Ball 2nd Edition Exam Prep

Module 06 Intellectual Property Rights and Other Legal Forces

1) Civil law is the most widespread system in use globally.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 06-01 Describe the three types of legal systems.
Topic : Differences in Legal Systems

The civil law approach is based on codification, that is, a systematic collection of laws designed to cover all areas of concern and, hence, is bureaucratic. The tradition of civil law was derived from ancient Roman law and has been influenced by codified religious law such as Islamic law and canon or Christian law. Today it is the most widespread system globally.

2) Common law relies on codification.

⊚ true
⊚ false

The common law approach relies on decisions made by judges in previous cases along with statutes and regulations made by legislatures, and civil law relies on codification.

3) Customary international law draws on practices that have been followed often for centuries.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Topic : Laws Affecting International Business
Difficulty : 1 Easy
Learning Objective : 06-02 Describe the rule of law and its sources.

Customary international law consists of international rules derived from customs and usage over centuries. An example of customary international law is the prohibition against genocide (there is also a specific international statute against genocide); another is the immunity from prosecution of visiting foreign heads of state.

4) The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in U.S. companies operating abroad is an example of extraterritoriality.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Laws Affecting International Business
Learning Objective : 06-03 Discuss the general legal concerns in global business.
Bloom's : Apply

Americans working for American companies abroad are protected by U.S. Equal Employment Opportunity Commission (EEOC) regulations. This may cause problems in countries where there are social mores that are not harmonious with those of the United States, such as men and women working together or closed hiring systems.

5) A choice-of-law clause in a contract specifies where the dispute will be settled.

⊚ true
⊚ false

A choice-of-forum clause makes this distinction.

6) The UN Convention on the International Sale of Goods (CISG) has established legal rules and outlined the rights and obligations of the buyer and seller.

⊚ true
⊚ false

If the traders are in countries that have ratified CISG, then it automatically applies unless they opt out.

7) Companies are agreeable to entering litigation efforts because they are quick and inexpensive.

⊚ true
⊚ false

Litigation, a legal proceeding conducted to determine and enforce particular legal rights, can be complicated and expensive.

8) Arbitration tends to be less private than litigation.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Laws Affecting International Business
Learning Objective : 06-03 Discuss the general legal concerns in global business.

Arbitration is usually quicker, less expensive, and more private than litigation, and it is usually binding on all parties.

9) Intellectual property includes patents and trademarks, but not copyrights.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Learning Objective : 06-04 Identify methods to protect intellectual property.
Topic : Property Rights and Intellectual Property Rights
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy

Copyrights are also a form of intellectual property.

10) The European Patent Organization (EPO) makes filing for a patent in all 28 EU member states more difficult than it was previously.

⊚ true
⊚ false

The EPO makes the filing easier, because it is only one filing, compared to 28.

11) The logo that allows consumers to identify a company or product is an example of a trademark.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 06-04 Identify methods to protect intellectual property.
Topic : Property Rights and Intellectual Property Rights
Accessibility : Keyboard Navigation

A trademark is a shape, color, design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company’s sole use.

12) Global standardization of trade-related law is progressing slowly.

⊚ true
⊚ false

There are tax conventions and some antitrust treaties, and the EU has made progress, but in general, legal matters go country by country.

13) Incoterms are established by the UN Commission on International Trade.

⊚ true
⊚ false

Incoterms are established by the International Chamber of Commerce.

14) International Organization for Standardization (ISO) is the only international standardizing organization.

⊚ true
⊚ false

The ISO is joined by the International Electrotechnical Commission (IEC).

15) Under U.S. law, price fixing is illegal per se, while in other countries, damage or harm has to be done; this is the case in the EU.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : 06-06 Describe the impacts of the national-level legal forces in the areas of competition, trade, tort, ethics, and accounting.
Topic : Laws Affecting International Business

The per se aspect of U.S. law is not shared in the EU.

