the item.

(p. 190) The World Court can adjudicate disputes between which of the following? A. Disputes between governments B. Disputes between a company and a government C. Disputes between two companies D. Disputes between a private citizen and a government E. Disputes between trade bodies of various countries

A The World Court can adjudicate disputes between governments, whereas the other two situations must be handled in the courts of the country of one of the parties involved or through arbitration.

(p. 187) The basis for which of the following is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings? A. Common law B. Code law C. Islamic law D. Marxist-socialist tenets E. Legal tradition

A The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings.

. (p. 187) If law is founded on tradition, past practices, legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings, it is called: A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

A The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings.

(p. 199) Which of the following is NOT one of the traditional remedies by American companies to protect intellectual property? A. Threats to withdraw products from country B. Complaints to U.S. government and WTO C. Negotiation and dispute resolution D. Preventative steps such as local representation E. Complaints to country's government

A The traditional, but relatively feeble, remedies for American companies operating in countries such as China are several: (1) prevention, that is, engage local representation and diligently register IP with the appropriate agencies; (2) pursue negotiation and alternative dispute resolution; (3) complain to the Chinese authorities; and (4) complain to the U.S. government and World Trade Organization (WTO).

(p. 191) In the usual _____ procedure, parties select a disinterested and informed party or parties to sever as a referee to determine the merits of the case and make a judgment that both parties agree to honor. A. arbitration B. informal settlement C. conciliation D. litigation E. coercion

A The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor.

(p. 190) In international commercial disputes, jurisdiction is generally determined in any of the following ways EXCEPT: A. on the basis of the money involved in a contract (who gains the most). B. on the basis of jurisdiction clauses included in contracts. C. on the basis of where a contract was entered into. D. on the basis of where the provisions of the contract were performed. E. on the basis of legal documents that define the business transaction.

A When international commercial disputes must be settled under the laws of one of the countries concerned, the paramount question in a dispute is: Which law governs? Jurisdiction is generally determined in one of three ways: (1) on the basis of jurisdictional clauses included in contracts, (2) on the basis of where a contract was entered into, or (3) on the basis of where the provisions of the contract were performed.

(p. 187) _____ is considered complete as a result of catchall provisions found in most of this type of law's system. A. Common law B. Code law C. Islamic law D. Marxist-socialist tenets E. Legal tradition

B Common law is recognized as not being all-inclusive, whereas code law is considered complete as a result of catchall provisions found in most code-law systems.

(p. 206) According to Canadian law, what is the standard expected by courts in Canada in determining whether a representation is false or misleading? A. De Novo standard B. Credulous person standard C. Clearly Erroneous standard D. Arbitrary and Capricious standard E. Discretionary standard

B Courts have been directed by Canadian law to take into account, in determining whether a representation is false or misleading, the "general impression" conveyed by the representation as well as its literal meaning. The courts are expected to apply the "credulous person standard," which means that if any reasonable person could possibly misunderstand the representation, the representation is misleading.

(p. 200) A creative way for intellectually property rich companies to make money in China is ___. A. enlist the Chinese government to sell their products B. to charge what the market will bear C. to sell older instead of the latest versions of their products D. to sell only in select populated areas, i.e., major cities E. to provide an extreme discount on next purchase

B Going by Warner Bros. example, the authors suggest an excellent way for IP-rich firms to make money in China currently and in the near future, using the oldest pricing strategy of all: Charge what the market will bear.

(p. 195) According the press on the topic, which of the following countries is the biggest piracy problem? A. Myanmar B. China C. Ukraine D. Finland E. Pakistan

B Judging from the press on the topic, one might conclude that China is the biggest piracy problem.

(p. 191) In settling international commercial transaction disputes, which of the following methods accounts for the majority of settlements? A. Criminal suits B. Conciliation C. Arbitration D. Litigation E. Coercion

B Most disputes that arise in commercial transactions are settled informally. Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.

(p. 214) Which of the following are the licenses required for products exported from the United States? A. International or bilateral license B. General or a validated license C. Single or multiple license D. Exporter or third-party license E. Shipment license or agent license

B Products exported from the United States require a general or a validated export license, depending on the product, where it is going, the end use, and the final user.

