International Business Law - Finals.pdf

International Business Law – Finals Methods of Doing Business Three major types of business organizations: 1. Sole Proprietorship 2. Partnerships 3. Corporations Sole Proprietorship: Unincorporated business that is owned by one individual. 1. Simple business structure. 2. The...

International Business Law – Finals Methods of Doing Business Three major types of business organizations: 1. Sole Proprietorship 2. Partnerships 3. Corporations Sole Proprietorship: Unincorporated business that is owned by one individual. 1. Simple business structure. 2. The owner makes decisions, receives all the profits, and claims all losses. 3. No separate legal entity. 4. Unlimited personal liability.  Search for, register, renew, change, or cancel a business name.  Search Costs: $8-$26 depending on the types of records you want to include in your search.  $60 to register.  $60 to renew. Sole Proprietorship: 1. Must satisfy federal, provincial, and municipal requirements. 2. The business name must be registered. 3. Obtain a license to operate. 4. Minimal records need to be kept. 5. No duties to disclose information to others. 6. Record to satisfy government agencies such as CRA. Partnership: 1. Two or more partners conducting business. 2. The question of profit. 3. Partnership legislation/agreement. 4. Could be created be an agreement or actions of partners. Partnership:  Each partner is an agent for the partnership.  All partners are liable for the torts of the other partners and employees.  All the assets of the partners are at risk to satisfy debts and obligations – unlimited liability. Which of the following activities would not be considered a partnership? 1. Sharing profit only (not in gross). 2. Owning a property in common with someone else, which is rented out for profit. 1. Contribution of capital to establish a business. 2. Sharing expense, profits, and losses. 3. Managing a business. Partnership Agreement 1. The duties of each partner. 2. Type of work or contribution. 3. Amount of time committed to the partnership. Dissolution of Partnership  Upon notice.  Upon death or bankruptcy of one of the partners. Vicarious Liability  Partners are vicariously liable for both carless and intentional conduct of other partners/employees.  All partners are vicariously liable for the money of third parties put into the care of the partnership.  Remember: A third party can collect from any partner regardless of agreement. Jointly Versus Severally Liable:  Apart from wrongful conduct or misuse, all parties are only jointly liable for the debts and obligations of the parentship. General principles of partnership: 1. Sharing profits equally between partners. 2. Reimbursement of partners for any expenses. 3. All partners have the right to take part in management. 4. A partner is not an employee (not entitled to wages). 5. Major changes require unanimous decision. 6. Partners do not have the right to assign their partnership status to other party without consent of other partners. Limited Partnership  General and limited partners.  Liability.  Limited liability partnerships are only available for professionals (accountants, lawyers, doctors, dentists, and others). Limited Partnership: A limited partnership status can be lost if:  The partner allowed herself to be represented as a partner.  The partner takes part in the control of the business.  She allows her surname to be used in the name of the business.  She contributes services to the partnership. Limited Liability Partnership:  Available for professionals (physicians, optometrists, lawyers, chiropractor, and accountants) authorized by statute.  Partners must maintain minimum insurance coverage.  Must be registered with LLP in their name.  Partners have unlimited liability only for their own negligent acts and for those they supervise. Methods of Doing Business Corporation: 1. Separate legal entity 2. Use of the word limited 3. Could be owned by one or more individuals 4. Shareholders own the shares of the corporation (more than one class of shares)  1. Shareholders are not liable for the debts of a corporation. However, courts oftentimes lift the corporate veil and find the directors or o icers liable. 2. A corporation has the capacity of a natural person. Advantages and disadvantages of corporations:  Limited liability (any exceptions?)  Tax benefits  The ease of transferring shares (corporation does not die.) However, transferability of shares may be restricted, but how?  Few ownerships obligations  Separation of ownership and management  Minority shareholders have a weak position in corporations. Funding of Corporations  Selling shares: common shares, preferred shares with special rights and restrictions  Borrowing  Shareholders are participants in the corporation.  