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, England.

• 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.