(p. 212) Which of the following U.S. government agencies oversees antitrust enforcement in international commerce? A. Department of State B. Department of Justice C. Department of Commerce D. Department of Defense E. Department of Home Land Security

B The Antitrust Division is committed to controlling foreign transactions at home or abroad that have a substantial and foreseeable effect on U.S. commerce. When such business practices occur, there is no question in the Antitrust Division of the Department of Justice that U.S. laws apply.

(p. 198) Which of the following is the most comprehensive multilateral agreement on intellectual property to date? A. World Intellectual Property Organization Charter B. Trade-Related Aspects of Intellectual Property Rights C. Inter-American Convention Agreement D. The Madrid Arrangement E. Paris Agreement for the Protection of Industrial Property

B The Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, a major provision of the World Trade Organization, is the most comprehensive multilateral agreement on intellectual property to date.

(p. 187) The basis for _____ is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. A. litigation B. common law C. code law D. constitutional rights E. intellectual property

B The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings.

(p. 188) Islamic law is known as the ___. A. Ulema B. Jihad C. Fatwa D. Shari'ah E. Barakah

B The basis for the Shari'ah (Islamic law) is interpretation of the Koran.

(p. 187) Under common law, ownership is established by _______; under code law, ownership is determined by ___. A. heredity; shareholding B. use; registration C. tradition; legal right D. legal right; patent E. shareholding; use

B Under common law, ownership is established by use; under code law, ownership is determined by registration.

(p. 193) Which of the following is usually placed in the arbitration clause that is becoming standard in many international contracts? A. The preferred court/legal body of arbitration. B. The place of the arbitration (city and/or country). C. The titles of the arbitrators to be involved. D. The age of the arbitrators to be involved. E. The nationalities of the arbitrators.

B While preparing contracts and other legal documents, including the number of arbitrators, the place of arbitration (city and/or country), and the language of the arbitration in the clause is also useful.

(p. 207) Which of the following countries has enacted the most stringent green marketing laws that regulate the management and recycling of packaging waste? A. Britain B. France C. Germany D. United States E. Japan

C Germany has passed the most stringent green marketing laws that regulate the management and recycling of packaging waste.

(p. 191) Ralph Richards has been attempting to solve a problem that his company has with a contract default by the Dutch government. He has tried conciliation but the two parties could never find any common ground on which to begin a fruitful negotiation for settlement. Which of the following will most likely be the course of action that both of the two parties will try next? A. Mediation B. Informal settlement C. Arbitration D. Litigation E. Coercion

C If conciliation is not used or an agreement cannot be reached, the next step is arbitration.

(p. 197) In a common-law country, ownership of intellectual property rights is established by "prior use versus registration." What does the phrase "prior use versus registration" mean? A. One must register a trademark to gain rightful ownership of it. B. One must pay for the right to own a trademark. C. Whoever can establish first use of a trademark is typically considered the rightful owner. D. Ownership of a trademark can only be established in a court of law. E. Ownership of a trademark is global and is established by the United Nations.

C In the United States, a common-law country, ownership of IP rights is established by prior use —whoever can establish first use is typically considered the rightful owner.

(p. 210) The _____ of the United States makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. A. Constitution B. Bill of Rights C. Foreign Corrupt Practices Act D. Best Practices Act E. International Codes of Law

C The Foreign Corrupt Practices Act (FCPA) makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Stiff penalties can be assessed against company officials, directors, employees, or agents found guilty of paying a bribe or of knowingly participating in or authorizing the payment of a bribe.

(p. 196) Which of the following commonly counterfeited products has the potential for doing the greatest harm to the consuming public? A. Toys B. CDs C. Pharmaceuticals D. Software E. Clothing

D Although counterfeit CDs, toys, and similar products cost companies billions of dollars in lost revenue and have the potential of damaging the product's brand image, the counterfeiting of pharmaceuticals can do serious physical harm.

(p. 207) Which of the following acts developed by the European Union erases legal and trade differences that have existed for decades between the member nations? A. European Sanctity Act B. European Antitrust Act C. European Unification Act D. Single European Market Act E. No European Union Act exists

D As the Single European Market Act is implemented, many of the legal and trade differences that have existed for decades will vanish.