16) When first introduced in Japan, antitrust legislation honored the existing zaibatsu.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Learning Objective : 06-06 Describe the impacts of the national-level legal forces in the areas of competition, trade, tort, ethics, and accounting.
Topic : Laws Affecting International Business
Difficulty : 1 Easy

In Japan, antitrust legislation was introduced by the United States during its occupation after World War II. This legislation, the Japanese Anti-Monopoly Law, was modeled on U.S. antitrust law and did not harmonize well with the existing cooperative zaibatsu (family-based financial and business conglomerates) the Japanese government had established.

17) Competition laws are another term for antitrust laws.

⊚ true
⊚ false

Actions to enforce competition laws or antitrust laws usually are brought by government against business, but one business may also sue another.

18) The EU does NOT apply its competition policy beyond the EU.

⊚ true
⊚ false

The EU engages in the extraterritorial application of its competition policy. In 2017, the EU Commission issued a record $2.7 billion fine against Google for giving unfair preference to some of its own online services ahead of those of its competitors.

19) The United States avoids trade barriers on imports in support of free trade principles.

⊚ true
⊚ false

The United States applies tariffs and other trade barriers.

20) Product liability is an area of torts in which the U.S. courts can make large awards, unlike in other countries.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Bloom's : Remember
Learning Objective : 06-06 Describe the impacts of the national-level legal forces in the areas of competition, trade, tort, ethics, and accounting.
Topic : Laws Affecting International Business

Other countries restrict award amounts.

21) In Sharia law, interest is forbidden, which results in

A) severe limitations on working capital.
B) equity partnerships, where business risk is shared.
C) interest that is usually paid but termed something else.
D) limits in the development of international businesses.

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Bloom's : Remember
Topic : Laws Affecting International Business
Learning Objective : 06-01 Describe the three types of legal systems.

One aspect of Sharia law relevant to international managers is the prohibition of charging interest. Instead, equity partnerships are used as a financing instrument, with the lender assuming a share in the operating risk.

22) During the trial, the judge openly questioned the defendant and her lawyers and often challenged the presented evidence. There wasn’t a jury and the judge made the final decision. Which type of legal system would include this scenario?

A) common
B) civil
C) religious
D) criminal

The civil law approach is inquisitorial; that is, judges often actively question the prosecution, the defense, and their witnesses during proceedings and may challenge evidence in their efforts to track down the truth. The judge also issues the decision. Trial by jury is less frequent in civil law systems.

23) The three main approaches to law are

A) civil, common, and religious.
B) civil, Sharia, and court-based.
C) Sharia, Talmudic, and Napoleonic.
D) criminal, civil, and common.

Civil, common, and religious are the three main approaches to law.

24) Civil law is based on

A) a collection of codes.
B) precedents found in judgments made by judges.
C) the assumption of innocence.
D) religious law associated with the area.

Civil law, such as Napoleonic law, is based on a collection of codes and tends to not be adversarial.

25) The legal system of a country is composed of

A) the collection of governing principles, and the legislation and regulations enacted to provide for the welfare of the country.
B) the laws and their interpretation by citizens, but not noncitizens.
C) local laws that are interpreted for federal use.
D) a collection of folkways, rules, and regulations whose goal is to support civil harmony.

The legal system of a country is the collection of governing principles, such as a written or oral constitution, and the legislation and regulations enacted by governing bodies established to provide for the welfare of the country.

26) The Qur’an is associated with Islam and indicates the presence of which form of law?

A) international
B) civil
C) religious
D) common

In religious law, a religious document or source is the basis of the legal system. Religious law is followed in Iran, Saudi Arabia, Libya, and Morocco, among other countries. In Islam, Sharia law’s fundamental documents are the Qur’an and Sunnah, while some rulings may be developed by jurists (legal experts) guided by religious documents, reasoning, and opinions from the religious community.

27) At the end of the trial, the judge stated that his decision for the case was based on a decision made in a similar case twenty years ago. Which form of law is indicated by the use of previous cases?

A) international
B) civil
C) religious
D) common

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Laws Affecting International Business
Bloom's : Apply
Learning Objective : 06-01 Describe the three types of legal systems.

The common law approach relies on decisions made by judges in previous cases along with statutes and regulations made by legislatures.

28) International law that is used to govern the transactions between companies that cross international borders is called

A) public international law.
B) jurisdiction law.
C) private international law.
D) territorial law.

