International Marketing - Chapter 7: The International Legal Environment: Playing by the Rules

Chapter 7The International Legal Environment: Playing by the RulesInternational Marketing15th edition Philip R. Cateora, Mary C. Gilly, and John L. GrahamOverviewBases for today’s legal systemsThe important factors in jurisdiction of legal disputesThe various methods of dispute resolutionThe unique problems of protecting intellectual property rights internationallyCyberlawCommercial law within countriesU.S. Laws application in host countriesExport restrictions2Roy Philip Bases for Legal SystemsFour heritages form the basis for the majority of the legal systems of the worldCommon law Civil or code lawIslamic lawMarxist-socialist tenetsEven though a country’s laws may be based on the doctrine of one of the four legal systems its individual interpretation may vary significantly3Roy Philip Common and Code LawCommon law Seeks interpretation through the past decisions of higher courts which interpret the same statues Applies established and customary law principles to a similar set of factsAre recognized as not being all-inclusive Ownership is established by useCode law Legal system is generally divided into three separate codesCommercial CivilCriminalOwnership is determined by registration Considered complete as a result of catchall provisions found in most code-law systems4Roy Philip Islamic LawThe basis for Islamic law is interpretation of the KoranIslamic law defines a complete system that prescribes specific patterns of social and economic behavior for all individualsProperty rightsEconomic decision makingTypes of economic freedomAmong the unique aspects of Islamic law is the prohibition against the payment of interestThe Islamic system Places emphasis on the ethical, moral, social, and religious dimensions to enhance equality and fairness for the good of society5Roy Philip Jurisdiction in International Legal DisputesNo judicial body exists to deal with legal commercial problems arising between citizens of different countriesLegal disputes can arise in three situationsBetween governmentsBetween a company and a governmentBetween two companiesJurisdiction is generally determined on the basis of:Jurisdictional clauses included in contractsWhere a contract was entered intoWhere the provisions of the contract were performedMost clear-cut decisions can be made:When contracts or legal documents supporting a business transaction include a jurisdictional clause6Roy Philip LitigationThe best advice is to seek settlementDeterrents to litigationFear of creating a poor image and damaging public relationsFear of unfair treatment in a foreign courtDifficulty in collecting a judgment that may otherwise have been collected in a mutually agreed settlement through arbitrationThe relatively high cost and time required when bringing legal actionLoss of confidentiality7Roy Philip Protection of Intellectual Property Rights – A Special Problem - What is intellectual property?Companies spend millions of dollars establishing brand names or trademarks to symbolize quality and design and to entice customersMillions are spent on research to develop products, processes, designs, and formulasIntellectual or industrial properties are among the most valuable assetsNew technologies developed to prevent piracy8Roy Philip Counterfeiting and PiracyLost sales from the unauthorized use of U.S. patents, trademarks, and copyrights Amount to more than $100 billion annuallyThe piracy industry has grown so sophisticatedMany counterfeit goods are indistinguishable from originalPiracy actually can serve come companiesMicrosoftCounterfeit pharmaceuticals 2% of the $327 billion worth of drugs sold each year – fun pirated products Roy Philip 9Inadequate ProtectionFailing to adequately protect intellectual property rights can lead to the legal loss of rights in potentially profitable marketsThere have been many cases where companies have legally lost the rights to trademarks and have had to buy back these rights or pay royalties for their useMcDonald’s in JapanMany businesses fail to take proper steps to legally protect their intellectual property10Roy Philip Prior Use Versus RegistrationPrior Use – whoever can establish first use is typically considered the rightful ownerRegistration – the first to register a trademark or other property right is considered the rightful ownerA company that believes it can always establish ownership in another country by proving it used the trademark or brand name first is wrong and risks the loss of these assetsIt is best to protect intellectual property rights through registration 11Roy Philip International ConventionsThree major international conventionsParis Convention for the Protection of Industrial PropertyInter-American ConventionMadrid ArrangementWorld Intellectual Property Organization (WIPO)Responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member statesPatent Cooperation Treaty (PCT)European Patent Convention (EPC)The Trade-Related Aspects of Intellectual Property Rights (TRIPs)12Roy Philip Marketing Laws (1 of 2)All countries have laws regulating marketing activitiesPromotionProduct developmentLabelingPricingChannels of distributionDiscrepancies across markets cause problems for trade negotiators – particularly for managers and their firmsU.S. does not allow the buying or selling of human organsSome countries only have a few marketing laws with lax enforcementOthers have detailed, complicated rules that are stringently enforced13Roy Philip U.S. Laws Apply in Host Countries (1 of 2)Foreign Corrupt Practices ActMakes it illegal for companies to pay bribes to foreign officials, candidates, or political partiesNational security lawsProhibit a U.S. company, its subsidiaries, joint ventures, or licensees to sell controlled products without special permission from the U.S.Antitrust lawsEnforcement has two purposes in international commerceProtect American consumersProtect American exports and investments against any private restrictionsThe question of jurisdiction and how U.S. antitrust laws applySections I and II of the Sherman Act14Roy Philip U.S. Laws Apply in Host Countries (2 of 2)Antiboycott lawU.S. companies are forbidden to participate in any unauthorized foreign boycottRequired to report any request to cooperate with a boycottExtraterritoriality of U.S. lawsEspecially important to U.S. multinational firmsForeign governments fear the influence of American government policy on their economies through U.S. multinationalsWhen U.S. laws conflict with those of host countryWhen U.S. Justice Department restricts of forbids ventures because of anticompetitive effects15Roy Philip