(p. 189) Because of political changes in the late twentieth century, which of the following countries has had to build from scratch an entire commercial legal system? A. France B. Germany C. Taiwan D. Russia E. Saudi Arabia

D Central European countries such as the Czech Republic and Poland had comprehensive codified legal systems before communism took over, and their pre-World War II commercial legal codes have been revised and reinstituted. Russia and most of the republics of the former Soviet Union and China have had to build from scratch an entire commercial legal system.

(p. 195) According to the text Vietnam, Russia, Japan and _____ made major progress in reducing software piracy from 2003 to 2006. A. Tunisia B. India C. Iran D. China E. Myanmar

D China has moved fast off the list of 20 worst piracy rates. At this writing, it ranks #25 and piracy has fallen to 80 percent, down from 92 percent just a few years earlier.

(p. 186) Another term for code law is: A. business law. B. common law. C. religious law. D. civil law. E. universal law.

D Civil or code law is derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries.

. (p. 186) Civil or code law was derived from which of the following? A. English law B. Economic law C. Greek law D. Persian law E. Roman law

D Civil or code law is derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries.

(p. 07-5) One counterfeiting problem for international marketers is: A. the ease with which consumers can tell the difference between real and counterfeit products. B. the theft of products by pirates during shipping. C. government regulations legitimizing counterfeiting. D. collusion between contract manufacturers and illegitimate sellers. E. the worldwide availability of duplication software

D Collusion between the contract manufacturer and illegitimate sellers for law enforcing authorities.

(p. 191) A nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences is called: A. litigation. B. informal settlement. C. arbitration. D. conciliation. E. coercion.

D Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.

(p. 201) _____ buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price. A. Patent trolls B. Server farms C. Domain name registries D. Cybersquatters E. Universal resource locators

D Cybersquatters buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price.

(p. 187) Laws governing _____ offer the most striking differences between common-law and code-law systems. A. international trade B. civil disputes C. criminal offence D. intellectual property E. domestic industry

D Laws governing intellectual property offer the most striking differences between common-law and code-law systems.

(p. 193) Most arbitration is successful, but success depends on the: A. amount of the judgment. B. personalities of the complainants. C. nationalities of the complainants. D. willingness of both parties to accept the arbitrator's rulings. E. amount of money involved in the dispute.

D Most arbitration is successful, but success depends on the willingness of both parties to accept the arbitrator's rulings.

. (p. 194) One authority suggests that settlement of every dispute should follow four steps. Which of the following is considered to be the first step in this process? A. Conciliate B. Arbitrate C. Coerce D. Try to placate the injured party E. Litigate

D One authority suggests that the settlement of every dispute should follow four steps: first, try to placate the injured party; if this does not work, conciliate, arbitrate, and, finally, litigate.

(p. 189) Under ___, the legal system is subordinate to prevailing economic conditions. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

D Socialist economies like the former Soviet Union and China built up entire commercial legal system under the premise that law, according to Marxist-socialist tenets, is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms have had to be developed.

(p. 204) All countries have laws regulating all of the following marketing activities EXCEPT: A. promotion. B. product development. C. labeling. D. channels of distribution. E. production volume.

E All countries have laws regulating marketing activities in promotion, product development, labeling, pricing, and channels of distribution.

(p. 210) U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect: A. the competitive balance of world trade. B. the competitive balance of free competition inside the U.S. C. relationship with the world community. D. the overall balance of payments of the United States. E. the national security of the United States.

E American firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell products to a country in which the sale is considered by the U.S. government to affect national security.

. (p. 188) Apart from intellectual property laws, another illustration of how fundamental differences in the common and code systems can cause difficulty is: A. civil laws. B. laws governing export and import. C. heredity laws. D. criminal laws. E. in the performance of a contract.

E Apart from intellectual property laws, another illustration of how fundamental differences in the common and code systems can cause difficulty is in the performance of a contract

(p. 214) The Department of Commerce has published a revised set of export regulations to alleviate many of the problems and confusions of exporting and to expedite the process. What is it called? A. Agreement on International Trade and Negotiations B. Export-Import Manual C. International Trade Regulations D. Export Charter E. Export Administration Regulations

E The volume of exports and the number of companies exporting from the United States have grown spectacularly over the last decade. In an effort to alleviate many of the problems and confusions of exporting and to expedite the process, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations (EAR).

