FBE 429 Final
Know-how
firm's intellectual property that is protected through secrecy and confidentiality agreements rather than through patents or copyright laws
fluctuation risk
possibility that currency of country in which U.S. investor has put its money will devalue against U.S. dollar
currency exchange rights
preferential access to hard currency by negotiating with gov't and offering to bring in industry to soft-currency nation
Blocking legislation
statutes containing provisions that block discovery of documents located in their countries and bar enforcement of foreign judgments there
Barter
direct exchange of goods for goods (or services)
Acquis Communautaire
"Which has been agreed upon by the community"
Consent agreement
Agreement which maintains the beneficial aspects of the deal while removing the anticompetitive elements - U.S. View: how mergers can go through if there are concerns
FCN treaties
Allows foreign employer to choose its own executives and experts to run its operations in other signatory countries
Currency swaps
Broad assortment of financial contracts purchased to hedge against fluctuation risk
Memoranda of understanding
Bilateral agreements that provide for coordination on cases, sharing of info, and dialogue concerning competition policy issues
Corruptness
Businessperson displays reckless or conscious disregard for consequences of personal actions
Knowing requirement
Businessperson must prove he did not know about the bribe and was reasonably unattached -- not just ignored the issue
Gray market
Importation of merchandise produced and sold abroad and then imported back in the U.S. for sale in competition with U.S. trademark owner
Leveraging theory
Company's ability to leverage dominance in one market to become dominant in another market
Evergreen contract
Continuing a contract after the stated term of the original contract -- continually renews after that
European Union
Created by Maastricht Agreement, expression of member states' underlying unity
Cybersquatting
Registering of domain name with intent to profit from goodwill of trademark belonging to another
EU regulation
EU rule that has general application, binding in its entirety, directly applicable to all member states
EU directive
EU rule that is binding as to the result to be achieved on each member state to which it is addressed, but shall leave to the national authorities choice of form and methods
Bona Fide Occupational Qualification (BFOQ) defense
Employer may engage in discrimination if it is reasonably necessary to normal operation of particular business or enterprise
Materiality
Facts of a financial magnitude that a prudent investor of the company should know
Clawback provision
Foreign companies can sue in their own country to recover against local U.S. assets all or part of the amount of antitrust judgment rendered in U.S.
Four freedoms
Free movement of goods, services, capital, and people
Informal consortia or parallel exchanges
Groups to trade local soft currency. Spread risk over larger group with hopes of reducing vagaries of local bureacracy
Currency inconvertibility
Inability to convert currency
Bad faith
Intentional wrongful behavior, even without intent
Active investment
Investor has ownership interests in foreign business
Counterpurchase agreement
Involves sale of goods to buyer (often foreign gov't) which requires as a condition of sale that seller buy other goods produced in that country
Aufsichtsrat
Large supervisory board in board of directors (German Approach) Represents shareholder interests Employees have direct representation
Caveat emptor
Let the buyer beware Founding concept of libertarian capitalism Government should not intervene in commercial relations. Buyers should investigate seller's claims. If they fail to do so and seller's claims turn out to be false, buyer has only himself to blame.
Royalty
Licensing fee
Grant back
Licensor grants back ownership (of new tech/improvement made by licensee)
License
Limited permission to use the firm's trademarks/copyrights/know-how
Geographical limitation
Limiting licensee sale within a nation
Vorstand
Management board in board of directors (German Approach) Manages the firm day to day
Import substitution rights
Manufacturing product in soft currency country that nation had previously imported
Permanent establishment
Office that a principal opens once it has hired a dependent agent within host country
Principal
Party in agency relationship who directs another party to perform a variety of functions
Agent
Party in agency relationship who performs a variety of functions on behalf and at direction of another party
Passive investment
Passive debt investment or passive equity investment Passive debt investment=making a loan to a foreign business Passive equity investment=purchasing equity interest in foreign business as portfolio investment
Nonobvious patent
Patent involving a inventive step
Design patent
Patent protecting ornamental features of article of manufacture
Useful patent
Patent that are capable of industrial application and are useful
Utility patent
Patents protecting a novel and useful process
Independent contractor
Perform general tasks for business, but retain substantial discretion and independence in carrying them out
Foreign compulsion defense
Permits U.S. firms flexibility when enforcement of U.S. employment laws overseas would result in violation of foreign law
Language laws
Policing of language in commercial advertising
Profit margin preservation (unitary index adjustment)
Price or payment to foreign investor will be adjusted periodically to maintain the same profit margin
Economic conditions alarm
Principal must notify agent if it expects that agent's volume of business (and commission) will be significantly lower than what agent normally expects
Just cause
Proof that breach affected principal in substantial manner such that breaking of contract is warranted
Buy-back agreement
Provider of equipment or tech used in manufacturing will receive, as its payment, portion of goods manufactured by supplier's equipment
Inconvertibility insurance (non-transfer insurance)
Purchase policies to insure against hard blockages (when gov't prevents conversion)
Accounting and record keeping provisions
Requirement of internal accounting controls sufficient to provide reasonable assurances that all transactions are properly authorized and that access to assets is tracked
Product liability
Responsibility to consumers for defects in product In context of product liability, agent-relationship relationship not critical b/c if you're in chain of distribution and likely to suit
Field of use limitations
Restrict applications for which licensee may employee IPR
Grease payments exception
Routine governmental action exception Any facilitating or expediting payment that secures performance of routine governmental action that is non-discretionary
Puffing
Vagueness and exaggeration in advertising
Qualified majority voting
Voting such that not all member states have to agree on proposals related to internal market. Allows institutions to make decisions even if there's objection
Hard blockages
When gov't prevents conversion or transfer
Commission override
Whenever a principal makes a sale in a territory that is reserved for the agent, the principal must pay the agent a commission, whether or not agent actually participated in sale
Geographical indications
Where a product is marketed by reference to a geographic region
Betriebsrat
Work council to represent plant's interest (German Approach)
Agency relationship
business arrangement in which agent performs functions for principal
Soft blockages
delays in processing conversion requests by local authorities
Countertrade
reciprocal arrangement between buyer and seller for sale of goods or services intended to minimize outflow of foreign exchange from buyer's country
inconvertibility risk
risk that gov't of country with soft currency will hinder foreign entrepreneur from trading the foreign currency back into U.S. dollars
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