Private international law includes laws governing the transactions between individuals and companies that cross international borders.

29) The most important sources of international law are

A) the UN International Court of Justice.
B) the U.S. Supreme Court and the EU Court of Justice.
C) bilateral and multilateral treaties, along with customary law.
D) common and civil law.

Treaties are the main source of international law, and they are often negotiated through efforts of the UN. Customary law is derived from centuries of practice.

30) An agreement between nations is called a

A) treaty.
B) constitution.
C) demographic.
D) regulation.

Treaties are agreements between countries and may also be called conventions, covenants, compacts, or protocols.

31) If the United States and Italy fell into a trade dispute, which form of international law would govern the situation?

A) litigation
B) public
C) civil
D) private

A contract between businesses in two different countries falls under private international law, and public international law governs a dispute between two countries over trade subsidies.

32) Extraterritoriality refers to

A) a nation's attempt to enforce its law beyond its borders.
B) added territory as a result of dispute settlements in wars, such as the Sakalin Islands.
C) a citizen's claim to government assistance in a foreign environment.
D) a taxable condition most international firms attempt to avoid.

Extraterritoriality is a government's attempt to enforce its laws beyond its borders.

33) The Alien Tort Statute allows non-U.S. nationals to

A) sue in the United States courts for residency in the United States.
B) file lawsuits in the United States courts for alleged violations of international law, including human rights violations, even when the defendant has no ties to the United States.
C) file claims in the United States courts for alleged violations of domestic laws.
D) file claims against other foreign nationals for violation of U.S. EEOC law.

The Alien Tort Statute allows non-U.S. nationals to file lawsuits in the United States courts for alleged violations of international law, including human rights violations, even when the defendant has no ties to the United States. This is an example of extraterritoriality.

34) If two English multinational companies had a dispute arising in New York City, and there were no choice of law or choice of forum clauses in their contract, it is likely that

A) a New York court would hear their complaint.
B) they would bring their dispute to an English court.
C) the dispute would not get heard in court, but rather, in the boardrooms.
D) they would reach an agreement informally and develop an off-the-books settlement.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : 06-03 Discuss the general legal concerns in global business.
Topic : Resolving International Business Disputes

Usually companies from the same country will handle their disputes within their own country's court system. For this reason, it is prudent to include both a choice-of-law clause and a choice-of forum clause in contracts. A choice-of-forum clause in a contract specifies where the dispute will be settled.

35) Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is

A) easier to influence an arbiter than a judge.
B) quicker, cheaper, and more private than litigation.
C) more discreet, although more costly than litigation.
D) less bureaucratic than litigating in any country.

Arbitration is seen as a desirable alternative to the U.S. court system because many people outside the United States dislike the U.S. court system. Likewise, many U.S. businesspeople dislike or fear litigation in other countries. Also, arbitration is, by agreement, binding, while one country’s court decisions are difficult to enforce on a nonresident.

36) CISG has been ratified by many countries and provides a set of uniform rules governing

A) foreign direct investment.
B) sales contracts.
C) foreign exchange rates.
D) advertising and promotion.

Many countries, including the United States, have ratified the UN Convention on the International Sale of Goods (CISG) to solve jurisdictional problems related to contract performance. The CISG is a set of uniform legal rules that govern the formation of international sales contracts and the rights and obligations of the buyer and seller.

37) During the pretrial period, the law firm worked to find facts relevant to the litigation. What is this process called?

A) discovery
B) arbitration
C) consolidation
D) accommodation

In addition to the trial itself, most lawsuits in the United States entail lengthy pretrial activities, including a process called discovery. Discovery is the means of finding facts relevant to the litigation, including facts known to the other side and documents in possession of the other side.

38) Kylie is a U.S. citizen currently living and working in France. She will have to pay U.S. taxes on her earnings since she is a citizen even though she is not currently a resident. What concept is illustrated by this example?

