LEGL4900 Test 3
patents
each country has its own registration system for ______________
Expropriations
government takes control of the business. Potential investors fear potential for government takings• FSIA means foreign govs often immune from suit in US courts• Get assurances through BITs, becoming a common part of FTAs• Often provide investor-state arbitration• ICSID is popular arbitration venue, run by World Bank
antiboycott laws
legal responses by governments that make it unlawful for their citizens or companies to participate in a boycott
Rules of origin
legal rules used to determine the country of origin of imported products
Sanctions
rarely successful, may hurt innocent citizens
copyright infringement
"Pirated / Bootlegged" movies, videogames, software are examples of __________________ __________________
Buy American Act
"substantially all" - 50% USA content and assembled in USA (Eisenhower) 95% for iron / steel and 55% for others, biggerpreferences (Trump, proposed)
field of use limitations
- restrict the application for which the licensee may employ the IPR - EX: laser tech used by licensee for medical use, but licensor retains the use for communication and other uses.
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
1. Updates Paris and Berne treaties 2. Provides state-state dispute resolution 3. Has escape clauses for research and public welfare 4. Also regulates geographical indications - "Champagne"• U.S. doesn't recognize
Henrietta Lacks
11,000 patents were filed using cancer cells removed from her body at Johns Hopkins and used to create an immortal cell line she was never informed or compensated
Base Erosion and Profit Shifting (BEPS)
A term describing tax avoidance strategies whereby corporations and investors shift their profits to jurisdictions with low tax rates. Instill a 10% min tax on large multinationals Use tax haven, inversion, profit shifting, and creative IP accounting ex: Apple
ADC Affiliate et al. v. The Republic of Hungary
ADC were a foreign entity that invested in the expansion of an airport in Hungary. The Gov or Hungary owned the airport and it enacted a decree resulting in the privatization of the airport and terminated ADC's long term leases, so they sought to recover their investment. Arbitration occurred over the unlawful expropriation because the airport boomed after receiving ADC's investments. Raised questions of compensation based on time of taking or time of award
Export Control Classification Number (ECCN)
An alpha-numeric code, e.g., 3A001, that describes an item and indicates licensing requirements. All ECCNs are listed in the Commerce Control List (CCL) (Supplement No. 1 to Part 774 of the EAR)
International Traffic in Arms Regulations
Applies to weapons and military tech, controlled by State Dept Interesting current debate over whether 3-d printing and milling software should be controlled change from Obama to Trump admins
Principal Use; Essential Character
Better Home Plastics Corp. v. US(CIT 1996) was an example of a classification debate in which "____________ ____________" versus "___________ ____________" was argued in court
Better Home Plastics Corp. v. US(CIT 1996)
Better home plastics corps imported shower curtains and Customs classified the shower curtains as curtains and interior blinds, whereas Better Home Plastics argued that the classification should be based on the inner plastic liner for kitchenware and toilet articles. Decision: Better Home Plastics were misassigned under interior blinds and are instead the household article of plastic. The rule of relative specificity doesn't apply here because the shower liner imparted the essential character to the set
Bikram Yoga
Bikram Cloudhury claimed to have copyright on 26 yoga postures, sued competitors U.S. Copyright office said yoga postures (asanas) cannot be copyrighted, upheld by courts
Bank of America vs US
BofA conducted general banking business in Thailand, Philippines, and Argentina and paid each place the associated taxes. BofA demanded a credit on its income tax returns but the IRS wouldn't allow it so Bank of America appealed to a trial commissioner and the Court of Claims. Decision: the US Court of Claims dismissed the petition for a tax credit.