Lenders are creditors  More stringent government control Corporations Act, R.S.O. 1990, c. C38 https://www.ontario.ca/laws/statute/90c38 The Process of Incorporations  Federal and provincial levels  Registration  Article of incorporation  Section 18 (1) Corporations Act, R.S.O. 1990, c. C38 https://www.ontario.ca/laws/statute/90c38 Finding the Right Partners  Assessing Organizational Readiness and Identifying Gaps  Defining Desired Business Partner Characteristics  Finding Business Partners  Determining Whether Organizations Are Complementary  Performing Due Diligence Assessing Organizational Readiness and Identifying Gaps Finding appropriate partners includes the analysis of: o Mission and goals o Financial resources o Commitment to change o Logistics resources o Product/service o erings o Cultural competence o Human resources o Production resources/capacity Defining Desired Business Partner Characteristics Six basic factors that have a significant impact on the success of a partnership: Mission Strategy Governance Culture Organization Management  Size  Capabilities o Technical skills and resources o Financial resources o Management resources o Competitive advantages Finding Business Partners  Business Associates Canada Global A airs Canada provides a range of services for Canadian and non-  Governments Canadian businesses. European Union The Enterprise Europe Network (EEN) is Europe’s largest network providing trade expertise and services for organizations. India The Government of India’s Department of Commerce o ers a wide range of trade promotion services and assistance for Indian organizations wishing to trade internationally. South Africa The South African Department of Trade and Industry o ers programs that support travel to foreign markets, attendance at trade shows and the establishments of pavilions at local and international trade fairs. United States The U.S. Department of Commerce provides many services to American organizations through their bureau. International Trade Administration Foreign Embassies and Trade Commissioners in Foreign Markets: o Determine what the o ice is to do. o Clearly state the nature of the business. o Provide thorough, point-form background. o Disclose previous dealings in country. o Be aware of rotating sta.  Business Associations  Business Advisors  Financial Institutions  Social Networking Sites  Commercial Databases Expos and Trade Shows: o Vertical or specialized trade shows o Consumer trade shows o Horizontal or universal trade shows Published Studies and Books Determining Whether Organizations Are Complementary Organizational or cultural clashes can be harmful to business partnerships. o Characteristics o Attitudes CHARACTERISTICS o Operations  Size  Structure  Management style  Operating style Ideal Partners Attitudes Operations  Strategic objectives  Communication systems  Level of cooperation  Logistics  Company management Intensive business relationships should consider: o How much cooperation is required o Are financial objectives compatible? o Do di erences require special o Is the understanding of risk similar? arrangements? o Is there agreement on financial o Can di erences be accommodated? distributions? o Are operations centralized/decentralized? o Are HR policies similar? o Are attitudes to tasks similar? Performing Due Diligence Research must be conducted to ensure the protective partner is exactly what it appears to be. Due diligence involves:  Investigating partner’s track record  Investigating partner’s financial history  Partner’s ability to deliver products on time and budget Intercultural Competence Gaining New Perspectives 1. Understanding Culture’s Impact on International Trade Describes what culture is the various degrees of understanding culture and how it a ects communication with international partnerships. 2. Developing Intercultural Relationships Describes the importance and process of building and maintaining relationships with international partners and how to navigate the cultural divide. Understanding Culture’s Impact on International Trade  What is Culture?  Cultural Orientations  Societal Systems  Cultural Resources  Research Target Cultures  Share Findings and Best Practices What is Culture? Culture is a system of shared attitudes, beliefs, values, aesthetics, language, traditions, and social systems of a group (for example, a country, an organization) Intercultural Competence Ethnocentrism Cultural Relativism Cultural Orientations  Cultural Distance  Individualism versus Collectivism  Power Distance  Masculinity versus Femininity  Uncertainty Avoidance  Long-Term Orientation versus Short-Term Orientation  Indulgence versus Restraint Meyer’s Model o Communicating: Low-Context versus High-Context o Evaluating: Directing Negative Feedback versus Indirect Negative Feedback o Persuading: Principles-First versus Application-First o Leading: Egalitarian versus Hierarchical o Deciding: Consensual versus Top-Down o Trusting: Task-Based versus Relationship-Based o Disagreeing: Confrontational versus Non-Confrontational o Scheduling: Linear Time versus Flexible Time Societal Systems Economic System o Free Market/State Controlled Religious System Education System o Universality o Quality o Content o Values Cultural Resources Primary research is often an e ective but expensive way to learn about a target culture, travelling reveals much about a society. o Trade o ices or consulates o Trade commissioners o Cultural attaches o Online resources o Peers familiar with target culture o Agents and representatives Share Findings and Best Practices International trade practitioners benefit from each other’s intercultural success stories and mistakes.  