A) arbitration
B) extraterritoriality
C) intellectual property
D) litigation

This process is referred to as the extraterritorial application of laws. For example, the U.S. government imposes taxes on U.S. citizens and U.S. permanent residents regardless of the source of income or the residence of the taxpayer. If a U.S. citizen is living in Madrid and receives all her income from Spanish sources, the United States will still expect her to comply with U.S. tax laws.

39) Arbitration is a private solution that is

A) more private than litigation.
B) considered a last resort when settling a dispute.
C) only used in common law cases.
D) common in religious law systems.

Arbitration is usually quicker, less expensive, and more private than litigation, and it is usually binding on all parties.

40) A patent gives the inventor

A) property rights for 10 years.
B) the right to use the invention until development costs are recouped.
C) exclusive right to manufacture, exploit, use, and sell the invention for a given time period.
D) the right to keep the patented process but not the product for five years.

Every country has its own understanding of patents, government grants giving the inventor of a product or process the exclusive right to manufacture, exploit, use, and sell that invention or process.

41) Patent treatment is becoming standardized owing to

A) the WTO.
B) the UN Commission on Patents.
C) domestic laws in various nations.
D) WIPO, TRIPS, and the Paris Union.

These organizations have the most impact on patent standardization.

42) Smaller nations would like patent protection to be

A) extended, to allow for them to build their competitive advantage.
B) extended, so that they can recoup development costs.
C) reduced, so that they can make money sooner.
D) dissolved, so that they can increase their profits.

Smaller nations have called for patent protection to be reduced. The prescription drug industry is a case in point. Smaller nations want to profit making generic drugs, while pharmaceutical companies want to recoup their research and development costs.

43) WIPO is a

A) UN agency that administers an intellectual property system.
B) WTO group opposed to patent extension and pro-generic.
C) part of the Club of Rome that lobbies for longer patent periods.
D) research arm of the Fuel Cartel that has been advocating longer patent protection for biofuel processing systems.

The World Intellectual Property Organization (WIPO), a self-funding UN forum with 191 members, works with the TRIPS council to develop an intellectual property (IP) system that operates for every nation’s benefit.

44) Patent trolls are

A) a record of all patents, recorded by the UN.
B) the numerical controls issued on patents, standardized by the Paris Convention.
C) the organizing system for patent review that is kept internationally by OECD.
D) modern highway robbers who exploit loopholes in IP protection.

An added complexity of the patent environment is the spread of so-called patent trolls. These are lawyers and investors who buy patents mistakenly granted mostly to failed companies, and then try to cash in on them.

45) Trademarks are defined as

A) a shape, color, design, sound, phrase, abbreviation by which a product is designated.
B) long-standing businesses that represent the hallmarks of an industry.
C) new products that have never been placed on the market before.
D) the key products that make the most money for a company.

A trademark is a shape, color, design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company’s sole use.

46) Intellectual property includes

A) intangibles, which is why it is a difficult area.
B) thoughts and ideas, but not tangible products.
C) anything that is a result of a creative process that does not have material qualities.
D) anything that is the result of creative work that can be protected by legal means.

Intellectual property (IP) is a creative work or invention that is protectable by patents, trademarks, trade names, copyrights, and trade secrets.

47) Patents are government grants that give the owner

A) exclusive rights to use, sell, manufacture, or exploit the invention or process.
B) the exclusive right to use the fundamental ideas on which the invention is based.
C) the rights to sell the invention, but only beyond the patent-granter's borders.
D) rights to the invention but does not prevent others from copying the invention.

A patent grants protection from copying and is exclusive to the inventor.

48) Shayna and her husband have developed a pizza pan that is guaranteed to keep the crust from sticking to the pan and washes clean with just water. They have applied to have exclusive rights to this product. What did they apply for?

A) a patent
B) a copyright
C) a trademark
D) a trade name

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Learning Objective : 06-04 Identify methods to protect intellectual property.
Topic : Property Rights and Intellectual Property Rights
Accessibility : Keyboard Navigation
Bloom's : Apply

Every country has its own understanding of patents, government grants giving the inventor of a product or process the exclusive right to manufacture, exploit, use, and sell that invention or process.