briggs and stratton corp v. baldridge
Briggs (engine manufacturer) was blacklisted because it had been dealing with Israel in the Arab League's eyes. Brigg's argued that because of US regulations, they were blacklisted and this affected its worldwide sales. Decision: the anti-boycotting regulations were upheld by the court despite the difficulties of compliance
copyright infringement
China was / is big problem regarding ___________ ______________, getting somewhat better after joining WTO and TRIPS
United States vs Zhi Yong Guo
Chinese engineer purchased thermal imaging cameras and tried to smuggle them to China. They were charged with attempting to export controlled items without a license. Decision: affirmed the initial decision and said that the regulations for EAR are neither vague nor complex
Kirksaeng v. John Wiley & Sons (2013)
Cornell student buys Thai texts resells to U.S. students SCOTUS says that's fine - "first sale" rule
substantial transformation
Country of origin is primarily determined by last place of _________________ ______________
CFIUS (Committee on Foreign Investment in the United States)
Created by an amendment to the 1950 Defense Production Act Can review and block any transaction with foreigner that impacts national security "Control" ambiguous - <10% passive interest may be ok
Lacoste v. Crocodile International
Crocodile trademark confusion. Lacoste hadn't used a logo in 3 years and should've had the trademark removed. The case was dismissed. Also happened with Lacoste suing Hema the children's brand (which was unsuccessful)
Inversions
Deferral Principle led to _____________, in which companies move their HQs out of US for tax purposes
Export Controls
Focus on what the product is and where it is going Administered by Commerce Dept
Substitution drawback
Duties paid on imported goods may be received by a U.S. firm that imports goods and then exports other goods of the "same kind and quality " Fungible goods (those that are interchangeable goods)
national security; trade competition
Export controls are often changing to maintain a balance between _________ and ____________
Biopiracy
Extracting plants and animals indigenous to the emerging nation for research, alter the plant or animal, and then obtain patents related to this research without providing the host country with compensation or affordable access to the inventions
Sanctions
Focus on problematic individuals and sometimes countries Administered by Treasury Dept.
Diamond vs Chakrabarty
GE engineer Chakrabarty developed genetically-modified bacteria that "eat" oil Initially denied patent - appealed to Supreme Court S.Ct. said bacteria were patentable - "manufacture" or "composition of matter"
Compaq v. Commissioner of Internal Revenue (US tax Court)
IRS requires "arms-length" tax accounting IRS loses this case, despite deference
Essential Character
If two or more headings or subheadings each describe only certain materials or components in composite goods, the article must be classified under the heading that describes the material or components that give the article its ______ ______
Foreign Direct Investment (FDI)
Investment made by a foreign company in the economy of another country can be direct or indirect
Apple vs Samsung Electronics
Jury awarded Apple money for Samsung infringement. Apple asked for more money but it was declined and Apple was hurt because Samsung now only had to pay half of what they were originally told to pay.
Use of production equipment in a free trade zone is consumption
Main takeaway from Nissan Motor Mfg. Corp., USA vs United States
Multinational treaties
Many export controls have been replaced by _____________, which allow individual countries to establish export controls as exceptions to free trade and promote cooperation for nonproliferation of weapons
Mobile Communication Service v. WebReg
Mobile Comm. Service, AKA Mobilcom said that WebReg, RN had infringed on its trademark by creating the website "mobilcom.com" even though there was no right or interests in that name, but rather in bad faith. Decision: WebReg, RN had to transfer the website to Mobilcom. Cybersquatting laws are now in place to protect URL's of trademarked company names
Nissan Motor Mfg. Corp., U.S.A. v. United States
Nissan imported production machinery of industrial robots and automated systems to assemble and test in the US assembly plant. If the machinery was unsatisfactory then it was replaced and scrapped; however, Customs said that the production equipment was not "merchandise" as ruled under the FTZ act, and was therefore taxable. Decision: machinery entering a FTZ for use in manufacture and assembly of automobiles is not "merchandise" and can still be taxed. Production equipment usage constitutes consumption
substantial transformation
Occurs when the original article loses its identity as such and is transformed into a new and different article of commerce having "a new name, character, or use" different from that of the original item
Deferral Principle
Parent companies are not taxed on the income of a foreign subsidiary until they actually receive a dividend from that subsidiary. Don't pay US taxes until repatriation
Natural resources looser regulations (labor, environmental, tax)• Cheap / specialized labor Avoid tariffs Broader customer access
Potential rewards of FDI
Currency risk (zimbabwe) Political risk (expropriations)
Potential risks of FDI
"Made in the USA"
Regulated by Federal Trade Commission, not Customs Mandatory for textiles, NAFTA auto % and assembly disclosure Otherwise voluntary, treated like false advertising "All or virtually all" - like "wholly-obtained" standard
Customer/Output Limitations
Restrictions on who can sell to, such as wholesalers only
customs enforcement
Right to Inspect, audit, 5-year record keeping
Tax Cuts and Jobs Act of 2017 (Trump Admin)
SHORT ANSWER 1. U.S. corporate tax rate dropped to 21% 2. No tax for repatriating foreign dividends -One-time payment on accumulated earnings 3.Global Intangible Low Tax Income (GILTA) -Tax on very large foreign earnings, assumes profit shifting 4. Foreign Derived Intangible Income - lower taxes on US IP earnings 5. Base Erosion and Anti-Abuse Tax (BEAT) - 10% minimum tax on large multinationals
US vs Mandel (9th Cir. 1990)
