QUESTIONS 1. Describe the multiplicity of the legal environments. Much like the political environment, the multiplicity of legal environments exists because a company selling abroad must cope with the legal systems of more than one country. It is possible that foreign, domestic, and international legal environments may demand contradictory actions. 2. Distinguish between common law and statute law systems. A common law system is a legal system that relies heavily on precedents and conventions. In the case of a statute law system, the main rules of the law are embodied in legislative codes, and there is a strict and literal interpretation of the law under this system. 3. Cite examples of products that cannot be imported into the United States. The prohibited items include counterfeit products, illegal drugs, most agriculture products, endangered species, monkeys and other primates, hazardous articles and substances, obscene articles, seditious and treasonable materials, lottery tickets, and products made by forced labor. 4. Explain how the legal environment can have an impact on an MNC's marketing mix. All of the four Ps of marketing are affected by the legal environment. A product may have to be modified to meet a country's safety standards. The length, width, and number of distribution channels may be specified by laws. Advertising time, space, and messages must conform to specific laws. In the case of pricing, price discrimination is generally illegal, and price controls are common in many countries. 5. What is the extraterritorial application of law? The extraterritorial application of law occurs when a nation attempts to apply its laws to activities outside its own territory (i.e., extraterritorially). 6. Why do MNCs prefer to use corporate subsidiaries in foreign markets? MNCs prefer to form corporate subsidiaries in foreign markets because of several reasons. One reason may involve gaining quick access to a particular market by acquiring an existing company within the market and making it a subsidiary. Another reason is because of the flexibility created, which may allow the parent company to take advantage of legal loopholes or of the opportunity to circumvent certain government requirements. Another advantage is the tax benefits. Finally, the limited-liability advantage may be one of the most important reasons why a subsidiary is formed.
7. Distinguish among patent, trademark, copyright, and infringement. A patent protects an invention of a scientific or technical nature. A trademark is a symbol or name used to identify a product made or marketed by a particular firm. A copyright offers protection against copying by others to an author or artist for his works. An infringement occurs when there is commercial use (i.e., copying or imitating) without owner's consent, with the intent of confusing or deceiving the public. 8. Distinguish between priority in use and priority in registration. A common law country determines patent ownership by priority in use. In comparison, the ownership in a statute law country is determined by priority in registration. That is, the "first to file" is granted a patent even if an innovation was actually created or used earlier by someone else.
DISCUSSION ASSIGNMENTS AND MINICASES 1. Why is it so difficult for an MNC to deal with bribery? It is very difficult to deal with bribery because of varying legal and cultural interpretations. The multiplicity of the legal environments makes it inevitable that certain laws of various countries will be in conflict. A certain practice can be legal in one country but is considered a bribe and an illegal act in another country. Since it is customary to compensate someone for doing a favor, the level and kind of compensation which may become illegal are difficult to determine. Furthermore, bribery is often a matter of degree, and to distinguish a bribe from a gift is no easy task. 2. What can trademark owners do to minimize counterfeiting? Trademark owners can ask U.S. Customs to seize counterfeit goods. To do so, they need to be able to offer concrete proof so that fakes can be identified. The battle must be carried to the counterfeiters' own country and to other major markets in addition to the trademark owners' home market. In any case, trademark owners cannot rely solely on government enforcement. They must invest in and establish their own monitoring systems. 3. As an owner of a software product, what form of legal protection will you try to obtain: patent, copyright, or trademark? A software product can be protected in a number of ways. On the one hand, software has a functional utility, and it is also technical in nature. As such, it may be eligible for a patent. On the other hand, software codes, as written, may be construed as a form of expression. Therefore, it may also be possible to copyright the software. It should be noted also that a copyright affords its owner a longer period of protection. Finally, a particular trademark can be used to identify the owner of a particular software (e.g., Adobe Photoshop).