49) WIPO and TRIPS represent

A) patent harmonization agreements in SE Asia and the EU, respectively.
B) anti-counterfeiting agreements in Korea and North America, respectively.
C) WTO and UN agreements on corruption.
D) UN and WTO agencies or programs that focus on IP.

The World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) council works with the World Intellectual Property Organization (WIPO), a self-funding UN forum with 191 members, to develop an intellectual property (IP) system that operates for every nation’s benefit.

50) Patent trolling is a process of

A) looking for loopholes in patent protection and exploiting them.
B) recording and registering of patents in foreign countries to protect the firm's IP.
C) searching out patents that have expired and negotiating their replacements.
D) legal research that uncovers obscure, deceased patent holders and liberates their inventions.

Patent trolls look for loopholes in patents and attempt to exploit them.

51) Trade names are protected under

A) national laws in all UN member countries.
B) WIPO and TRIPS.
C) many local laws in most countries, so that illegal trademark use is a local issue.
D) the United Nations.

A trade name is the name used by merchants and manufacturers to designate and differentiate their products, and it is protected by WIPO and TRIPS.

52) Nora knew her package had arrived because she saw the truck with the Amazon logo pull into her driveway. The logo she recognized is an example of a

A) patent.
B) trademark.
C) trade name.
D) copyright.

A trademark is a shape, color, design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company’s sole use.

53) Sudsy Soap Company sells face soap in the United States as “Fresh Face” but in Europe the same soap is sold as “Shiny Clean.” These two different soaps represent types of

A) trademarks.
B) trade names.
C) patents.
D) copyrights.

A trade name is the name used by merchants and manufacturers to designate and differentiate their products.

54) Sanjay has written a cookbook. What form of legal protection can he obtain for his book?

A) copyright
B) patent
C) trademark
D) arbitration

Copyrights are exclusive legal rights of authors, composers, software creators, playwrights, artists, and publishers to publish and dispose of their work.

55) Keith’s favorite restaurant sells sandwiches that have a “kicker sauce.” Everyone loves the sauce, but the company won’t reveal what’s in it. This sauce is an example of a

A) trade secret.
B) trademark.
C) patent.
D) copyright.

Both the U.S. and the EU apply their competition or antitrust law extraterritorially.

56) Incoterms attempt to standardize shipping agreements, and include

A) FAS and CIF.
B) CED and COD.
C) descriptions of portside processes.
D) insurance arrangements for international shipments.

CIF and FAS are both Incoterms that describe shipping-related obligations of the seller and buyer.

57) The ISO and the IEC both promote

A) harmonization in international accountancy.
B) standardization in technology-related fields through specifications.
C) union membership in fields that are technology intensive.
D) shared bankruptcy standards across the globe.

ISO and IEC promote standardization in technical areas through specifications.

58) Actions that involve antitrust laws usually involve

A) government against citizens.
B) government against business.
C) country against country.
D) citizen against citizen.

Actions to enforce competition laws or antitrust laws usually are brought by government against business, but one business may also sue another.

59) The concept of strict liability, as found in the U.S. legal system, applies

A) to harm done by the designer/manufacturer without the need to prove negligence.
B) to harm done within narrow limits, considering the design of the product.
C) to children harmed by products in both the United States and the EU.
D) strictly to harm caused by the designer/manufacturer, so no penalties outside of damages can be awarded.

In the United States, strict liability applies to harm done without a need to prove negligence.

60) Punitive damages in product liability cases can be awarded in

A) Japan.
B) Japan and the EU.
C) the United Kingdom.
D) the United States.

The defendant can be punished in the United States by the jury, a punishment known as punitive damages.

61) The Chinese Anti-Monopoly Act seems to support

A) the consumer.
B) local businesses.
C) reducing competition.
D) political sovereignty.

The Chinese Anti-Monopoly Act has recently received attention for slow, bureaucratic approval of international mergers and deal making that supports local businesses rather than reduces competition.

62) The Foreign Corrupt Practices Act (FCPA) is U.S. legislation that

A) outlines bribery practices that are allowed abroad but not in the United States.
B) prohibits bribery by American companies abroad.
C) allows bribery in foreign dealings when culturally sanctioned.
D) outlines and prohibits foreign bribery practices by foreign nationals in foreign nations.