The defendants were charged with exporting high tech equipment illegally without a license. The gov said that a criminal defendant couldn't challenge the Secretary of Commerce's decision to place a commodity on the control list. Decision: reversed and remanded. The decision to put an item on the control list is not subject to discovery by the defendants and aren't material and the courts will not inquire into the national security policy reasons for control
"Wholly obtained" - common for ag products "Yarn-forward" - common for textiles and clothing "Tariff-shift" - more objective standard
Some products, by treaty, have different standards for country of origin; these include:
Geographical Indications (examples: champagne, parmesan, etc)
US doesn't recognize _____________ _______________ of TRIPS
Otter Products, LLC v. United States
There wasn't a clear designation of what a phone case should be taxed as. Customs classified the Otterbox phone cases as brief case with a 20% duty while Otterbox said they should be charged as "other article of plastic" at 5.3% instead; Decision: the court agreed with Otterbox's arguement
Defense Production Act of 1950
Trump threatened to enforce the ____________________ during COVID with companies like 3M (mask production) and General Motors (ventilator production) 3M refused, citing humanitarian reasons
Bhopal Gas Disaster (1984)
Union Carbide set up Indian subsidiary Required to partner with Indian government (49%) 500k injured, 3k died Avoided liability inU.S. courts
HTSUS (Harmonized Tariff Schedule of the United States)
Used around the world to determine tax rate. Items classified by number to make it more universal. Includes general rates, special rates for trade preference programs, and special tariffs for countries like Russia
Exclusive Rights/ a "turf"
When exploitation of a licensed IPR requires significant financial resources from a firm, they may seek _______ ______ to enhance chances of adequate return on investment; typically the licensor doesn't want to put all eggs in 1 basket though
Geographic Limitations
When the licensor agrees to provide services to facilitate the anticipated activities, such as assistance in setting up an assembly line or other training and technical support, this is one way it can restrict the licensee's use of the transferred IPR. e.g. within a specific nation
Carl Zeiss, Inc. v. United States
Zeiss imported microscopes, stands, and accessories for neurological use. Customs classified them as a photographing machine whereas Zeiss disagreed and said it was a medical or surgical apparatus. Decision: the court held for the government because of the rule of relative specificity was better applicable under what Customs had declared the microscopes as. Stereoscopic compound microscope won because it was more specific.
cybersquatting
_____________ laws protect URL of trademarked company names
same-condition drawback
a drawback of duties paid on imported goods that are re-exported in the "same condition" as they were imported, provided they were not significantly altered. It's rejected merchandise that is being sent back
Civil Fraud
a far more serious case of fraud than negligence occurs when there is clear and convincing evidence of intent to use false statements when importing goods to US
Drawback
a refund of duties already paid on imported goods when the goods are reexported or destroyed
manufacturing Drawback
a refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years. Input product pieces, doesn't leave the country in the same condition as it arrived
Sanctions
a regulation that restricts or prohibits certain relationships with specified foreign countries, entities, or named individuals because of their support for things that the US doesn't support. Administered by the Treasury Dept
rejected merchandise drawback
allowed for imported merchandise that was shipped without consent, is defective, or does not conform to specifications or to samples
Berne Convention
allows international recognition of copyrights
Patent Cooperation Treaty
allows international registration of patents through WIPO
formal entry
customs procedure for most big commercial shipments;
"Short Supply" Export Controls
apply to certain foodstuffs, medicines, basic metals, or natural resources. It protects US economy from excessive foreign demand for scarce materials. ex: France and Germany put controls on PPE or US restricts weapons trade for dual use
international emergency economic powers act
broad executive power to seize assets or impose trade embargos
Geneva Convention
central registration for design patents; US moved from 14 years to 15 years to comply
"dual use" items
commercial items that may also have military, terrorist, or "proliferation" uses. Must get a license from Commerce BIS (Bureau of Industry and Security)
European Patent Office
common system for EU regarding patents
Apple
company that pays virtually no taxes because of international tax avoidance strategies
Country of origin
country from which an imported good is said to have originated according to the specific legal rules called the rules of origin. It looks at the last place of substantial transformation
"Wholly-obtained" standard
country of origin standard common for ag products
"Yarn-forward" standard
country of origin standard common for textiles and clothing
China
current focus of CFIUS
Foreign Trade Zone
designated geographic region through which merchandise is allowed to pass with lower customs duties (taxes) and/or fewer customs procedures. It's legally defined sites, like warehouses or manufacturing facilities, that are operated pursuant to legislation and under gov license, that are legally outside the customs territory of the country they are in. It saves time and allows you to assemble, repackage, and export without paying duties examples: ATL, Savannah, Brunswick
property sale/seizure where the wall was to be built
example of expropriation (kind of) during trump admin
1. Monsanto / Bayer Crops 2. "GloFish" 3. Aqua Advantage Salmon
examples of transgenic life you can patent (and have been patented)
NATO; sensitive military tech
export controls have roots in _________ and are often implemented to keep ______________ from China and Russia
patent trolls
firm that produces nothing but patents
trade secrets
important part of manufacturing process, especially tech and pharma. Countries that don't produce much IP are less likely to respect it. China is in transition for the right direction now.