Lessons from colleagues  Noting observations, interpretations, questions, and insights Developing Intercultural Relationships  How to Build and Sustain Intercultural Relationships  Misunderstandings  Using a system  Communication and Intercultural Relationships How to Build and Sustain Intercultural Relationships Developing relationships is a process that needs an ongoing commitment of time and e ort.  Finding Similarities  Building Trust  Ongoing Communication Misunderstandings Misunderstandings are likely to occur in intercultural relationships because of di erences in language, value, beliefs, perceptions, expectations, and behaviours. The most common forms of misunderstandings are time, high-versus low-context communication, and loss of harmony and face. When a misunderstanding occurs, trade associates should attempt to recover by explaining the intended outcome. Using a System David Livermore created a system for developing cultural intelligence to help people prepare for and adapt to the situation as it unfolds. A System for Managing Intercultural Interactions Communication and Intercultural Relationships Language and Verbal Communication Non-Verbal Communication Written Communication Interpreters Translators Long Distance Communications and Technology Tips for Communicating When Speaking… When o Repeat messages as necessary. Make it clear at the beginning of the conversation Listening that you are happy to do so. o Enunciate words clearly and speak at a slow pace. Do NOT speak loudly. o Improve ability to o Pause more frequently. interpret di erent o Use simple and vocabulary. Avoid using jargon, slang and colloquial expressions pronunciations. such as ‘run that by’ and fillers, such as ‘well, ummm’. o Ask questions or do activities to ensure that they understand the message. Ask clarifying, open-ended questions, such as ‘Where is the order at this time?’ or ‘How would you like to proceed?’ o Avoid long sentences. o Balance facts and principles with stories. o Use visuals. o Provide summaries in writing, with visuals if appropriate. Steps to Help with Interpretation Negotiations Relationship Exchange Preparation Information and Building First O er Evaluate Approach Persuasion Concessions Agreement and Identify Lessons Learned Typical Phases in Negotiations Impact of Culture on Negotiation Strategies Around Information Exchange and Initial O er Final Check 1. What is the importance of international trade practices developing intercultural competence? a. To adapt to other cultures’ preferences while remaining true to self. b. To gain a more ethnocentric perspective of the world. c. To find ways to gain advantage in intercultural relationships. d. To develop the ability to perform e ectively in other cultures. 2. What is intercultural competence? a. The ability to behave appropriately and e ectively in another cultural context. b. The ability to see the di erence between two cultures in terms of their politics, history, economics, language, education, religion and cultural patterns orientations. c. The ability to view situations from the perspective of multiple cultures. d. The ability to value one’s own culture above those of others, to see the world in light of one’s own cultural background and to view one’s experience as what is normal and best. 3. The following bar chart shows the uncertainty avoidance score of four countries. Based on these scores, which country’s tendency is best described in the statements that follow? The culture tends to believe:  There should only be as many rules as necessary, i.e. the preference is for fewer rules.  If rules are ambiguous or do not work, they should be abandoned or changed.  Schedules are flexible and innovation is not seen as threatening. a. Hungary b. Bangladesh c. New Zealand d. Jamaica 4. In preparation to host a business delegation from Vietnam, you have learned that Vietnamese are likely to express opinions and requests using phrases such as, “If it’s all right with you…?” and “I’d like to suggest…”What kind of communication preference does that indicate? a. Feminine b. Masculine c. High context d. Low context 5. An American company is negotiating a contract and potential partnership with a German company. The American negotiating team is looking to build long-term relationship with the German team. When meeting to negotiate the contract, the American team members referred to everyone by their first names, took o their jackets and rolled up their sleeves when sitting down, shared personal anecdotes, and asked non-work-related questions to the German team. These actions were aimed to build an open and friendly relationship. The German team was surprised and