FCPA makes it unlawful to bribe foreign government officials to obtain or retain business.

63) FCPA includes

A) uncertainties that make its application problematic.
B) specific explicit rules with clear definitions of terms that U.S. companies must follow in their foreign operations.
C) all accounting processes, including the accounting of transfer payments.
D) foreign tax liabilities and other adjustments specific to business outside of the home country.

FCPA has vaguely defined terms; "grease" is mentioned in the text as an example. The act is also very broad in defining what constitutes a foreign official, and the government’s relevant criterion for a bribe is not the amount but rather the intent of the payment.

64) What effect has the FCPA had on American business?

A) It has hurt American business because managers cannot use bribes anymore.
B) It has challenged the creativity of American managers and consultants to develop ways to work around the FCPA.
C) It has brought the discussion of bribery into the open, which has, overall, been positive.
D) It has resulted in American foreign business going to Japanese and German businesses.

By bringing the discussion forward, other anticorruption initiatives have been developed and taken effect, including work on behalf of the OECD and the UN.

65) Under the FCPA, facilitating payments are allowed for

A) patent approvals.
B) import approvals.
C) building construction.
D) production standards.

Facilitating payments for routine government actions such as visa issuance, import approvals, and the processing of government papers are permissible under the FCPA.

66) Critics of the FCPA believed that it would

A) harm U.S. companies’ credibility.
B) eliminate necessary competition.
C) increase environmental waste.
D) lower the costs of production.

When the FCPA was passed, critics believed it would harm U.S. companies’ competitiveness abroad because it would demand of them a higher standard of behavior than was common in the competitive environment.

67) Madison Foods Corp. is frustrated in its efforts to sell products in Europe because several countries are demanding that the company label products in the specific language associated with the country. These demands are examples of a

A) trade name.
B) trade obstacle.
C) trademark.
D) trade role.

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : 06-06 Describe the impacts of the national-level legal forces in the areas of competition, trade, tort, ethics, and accounting.
Topic : Laws Affecting International Business
Bloom's : Apply

There are many other forms of protection or obstacles to trade in national laws. Some are health or packaging requirements. Others deal with language, such as the mandatory use of French on labels and in advertising, manuals, warranties, and so forth, for goods sold in France, including websites hosted on servers that physically reside in France.

68) The per se concept of U.S. law means that a situation is

A) only illegal in the United States.
B) illegal in and of itself.
C) legal regardless of judicial decree.
D) only legal outside of the United States.

One difference is the per se concept of U.S. law, under which certain activities, such as price fixing, are said to be illegal “per se.” This means that they are illegal in and of themselves, even though no injury or damage results from them.

69) The EU applies its competition policy

A) extraterritorially.
B) only within EU.
C) within the EU and applicant states.
D) within the EU and other European nations.

The EU applies its competition policy beyond the borders of the EU.

70) One major difference between U.S. and Japanese trust-busting is

A) who initiates it.
B) who is at fault.
C) why it occurs.
D) where it takes place.

A major difference between U.S. and Japanese trust-busting is who initiates it. In the United States, 90 percent of the complaints are brought by private parties, while in Japan, a private antitrust action can be brought only if the FTC has investigated the case first.

71) Butter Babies Inc. was held responsible in court for failing to indicate on their labels that their baby bath wash contained traces of mercury and could potentially harm infants. Which type of law is playing a part in this scenario?

A) patent
B) product liability
C) common
D) trade name

One important area of torts, especially in the international arena, is product liability. Product liability laws hold a company and its officers and directors liable and possibly subject to fines or imprisonment when its product causes injury, damage, or death.

72) Trade obstacles are considered to be legal forces because

A) customs is controlled by a country's national police or army.
B) their compliance is costly to the firm and the consumer.
C) they are protected by the courts.
D) they often are based on legislation.

Many trade obstacles are legislated, and they are part of a formal institution.

73) The end result of legal trade obstacles is often

A) limited trade, with the recipient of the trade obstacles withdrawing.
B) political negotiations between the two countries, to smooth relations and reduce costs.
C) higher costs to consumers.
D) lower taxes to citizens in the tariff-imposing country due to tariff revenues.