180
importer has ____ days to challenge/protest liquidation assessment
Grey Market Goods
items manufactured outside a country and then imported without the consent of the trademark holder intended for one market, but not another
patriot act 2001
law in response to 9/11 strengthened search and seizure powers banks must issue SARs (report filed when bank notices suspicious account activity)
Importer's ignorance is no excuse in customs enforcement charges
main takeaway from U.S. v. Golden Ship Trading (CIT 2001)
market access
many countries limit foreign investment, especially in national security interests. ex: Ports or defense industries are usually off limits. In US, CFIUS regulates companies buying an interest in a company and can review or block any transaction with foreigners that impacts national security.
operation mega flex
movement under Trump for US customs and border protection agency to seize more illicit goods from places like China
Paris Convention
multilateral agreement to respect foreign patent filings
transfer pricing
multinational corps often do business with their subsidiaries
Madrid Protocol
now allows international recognition of trademarks
Criminal Fraud
occurs when not only intent is proven, but when there is material evidence of using false import statements more serious than civil fraud; must be proven beyond a reasonable doubt
transgenic organism
organism that is genetically engineered by inserting a gene from another organism
informal entry
personal and commercial shipments valued at $2,500 or less may be cleared through this customs procedure
tariff engineering
process of modifying or engineering a product prior to importation for the purposes of obtaining a lower rate of duty. You do things to try and get a tariff advantage
Trading with the Enemy Act of 1917
prohibited individual trade with an enemy nation and banned the use of the postal service for disseminating any literature deemed treasonous by the postmaster general it is now limited to wartime use
Companies trading Venezuelan oil• Banks working with Iran Russian election hackers Bitcoin addresses associated with NK hackers Huawei not listed (yet) Turkish officials recently "delisted"
recent adjustments to office of foreign assets control (OFAC) specially designated nationals (SDN) list
screwdriver plant
ship a product in pieces to your affiliate and then assemble it there for shipping. It's a type of transshipment pretending to have a substantial transformation
reexport
the shipment or transfer of American-controlled items or technology from one foreign country to another foreign country or foreign person
export
the actual shipment or transmission out of the US in any manner to a foreign person to the US
"tariff-shift" standard
the country of origin is the last country in which all "inputs" (raw materials, component parts, etc.) in the finished product underwent a defined change in tariff classification
Copyrights
the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit
liquidation
the final computation and assessment of the applicable duty on entered goods by customs. Customs has 314 days to make final determination
Extraterritoriality
the idea of a nation being able to extend the power of its export control laws over its goods and tech once they have left its territory.
intellectual property rights
the legal protection of the original works of inventors, authors, creators, and performers under patent, copyright, and trademark law. Such rights became a contentious area of trade negotiations in the 1990s.
Dutiable Status
the legal status of imported goods at the time of entry for purposes of compliance with the tariff and customs laws. Must list classification, customs value, and country/origin in order to decide how much to tax
Principal Use
the ordinary use to which articles of the same class and kind as those being imported are usually put and which is greater than any other single use of the article
Customs Value/Valuation
the process where customs authorities assign a monetary value to a good or service for the purposes of import or export
transshipment/"screwdriver plants"
the shipment of goods or containers to an intermediate destination, then to another destination
diversion
the unlawful transfer, transshipment, or rerouting of controlled goods or technology from one destination to which the goods or tech were legally shipped to another destination who doesn't have the license to receive the items
Ferrostaal Metals Corp v US
unpainted steel sheets from Japan were galvanized in New Zealand and the Plaintiff listed the country of origin as NZ but Customs said the country of origin was Japan. Decision: Japanese steel that had been galvanized in NZ was substantially transformed so that it had become a product of NZ and wasn't subject to voluntary restraint agreements btwn the US and Japan
