1. The International Legal Environment: Playing by the Rules
International Marketing
15th edition
Chapter 7
The International Legal Environment:
Playing by the Rules
Philip R. Cateora, Mary C. Gilly, and John L. Graham

2. Overview Bases for today’s legal systems
The important factors in jurisdiction of legal disputes
The various methods of dispute resolution
The unique problems of protecting intellectual property rights internationally
Cyberlaw
Commercial law within countries
U.S. Laws application in host countries
Export restrictions
Roy Philip

3. Bases for Legal Systems
Four heritages form the basis for the majority of the legal systems of the world
Common law
Civil or code law
Islamic law
Marxist-socialist tenets
Even though a country’s laws may be based on the doctrine of one of the four legal systems its individual interpretation may vary significantly
Roy Philip

4. Common and Code Law Common law Code 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 facts
Are recognized as not being all-inclusive
Ownership is established by use
Code law
Legal system is generally divided into three separate codes
Commercial
Civil
Criminal
Ownership is determined by registration
Considered complete as a result of catchall provisions found in most code-law systems
Roy Philip

5. Islamic Law The basis for Islamic law is interpretation of the Koran
Islamic law defines a complete system that prescribes specific patterns of social and economic behavior for all individuals
Property rights
Economic decision making
Types of economic freedom
Among the unique aspects of Islamic law is the prohibition against the payment of interest
The Islamic system
Places emphasis on the ethical, moral, social, and religious dimensions to enhance equality and fairness for the good of society
Roy Philip

6. Jurisdiction in International Legal Disputes
No judicial body exists to deal with legal commercial problems arising between citizens of different countries
Legal disputes can arise in three situations
Between governments
Between a company and a government
Between two companies
Jurisdiction is generally determined on the basis of:
Jurisdictional clauses included in contracts
Where a contract was entered into
Where the provisions of the contract were performed
Most clear-cut decisions can be made:
When contracts or legal documents supporting a business transaction include a jurisdictional clause
Roy Philip

7. Litigation The best advice is to seek settlement
Deterrents to litigation
Fear of creating a poor image and damaging public relations
Fear of unfair treatment in a foreign court
Difficulty in collecting a judgment that may otherwise have been collected in a mutually agreed settlement through arbitration
The relatively high cost and time required when bringing legal action
Loss of confidentiality
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8. 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 customers
Millions are spent on research to develop products, processes, designs, and formulas
Intellectual or industrial properties are among the most valuable assets
New technologies developed to prevent piracy
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9. Counterfeiting and Piracy
Lost sales from the unauthorized use of U.S. patents, trademarks, and copyrights
Amount to more than $100 billion annually
The piracy industry has grown so sophisticated
Many counterfeit goods are indistinguishable from original
Piracy actually can serve come companies
Microsoft
Counterfeit pharmaceuticals
2% of the $327 billion worth of drugs sold each year
– fun pirated products
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10. Inadequate Protection
Failing to adequately protect intellectual property rights can lead to the legal loss of rights in potentially profitable markets
There 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 use
McDonald’s in Japan
Many businesses fail to take proper steps to legally protect their intellectual property
Roy Philip

11. Prior Use Versus Registration
Prior Use – whoever can establish first use is typically considered the rightful owner
Registration – the first to register a trademark or other property right is considered the rightful owner
A 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 assets
It is best to protect intellectual property rights through registration
Roy Philip

12. International Conventions
Three major international conventions
Paris Convention for the Protection of Industrial Property
Inter-American Convention
Madrid Arrangement
World 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 states
Patent Cooperation Treaty (PCT)
European Patent Convention (EPC)
The Trade-Related Aspects of Intellectual Property Rights (TRIPs)
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13. Marketing Laws (1 of 2)
All countries have laws regulating marketing activities
Promotion
Product development
Labeling
Pricing
Channels of distribution
Discrepancies across markets cause problems for trade negotiators – particularly for managers and their firms
U.S. does not allow the buying or selling of human organs
Some countries only have a few marketing laws with lax enforcement
Others have detailed, complicated rules that are stringently enforced
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14. U.S. Laws Apply in Host Countries (1 of 2)
Foreign Corrupt Practices Act
Makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties
National security laws
Prohibit a U.S. company, its subsidiaries, joint ventures, or licensees to sell controlled products without special permission from the U.S.
Antitrust laws
Enforcement has two purposes in international commerce
Protect American consumers
Protect American exports and investments against any private restrictions
The question of jurisdiction and how U.S. antitrust laws apply
Sections I and II of the Sherman Act
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15. U.S. Laws Apply in Host Countries (2 of 2)
Antiboycott law
U.S. companies are forbidden to participate in any unauthorized foreign boycott
Required to report any request to cooperate with a boycott
Extraterritoriality of U.S. laws
Especially important to U.S. multinational firms
Foreign governments fear the influence of American government policy on their economies through U.S. multinationals
When U.S. laws conflict with those of host country
When U.S. Justice Department restricts of forbids ventures because of anticompetitive effects
Roy Philip