confused by this laid-back attitude and questioned why the American team was being disrespectful and whether it was serious about the contract. The German team is  now re-thinking its partnership with this American company. Based on the above information, which cultural element a ected these negotiations? a. Risk taking b. Personal style c. Team organization d. Emotionalism Introduction to IP Law What is Intellectual Property? What is Intellectual Property Law? Why Study Intellectual Property? Policies and Tensions in Intellectual Property. A Brief look at the National and International Regulatory Frameworks How to Protect Information? IP Rights Subject Matter Example Registration Duration Copyright Original artistic and Books, novels and Yes/No? Varies: Life+ 50, 70 literary work music or 95 (for published) or 120 unpublished work Patents Inventions Computer software Yes 20 Trademarks Signs identify Apple/Google Yes Renewable every 10 products years Design Patent Visual appearance of Furniture, lamp Yes In Canada, 10 years a product from the registration date or 15 years from the filing date (14 years in the US) Trade Secrets Economically viable Recipes Google’s No Forever information search algorithm What is Intellectual Property ‘Intellectual property, very broadly, means the legal rights which result from intellectual activity in the industrial, scientific, literary, and artistic field.’ ‘Property’: rights and remedies Intellectual Property: Copyright Copyright law concerns the protection of original works of ‘authorship fixed in any tangible medium of expression’… including literary, musical and artistic works, films and sound recording…’ and so on. Certain types of authorship, original, fixed, and expression of ideas not the ideas themselves. Copyright is not granted by anyone; it subsists automatically. What is Intellectual Property Law? How about; Tax table, Computer programs, Electronic databases, Websites Intellectual Property: Copyright Registration in 3 steps: 1. Application 2. Fee Payment 3. Deposit submission You can access the registration system here: https://www.ic,gc.ca/eic/site/cipointernet- internetopic.nsf/eng/wr03915.html Patents 1. Why file a patent application? 2. What are the alternatives to patent protection? 3. What are the advantages and disadvantages of patent protection (think trade secrets)? 4. When would you file a patent application for a new invention? 5. What would you do before launching a new technology? Intellectual Property: Patents Patent – Patere: ‘to be open’ Patent law protects inventions including any process, machine, manufacture, or composition of matter, or improvement thereof. Patent law protects the underlying idea of an invention and protects against use even without copying (note: copyright law protects expression rather than ideas and forbids actual copying). Patents Obtaining a patent is much harder that copyright. Shorter but stronger protection. Unlike copyright, patents are only granted after an examination process that takes 2-4 years and involves considerable expense. Patents: Regulatory Framework Filing a patent application Requirements: 1. Is your invention patentable? 2. Has your invention been disclosed before? What type of patent is good for you? Patent Application Requirements: 1. An application includes: A specification, including a description A claim or claims Drawings When necessary; an oath or declaration The prescribed filing, search Examination fees (attached) What is Patent? (two examples) A written description includes:  An abstract  The field invention falls into  Description of similar inventions / prior art  Adequate description of the invention / how to practice it Routes to Registration Trademarks 1. Why register a trademark? 2. What are the pros and cons of a trademark registration compared to unregistered trademark protection? 3. What are the advantages and disadvantages of a trademark protection compared to other IP rights? 4. When would you file a trademark registration application? 5. What would you do before choosing a new trademark or filing?  A trademark di erentiates the product of one undertaking from those of another undertaking.  Unlike patents and copyright, trademarks can last forever.  Unlike patents and copyright, trademarks exist as far they are used in relation to goods and services (not in gross).  Enhancing protection for products already protected by others forms of IP. Viagra TM – Sildenafil Citrate Patent.  