The inevitable result is higher costs to U.S. consumers because exporters send only the higher-priced top of their lines and importers charge more for scarcer products.

74) In the United States court system, tort claims may result in

A) exceedingly large awards.
B) lower liability insurance.
C) a reduction in strict liability.
D) reduced liability insurance costs for foreign companies.

Tort claims in the United States may result in large monetary rewards.

75) The settlement awarded $2 million to each of the four hundred individuals harmed by the effects of groundwater emissions created by manufacturing processes at Mission Corp. The award money is an example of

A) a voluntary restraint agreement.
B) punitive damages.
C) antitrust law.
D) product liability.

As the name indicates, punitive damages have the purpose of punishing the defendant, and if the plaintiff has been seriously injured or the jury’s sympathy can be otherwise aroused, it may award millions of dollars to “teach the defendant a lesson.”

76) The Foreign Corrupt Practices Act has

A) moved the discussion of transparency and corruption out into the open.
B) impaired American competitiveness abroad.
C) jailed legions of corrupt foreign executives in the United States.
D) introduced clear, concise terminology into the discussion of corruption.

The FCPA, along with the OECD convention, EU legislation, UK legislation, and a UN initiative, has certainly brought a discussion of bribery and transparency out into the open.

77) If the Securities and Exchange Commission learns that a business might be involved in corruption, it will look at other businesses in the same industry to assess if they might also be involved. What is this process called?

A) phishing
B) ghosting
C) tagging
D) sweeping

The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) often pursue companies in situations that might encourage corruption, in a process called sweeping.

78) Which area of the U.S. government enforces U.S. antitrust laws?

A) State Department
B) Department of Justice
C) House of Representatives
D) Senate

The U.S. Department of Justice is charged with enforcing U.S. antitrust laws, while in the European Union, the EU Commission is responsible for enforcing competition policy.

79) One characteristic of the United States Foreign Corrupt Practices Act is that it

A) clearly stipulates terminology and behavior that is illegal on the part of U.S. businesses and foreign business operating in the United States.
B) includes uncertainties such as terminology, definitions, accounting standards, and behavior standards.
C) applies to only international transactions that occur within the territorial borders of the United States.
D) is an attempt to support U.S. businesses by exporting U.S. values that indirectly aid business.

The FCPA contains many uncertainties, but it has helped to raise the bar on transparency, along with similar laws enacted by the EU and the United Kingdom.

80) Trade obstacles are viewed as

A) political, financial, and legal.
B) political and legal.
C) only financial.
D) only legal.

Trade obstacles are not only political and financial but legal as well. Every country has laws on these subjects.

81) The Sarbanes-Oxley Act was passed in the United States in response to

A) consumer requests for cleaner air standards.
B) human rights violations in Europe.
C) deceptive marketing practices in the service industry.
D) accounting scandals in the corporate world.

As a response to corporate and accounting scandals in the early 2000s, including those implicating Tyco, Enron, and WorldCom, Congress passed the Sarbanes-Oxley Act (SOX) in 2002.

82) In Japan, antitrust legislation

A) was introduced by the United States and did not harmonize well with Japanese values.
B) developed out of a samurai code of ethics.
C) has been influenced by Chinese and Korean approaches to monopoly markets.
D) does not exist.

The Japanese approach to economic development saw antimonopolist legislation as an impediment, but have incorporated antitrust thinking into their strategies.

83) When a government sets a quota on the amount of sugar that can be imported, it is implementing a

A) trade obstacle.
B) copyright.
C) trademark.
D) qualitative tariff.

Trade obstacles can be political, financial, or legal in their origins. Quotas limit the amount or source of imports.

84) Japan has established trade barriers in the form of tariffs against

A) Chinese vegetables and fruits, but not rice.
B) U.S. beef, citrus, and dairy products.
C) European electrical goods.
D) European automakers.

Japanese tariffs are on U.S. beef, citrus, and dairy.

85) U.S. responses to foreign tariffs are likely to

A) raise the cost of the imported goods for U.S. consumers.
B) force a reduction in tariffs.
C) create equity across markets, which is the goal.
D) establish the fundamental rule of power rather than principle.