(p. 193) The first step that most arbitrators try to resolve a dispute between two parties is to attempt: A. coercion. B. informal settlement. C. fault finding or wrong doing. D. litigation. E. conciliation.

E When an initial request for arbitration is received, the chamber first attempts conciliation between the disputants. If this fails, the process of arbitration is started.

. (p. 191) Another name for conciliation as a means for settling a dispute in international commerce is: A. mediation. B. informal settlement. C. arbitration. D. litigation. E. coercion.

A Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.

(p. 197) In a common-law country, ownership of intellectual property rights is established by: A. prior use. B. registration. C. design proof. D. the "common sense mandate." E. the "golden rule of property."

A In the United States, a common-law country, ownership of IP rights is established by prior use —whoever can establish first use is typically considered the rightful owner.

(p. 197) Which of the following international conventions was established to recognize intellectual property rights? A. The Paris Convention B. The Munich Agreement C. The Tokyo Convention D. The Eurasian Convention E. The Kyoto Protocol

A One of the three major international conventions is: The Paris Convention for the Protection of Industrial Property, commonly referred to as the Paris Convention, includes the United States and 100 other countries.

(p. 187) Under ___, the legal system is generally divided into three separate codes: commercial, civil, and criminal. A. constitutional law B. code law C. family law D. religious law E. traditional law

B Code law is based on an all-inclusive system of written rules of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal.

. (p. 187) Which of the following is based on an all-inclusive system of written rules of law that is generally divided into commercial, civil, and criminal sections? A. Common law B. Code law C. Islamic law D. Marxist-socialist tenets E. Legal tradition

B Code law is based on an all-inclusive system of written rules of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal.

(p. 186) Which of the following types of law is primarily found in the United States, England, Canada, and other countries once under English influence? A. Code law B. Common law C. Religious law D. Civil law E. Universal law

B Common law is derived from English law and found in England, the United States, Canada, and other countries once under English influence.

. (p. 186) Which of the following forms of law was derived from English law? A. Code law B. Common law C. Religious law D. Civil law E. Universal law

B Common law is derived from English law and found in England, the United States, Canada, and other countries once under English influence.

(p. 189) Among the unique aspects of Islamic law is the prohibition against the payment of: A. taxes. B. profits. C. interest. D. equity. E. accounting fees.

C Among the unique aspects of Islamic law is the prohibition against the payment of interest. The Islamic law of contracts states that any given transaction should be devoid of riba, which is defined as unlawful advantage by way of excess of deferment, that is, interest or usury.

(p. 212) The first objective of these laws is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. Which law is in discussion? A. Incorporation laws B. Intellectual property laws C. Antitrust laws D. Criminal laws E. Monopoly laws

C Antitrust enforcement has two purposes in international commerce. The first is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. The second purpose of antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions.

(p. 193) Arbitration clauses require agreement on two counts. Which of the following is one of those accounts? A. The complainants agree on who is right and who is wrong. B. The complainants agree on litigation issues. C. The complainants agree to abide by the awards resulting from the arbitration. D. The complainants agree to not hire legal counsel. E. The complainants agree to hear the case before the World Court if the arbitration fails.

C Arbitration clauses require agreement on two counts: (1) The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal and (2) they agree to abide by the awards resulting from the arbitration.

(p. 187) _____ is based on an all-inclusive system of written rules of law. A. Common law B. Constitutional law C. Code law D. Theological law E. Family law

C Code law is based on an all-inclusive system of written rules of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal.

(p. 201) _____ is by its nature a global enterprise for which no political or national boundaries exist. A. The ASEAN B. The OPEC region C. The Internet D. The European Union E. The NAFTA region

C The Internet is by its nature a global enterprise for which no political or national boundaries exist.

(p. 188) The basis of _____ is the Koran. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

C The basis for the Shari'ah (Islamic law) is interpretation of the Koran

(p. 215) The responsibility of determining if a license is required rests with the ___. A. Department of Commerce B. industry regulatory body C. exporter D. U.S. Customs department E. export agent

C The responsibility of determining if a license is required rests with the exporter. The exporter is responsible for selecting the proper classification number, known as the Export Control Classification Number (ECCN), for the item to be exported.

