1、Chapter 7The International Legal Environment: Playing By the RulesIntroductionInternational marketers must complywith the laws of each country within which it operate. These laws are disparate and complex Chapter Learning Objectives1. four heritages of legal systems2. important factors in jurisdicti

2、on of legal disputes3. jurisdiction of legal disputes and various methods of resolution 4. protecting intellectual property rights internationally against piracy and counterfeiting Chapter Learning Objectives5. legal differences between countries and their effect on international marketing plans6. d

3、ifferent ways U.S. laws can be applied to U.S. companies operating outside the U.S.7. The many issues of evolving cyber-law (1) Common law, derived from English law and found in England, the United States, Canada, and other countries once under English influenceBases for Legal Systems (2) Civil or c

4、ode law, derived from Roman law and found in Germany, Japan, France, and in non-Islamic and non-Marxist countriesBases for Legal Systems(3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic statesBases for Legal Systems(4) A commer

5、cial legal system in the Marxist-socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, whose legal system is based on the economic, political, and social policies of the stateBases for Legal SystemsCommon and Code LawCommon Law is set by the courts throug

6、h interpretations of statutes, interpretations of legal legislation, interpretations of past rulings Past decisions of higher courts to interpret the same statutes, apply established / customary principles of law to a similar set of factsCommon and Code LawCode law is based on an all-inclusive syste

7、m of written rules (codes) of lawUnder code law, the legal system is divided into three separate codes: (1) Commercial code(2) Civil code, and (3) Criminal codeCommon and Code Law Broad interpretation in _ law. U.S. commercial law has been codified under Uniform Commercial Code, the philosophy of in

8、terpretation is anchored in _ law. codecommonCommon and Code Law common code law lawOwnership use notarized or registrationAgreement proof of it notarized or registrationContract act of forces of nature and performance God unforeseeable human actsexception Comparison:Islamic LawKoran is the basis fo

9、r Shariah (Islamic law)It encompasses religious duties and obligations and patterns of social and economic behavior for all individualsIt includes issues such as property rights, economic decision making, and types of economic freedom The overriding objective of the Islamic system is social justiceI

10、slamic Lawprohibits the payment of interest Its doctrine advocates risk sharing, individuals rights and duties, property rights, and the sanctity of contract Emphasize on ethical, moral, social, and religious dimensions to enhance equality and fairness for the good of society Prohibits investment in

11、 activities that violate the Shariah, e.g., business of alcohol, gambling, and casinos Islamic LawNone-interest-payment Accumulation and distribution of wealth be representative of true productivity:Alternative to interest payment:Use financiertrade with markup or cost-plus saleTrade with leasing Ma

12、rxist-Socialist Tenetsastern Eur countries commercial legal system to engage in international commerce Czech and Poland revised and re-instituted preWorld War II commercial legal codesMarxist-Socialist TenetsUSSR and China need an entire commercial legal system with respect to private ownership, con

13、tracts, due process, and other legal mechanismsRussia is moving toward a democratic systemChina is attempting to activate a private sector within a multi-component economy, but their legal systems are still nascent Marxist-Socialist TenetsChina and Russia:Vaguely written laws great damage ? States s

14、ecretsLack of implementation mechanism Determining whose legal system has jurisdiction when a commercial dispute arises is another problem of international marketing.The World Court at The Hague and the International Court of Justice resolve international disputes between sovereign nations of the wo

15、rld rather than between private citizens.Jurisdiction in International Legal DisputesLegal disputes can arise in three situations: (1) between governments, (2) between a company and a government,(3) and between two companiesJurisdiction in International Legal DisputesThe World Court can adjudicate d

16、isputes between governments, but disputes in situations 2 and 3 must be handled in the courts of the country of one of the parties involved or through arbitration.When the dispute has to be solved by laws - Which law governs? Jurisdiction in International Legal Disputes(1) on the basis of jurisdicti

17、onal clauses included in contracts (2) on the basis of where a contract was entered into(3) on the basis of where the provisions of the contract were performedJurisdiction in International Legal DisputesJurisdiction is generally determined in one of three ways: The parties hereby agree that the agre

18、ement is made in Oregon, USA, and that any question regarding this agreement shall be governed by the law of the state of Oregon, USAJurisdiction in International Legal DisputesSample of Jurisdictional clause:International Dispute ResolutionInternational disputes can be resolved by: ConciliationArbi

19、trationLitigation International Dispute ResolutionConciliation (also known as mediation) is a non-binding agreement by asking a third party to mediate differencesConciliation sessions are private and confidential, and the agreement may not be used in any subsequent litigation or arbitration For Chin

20、a business, formal conciliation via some tribunal such as Beijing Conciliation Center an arbitration clause should be included in all conciliation agreements. Informal conciliationInternational Dispute ResolutionThe arbitration procedure calls for the parties involved to select a disinterested and i

21、nformed party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor In most countries, decisions reached in formal arbitration are enforceable under the law For using arbitration, it is suggested to put a provision for arbitration in the contr

22、act: Any controversy or claim arising out of or relating to this contract shall be determined by arbitration in accordance with the International Arbitration Rules of the American Arbitration AssociationLitigation deals with filing a lawsuit mmercial disputesInternational Dispute ResolutionDeterrent

23、s to Litigation: lawsuits should be avoided for many reasons including cost, frustrating delays, and extended aggravation, and fear of creating a poor image, damaging public relations, fear of unfair treatment in a foreign courtIntellectual Property Rights, Counterfeiting and Piracymillions of dolla