Valium TM. Names, words, symbols, logos or any combination thereof. Terms: trademarks and service marks. A certification mark donates that a product has certain qualities or attributes – WOOLMARK (Geographical indications) https://www.woolmark.com/industry/certification/ Grounds for Refusal  Identical mark/good  Confusingly similar  Earlier marks with a reputation  Conflict with other IP rights How Strong is Your Trademark: Five Categories Fanciful: Kodak’ printing and photography services’ Arbitrary: Apple for ‘computer’ Suggestive: QUICKLY N’ NEAT for “pie crust” or GLANCE-A-DAY for “calendars” Descriptive: secondary meaning Generic: CREAMY for “yogurt” Prohibited Shape Resulting from the nature of goods Necessary to obtain a technical result Giving substantial value to the goods Contrary to public moral Deceptive Benefits of Registration A proof of ownership of the mark – nationwide / state registration only for common law (right persists only for the specific area where the mark is used). Public notice of your claim of ownership. Recording your mark with the U.S Customs and Border Protection Service to prevent importation of infringing foreign goods. Trademark Representation Non-conventional trademarks: Colours: Green-gold color on press pads Sounds: NBC’s three chimes or Tarzan yell Scent: Plumeria blossoms on sewing thread Holograms: A mark that contains a changeable or ‘phantom’ element Motion marks: Moving images Classification of Goods and Services Requirement for classification of goods / services Nice Classification System (45 classes) 1-34 for goods- Examples: Class 3: Soaps, perfumery, essential oils, cosmetics, hair lotions. Class 15: Musical instruments Class 29: Meat, fish, poultry and game 1. Why classify goods and services? 2. What is the legal significance of the class into which goods or services fall? 3. Can you use class headings only without going into details? Trade Secrets The secret formula of Coca-Cola Nutmeg sourced from the Banda Islands: the New Yorker, August 13, 2001, at 60-65. Things to Consider When Keeping a Trade Secret 1. No state agency in charge of issuing or registering secrets. 2. Misappropriation can be found under two main scenarios: when a secret is obtained by theft or where a secret is disclosed in violation of a confidential agreement. 3. No protection against independent discovery or invention. 4. Reverse engineering a product containing a trade secret – though immoral – is legal. 5. Once disclosed, protection is lost. Digital technology: Easy to store / access higher risk of disclosure or misappropriation Example: publication Digital technology: What to do about it? 1. Encryption 2. Restrictions: no USB? Employment: IP ownership / Non-compete clause Licensing: the ‘Black box dilemma’ Non-disclosure agreements (NDA) In writing Define technology/information Duration Ethical Standards in Modern Business Meaning of “Ethics”: “The study of principles relating to right and wrong conduct.” “The standards that govern the conduct of a person, especially the member of a profession.” Ethics no longer a marginal consideration in business. Triple Bottom Line Profit not the only goal of business:  Profits  People  Planet Child Labour Critical, complex, and compelling problem Many conventions: fewer ratifications  ILO Convention: 1973  United Nations: Rights of the child 1989  UNICEF Child Labor Report 1997  Corporations: Now include in Codes of Conduct Human Rights Universal Declaration of Human Rights (by United Nations – 1948) Other major conventions:  Genocide (1951)  Racial Discrimination (1969)  Economic, Social, and Cultural Rights (1976)  Torture (1984)  Discrimination Against Women (1981)  Rights of the Child (1989)  International Criminal Court (2002) Human Rights: NGOs Many organizations report on abuses:  Amnesty International  Human Rights Watch  International Human Rights Association  World Organization against Torture  Freedom House  Anti-slavery International  Democracy Watch Privacy and Counterfeiting Intellectual Property (patents/trademarks and so on): important business asset Piracy endemic in many regions  Examples: CDs / DVDs  Software  Medicines  Food Challenge of protection  Costs involved  Pirates who ignore the law Invest time and resources to protect IP Apply to regional / national IP o ice Codes and Integrity Programs The evolution of five generations of codes and conduct First generation Conflict of interest Second generation Commercial conduct, observing the rule of law Third generation Safe working practices, other third-party concerns Fourth generation Community and environmental issues Fifth generation Human rights, accountability, and social justice Ethics Dangerous to ignore ethical issues  Legal penalties  Loss of reputation and / or business Develop clear policies Put in Code of Conduct / Integrity program Obtain commitment from sta Introduce throughout organization Obtain “buy-in” Senior Managers: “walk the talk” Independent monitoring to ensure compliance Holding Corporations to Account Voluntary and International Guidelines  Extractive Industries Transparency Initiative (EITI)  Chemical Industries: Responsible Care (RC)  OECD Guidelines for multinationals  Financial Institutions: Equator Principles  Global Reporting Initiative (GRI)  Also: “Corpwatch” magazine CITP Standards of Ethical Conduct Two basic concepts: 1. Competency 2. Integrity Responsibilities  To the individual  To the organization  To the community and society  To the profession  To avoid or disclose potential conflicts of interest CITP should ensure his/her organization has an e ective policy on ethics in international business.