Chapter 7

Chapter 7: The International Legal Environment

Overview

  • Focuses on the importance of understanding international laws in business operations.

  • Covers various legal systems, intellectual property rights, legal recourses, marketing laws, antitrust laws, and the extraterritoriality of US laws.

Legal Systems

Common Law vs. Code Law

  • Common Law

    • Based on tradition, past practices, and legal precedents.

    • Courts interpret laws and provide legal precedents.

    • Examples: United States, UK, Canada, and Australia

  • Code Law

    • Comprises written laws (codes) governing various sectors including commercial, civil, and criminal laws.

    • Examples: China, Japan.

Intellectual Property Rights

Key Concepts

  • Intellectual Property: Ideas transformed into tangible products protected by law.

  • Types of Intellectual Properties:

    • Patents: Exclusive rights for inventions providing new solutions.

    • Trademarks: Distinctive signs identifying goods/services (e.g., iconic product shapes).

    • Copyrights: Rights of creators over their artistic and literary works (e.g., expressed through the World Intellectual Property Organization).

Infringement of Intellectual Property Rights

  • The impact of counterfeits and knockoffs on original product sales.

  • Example: China’s unauthorized Apple stores, demonstrating how fakes can affect brand reputation.

International Legal Recourses

Methods for Dispute Resolution

  1. Conciliation (Mediation): A confidential, non-binding process involving a mediator to facilitate discussions.

  2. Arbitration: Formal, binding agreement with a third-party arbitrator; decisions enforceable by law.

  3. Litigation: Lawsuit process, seen as a last resort due to costs, time, and public exposure.

  4. Initial step of Negotiation before involving formal legal recourses.

Varied Commercial Laws by Country

  • Austria: Restrictions on free gifts and coupons.

  • France: Sales permitted twice a year.

  • China: Cultural reactions (e.g., notable Nike commercial) to foreign marketing.

Antitrust Laws

Overview

  • Designed to prevent unfair business practices that reduce competition for consumer benefits.

  • Example of violations: Apple’s investigation in Europe regarding antitrust practices under the new Digital Markets Act.

Extraterritoriality of US Laws

Objective Theory of Jurisdiction

  1. Foreign Corrupt Practices Act (FCPA): Prohibits bribery of foreign officials by U.S. firms.

  2. Antiboycott Laws: Regulations against U.S. companies engaging in unauthorized boycotts, particularly regarding the Arab-Israeli conflict.

Recap of Important Points in Chapter 7

  • Key comparisons between Common Law and Code Law regarding Acts of God and labor strikes.

  • Hierarchical order of resolving international disputes:

    1. Negotiation

    2. Mediation

    3. Arbitration

    4. Litigation

  • Awareness of different marketing laws across countries, including cultural sensitivities (e.g., Lebron James’ Nike commercial).

  • Understanding the implications of Antitrust Laws and the extraterritoriality of U.S. laws.