Chapter 5

Legal Environment

Chapter Outline

Multiplicity of Legal Environments Legal Systems Jurisdiction and Extraterritoriality Legal Form of Organization Branch vs. Subsidiary Litigation vs. Arbitration

Chapter Outline

Bribery

- Legal Dimension

- Ethical Dimension Intellectual Property

- Categories of Intellectual Property

- Legal Rights and Requirements

Legal Systems

Common law system– Relying on precedents and conventions– E.g., USA, UK, Canada, India

Statute law system– Code or civil law system– Main rules of law embodied in legislative codes– Japan and most continental European countries

Jurisdiction

territorial range of authority a court's legal power to hear a case

Extraterritoriality

a country's or court's application of national laws beyond its border– E.g., USA and Foreign Corrupt Practices Act– E.g., Belgium’s universal jurisdiction

How to Settle Commercial Disputes

Negotiation Arbitration Litigation

Bribery: Legal Dimension

Foreign Corrupt Practices Act (FCPA) OECD Convention on Combating Bribery of

Foreign Public Officials in International Business Transactions

Foreign Corrupt Practices Act (FCPA)

Bribery is "the use of interstate commerce to offer, pay, promise to pay, or authorize giving anything of value to influence an act or decision by a foreign government, politician, or political party to assist in obtaining, retaining, or directing business to any person."

Types of Payment- Permissible: expediting payments to low-level officials

who exercise only "ministerial" or "clerical" functions - Illegal: payments to an official exercising discretionary

authority

Bribery: Ethical Dimension

Morality as a function of culture Corporate strategies

– Codes of conduct– Sensitization of ethics in managers through training

and education– Ethics audit

Transparency International

Corruption Perceptions Index (CPI) Bribe Payers Index (BPI)

Intellectual Property

"creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce"

Trademark Copyright Patent

– Functional patent– Design patent

Trade Secret

Intellectual Property

Trademark - symbol, word, or thing used to identify a product made or

marketed by a particular firm Copyright- protection given to an author or artist for literary, musical,

dramatic, and artistic works Patent - invention of a scientific or technical nature Trade secret - know-how that is kept secret within a particular business- e.g., manufacturing methods, formulas, plans