24、rs to establish brand names or trademarksPiracy and counterfeiting reduce sales embody authorized patents, trademarks, and copyrightsCounterfeited pharmaceutical drugs can lead to bad publicityContract manufactureIntellectual Property Rights, Counterfeiting and PiracyInadequate protection from produ

25、cts being counterfeited or pirated as many countries do not recognize trademarks and patents registered in other countries. - McDonald had to buy its trademark back in Japan - Korean distributor register American brands in Korea.Intellectual Property Rights, Counterfeiting and PiracyIn a common-law

26、country, ownership of intellectual property rights is established by prior use.In many code-law countries, ownership is established by registration rather than by prior use. - a trademark in Jordan belongs to whoever registers it first in Jordan so there are “McDonalds restaurants, “Microsoft softwa

27、re, and “Safeway groceries all legally belonging to a JordanianInternational Conventionsmajor international conventions:The Paris Convention for the Protection of Industrial Property -the Paris Convention- includes the USA and 100 other countriesThe Inter-American Convention - most of Latin American

28、 nations and the USAThe Madrid Arrangement, which established the Bureau for International Registration of Trademarks, includes 26 European ernational conventions for mutual recognition and protection of intellectual property rights International ConventionsIntellectual Property Rights,

29、 Counterfeiting and PiracyMulti-country arrangements to streamline patent procedure in EUR: The Patent Cooperation Treaty (PCT) - it search report on other patent The European Patent Convention (EPC) - one application for 15 states The World Intellectual Property Organization of UN (WIPO)Internation

30、al ConventionsIntellectual Property Rights, Counterfeiting and PiracyTrade Related Aspects ofIntellectual Property Rights (TRIPs)- min standards by 2006- procedures and remidies for enforcement- WTO dispute settlement proceduresInternational ConventionsIntellectual Property Rights, Counterfeiting an

31、d PiracyThe patent can be hold without being used:USA: whole durationother countries: 1 5 years The trademark can be hold without being used: Venezuela: 2 yearsattitude of people fm different countries- protect or share/benefit all?Patent Law: The U.S. versus JapanOperates under “first to invent rul

32、eOperates under “first to register ruleProtects individual inventorsPromotes technology sharingPatent applications secret Patent applications publicPatents granted in up to 24 monthsPatents granted in 4 to 6 yearsPatents valid for 17 years from its approvalPatents valid 20 years from application dat

33、e issued USAJAPANCommercial law within CountriesMarketing LawsIntellectual Property Rights, Counterfeiting and PiracyAll countries have laws regulating marketing activities. Take promotion in Eur for example. -In Austria, premium offers, free gifts, or coupons are considered as cash discounts and ar

34、e prohibited -Premium offers in Finland are allowed as long as the word free is not used -French law regulate premium, or gift conditional on purchase of another products. French law permits sales only twice a year, in January and August.- B4 Y2K,German courts prevented business from offering all so

35、rts of incentives to lure customers. No discount, rebate,lifetime guarantee, donation Commercial law within CountriesMarketing LawsIntellectual Property Rights, Counterfeiting and PiracyProduct comparison laws: False and misleading in ad and sales?- German: proof of superiority in ad?- Canada: exami

36、ne ahead, and “credulous person standardCommercial law within CountriesMarketing LawsIntellectual Property Rights, Counterfeiting and PiracyLanguage designated:-Puerto Rico and Virgin Island Spanish and English-China: magazine name should use direct translation from licensed namePrize drawing promot

37、ion- notary be presentSingle European Market Act v.s. trade legal differences Commercial law within CountriesMarketing LawsIntellectual Property Rights, Counterfeiting and PiracyGreen Marketing Legislation laws on environmental issues on consumer products related with industrial pollution, hazardous

38、 waste disposal, and rampant deforestation Green marketing laws focus on environmentally friendly products and on product packaging and its effect on solid waste management Green Marketing LegislationGermany has passed the most stringent green marketing laws that regulate the management and recyclin

39、g of packaging waste 3 phases of getting packaging green dot program EU is trying to harmonize eco-label for product on its packaging.aaAntitrust IssuesThe European Community, Japan, and many other countries have begun to actively enforce their antitrust laws patterned after those in the United Stat

40、esAntimonopoly, price discrimination, supply restrictions, and full-line forcing are areas which lead to less competition and higher prices for consumers Antitrust Issues - Before Procter & Gamble buy a German hygiene company, it had to sell off the napkin division of the latter first. - Coca-Cola w

41、as fined by Frances antitrust authority, and in Venezuela for limiting competition. - USA intervenes non-US companies attempt to acquire American companies: Nestle for Dreyers Grand Ice CreamtTactics to gain monopoly in is legal in one country, and illegal in another country.- beer in Mexico and USA

42、 U.S. Laws Apply in Host CountriesLeaving the boundaries of a home country does not exempt a business from home-country laws What is illegal for an American business at home can also be illegal by U.S. law in foreign jurisdictions for the firm, its subsidiaries, and licensees of U.S. technologyU.S.

43、Laws that apply in host countries include:(1) Foreign Corrupt Practices Act (FCPA)(2) National Security Laws(3) Antitrust LawsU.S. Laws Apply in Host Countries(2) National Security Laws(3) Antitrust LawsU.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology ca

44、nnot sell a product to a country which could affect national security of the U.S. the control of the sale of goods that have a strategic and military value was prohibited to countries viewed as major threats to U.S. security Protects American consumers from actions that restricts competition; also protect American export and investment opportunities (1) Foreign Corrupt Practices Act (FCPA)It is illegal to pay bribes to foreign officials, candidates, or political parties Stiff penalties can be assessed Cyber-law: Unresolved IssuesEx