(p. 213) Under the Antiboycott Law, U.S. companies are forbidden to participate in any unauthorized foreign boycott. Which of the following situations brought about the Antiboycott Law in the U.S.? A. The boycott of Cuba by the U.S. B. The boycott of South Africa by the world community. C. The boycott of Israel by the Arab League. D. The boycott of Iraq by the United States. E. The boycott of the U.S. by the U.S.S.R. (the wheat embargo).

C Under the Antiboycott law, U.S. companies are forbidden to participate in any unauthorized foreign boycott; furthermore, they are required to report any request to cooperate with a boycott. The Antiboycott law was a response to the Arab League boycott of Israeli businesses.

(p. 208) Which of the following is NOT one of the areas of antitrust enforcement in the European Union and elsewhere? A. Full-line forcing B. Price discrimination C. Supply restrictions D. Competitiveness councils E. Antimonopoly

D The European Union, Japan, and many other countries have begun to actively enforce their antitrust laws, patterned after those in the United States. Antimonopoly, price discrimination, supply restrictions, and full-line forcing are areas in which the European Court of Justice has dealt severe penalties.

(p. 209) The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law called the: A. the right of imminent domain. B. the legal transfer of power. C. the rights of foreign powers and citizens. D. the objective theory of jurisdiction. E. the McNeil Principle of International Law.

D The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law, the "objective theory of jurisdiction."

(p. 194) All of the following are considered to be deterrents to litigation EXCEPT: A. fear of creating a poor image and damaging public relations. B. fear of unfair treatment in a foreign court. C. difficulty in collecting a judgment that may otherwise have been collected in a mutually agreed settlement through arbitration. D. the relatively low cost and time required when bringing legal action. E. loss of confidentiality.

D The relatively high cost and time required when bringing legal action is a deterrent to litigation. The Rheem Manufacturing Company, a billion-dollar manufacturer of heating and air conditioning systems, estimates that by using arbitration over litigation, it has reduced the time and cost of commercial-dispute resolution by half.

(p. 193) When all else fails in an international commercial dispute, the final step is: A. conciliation. B. to encourage one's government to force the other party to comply. C. to find fault or wrong doing as a public relations device. D. litigation. E. coercion.

D When all else fails, the final step to solve a dispute is litigation.

(p. 187) _____ 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." A. Constitutional law B. Family law C. Criminal law D. Civil law E. Common law

E 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."

(p. 197) Which of the following countries has ownership of IP rights established by prior use—whoever can establish first use is typically considered the rightful owner? A. Japan B. Brazil C. Saudi Arabia D. France E. United States

E In the United States, a common-law country, ownership of IP rights is established by prior use —whoever can establish first use is typically considered the rightful owner.

(p. 196) A famous case occurred in Japan where a Japanese business registered McDonald's world famous trademark before McDonald's did and was given permission to use the trademark. McDonald's eventually got the trademark back after a lengthy court battle and a monetary award to the Japanese company. McDonald's learned that trademarks registered in the United States: A. must be ratified by the United Nations trademark protection agency. B. are worthless. C. are protected in the European Union under the Geneva Convention but not in Japan. D. need to be registered with the World Court. E. are not protected in other countries.

E One of the more frequent errors is assuming that because the company has established rights in the United States, they will be protected around the world or that rightful ownership can be established should the need arise.

. (p. 197) Which of the following conventions is responsible for the promotion of the protection of intellectual property rights? A. The Paris Convention B. The Madrid Arrangement C. The Tokyo Agreement D. The Eurasian Convention E. The United Nation's WIPO

E The World Intellectual Property Organization (WIPO) of the United Nations is responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member states.

(p. 215) The exporter is responsible for selecting the _____ which leads to a description in the Commerce Control List (CCL), which indicates the exportability status of the item. A. Entity List Number B. Priority Number C. Export License Number D. Control Number E. Export Control Classification Number

E The exporter is responsible for selecting the proper classification number, known as the Export Control Classification Number (ECCN), for the item to be exported. The ECCN leads to a description in the Commerce Control List (CCL), which indicates the exportability status of the item.