Any response by the government against tariffs is likely to be in the forms of voluntary export restraints or restraint agreements (not so voluntary, in fact), which tends to raise the costs for consumers.

86) One area of concern for international businesses is that U.S. tort cases may result in

A) large monetary awards.
B) malfeasance claims against the business.
C) personal embarrassment to corporate officers and require apologies.
D) exorbitant legal fees that stem from long-term court cases.

Tort cases in the United States may result in large monetary awards. Other countries restrict the amount of money that can be obtained in tort actions.

87) Strict liability requires

A) no need for a plaintiff to prove manufacturer negligence.
B) the manufacturer to know that the design or manufacture is inferior.
C) the buyer to take risks on the purchase of a newly designed product.
D) responsibility for the product throughout its life cycle.

Strict liability makes the designer/manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence in the product's design or manufacture.

88) Punitive damages are found

A) throughout legal systems based on common law.
B) only in the United States.
C) in the United States, EU, and Asia.
D) in both secular and religious-based legal systems.

Punitive damages are awarded by juries in the United States and only in the United States, where huge damages can be levied against the defendant to "teach a lesson."

89) In Japan, product liability requires that

A) the plaintiff prove design or manufacture negligence.
B) the plaintiff meet with the defendant to reach an agreement and present it to the judge.
C) harm be done with foreknowledge.
D) in high-tech cases, the plaintiff establish a pattern of malfeasance.

The Japanese law on product liability requires that the plaintiff prove design or manufacturing negligence, which is difficult with complex, high-tech devices. The plaintiffs’ difficulties are increased by the fact that, as we’ve seen, discovery is limited in Japan.

90) Miscellaneous foreign laws can cause difficulties for the uninformed businessperson because

A) these laws may not be obvious or in accord with laws at home.
B) they are ambiguous enough that they can be applied to the foreigner at almost any time.
C) they may violate them and be arrested, yet ignorance of the law is an acceptable defense.
D) they are aimed to take advantage of the foreigner's ignorance, a trade barrier.

These miscellaneous laws are sometimes not so well-known, although certainly you would be foolhardy to drink alcohol in public in Saudi Arabia, for example.

91) The intent of the Foreign Corrupt Practices Act is to

A) reduce corruption and thereby make the costs of doing business transparent.
B) function as a barrier to trade by giving U.S. businesses an advantage of transparency.
C) penalize developing economies, where functionaries often compensate for their poor salaries by levying small personal taxes.
D) export cultural arrogance by asserting that the U.S. practice of business is more transparent than in other countries.

FCPA comes from and is influenced by American culture, yet its purpose is to reduce the cost of doing business for everyone by eliminating the "invisible hand" part of the transaction and making the entire transaction transparent.

92) In U.S. accounting law, the Sarbanes-Oxley Act

A) holds corporate officers personally responsible for their corporate filings.
B) seeks to establish barriers to foreign listings on the U.S. stock exchanges.
C) is a response to reduced corporate earnings due to corruption.
D) attempts to establish GAAP practices for foreign companies.

Sarbanes-Oxley was in response to scandals and was an attempt to establish higher ethical standards. One of the means is to hold corporate officers personally responsible for their filings.

93) The ________ approach relies on previous decisions made by judges along with statutes made by legislatures.

The common law approach relies on decisions made by judges in previous cases along with statutes and regulations made by legislatures.

94) ________ describes the set of rules that nations have agreed to follow.

International law describes the set of rules nations have agreed to follow. It is usually established by treaties and other multilateral agreements.

95) ________ helps set the context for stable relationships among nations.

International law describes the set of rules nations have agreed to follow. Such rules help set the context for stable relationships among nations.

96) International law comes from several sources, the most important of which are bilateral and multilateral ________ between nations.

International law comes from several sources, the most important of which are bilateral and multilateral treaties between nations. Treaties are agreements between countries and may also be called conventions, covenants, compacts, or protocols. These agreements often are reached as a result of the efforts of international organizations such as the United Nations and the World Trade Organization.

97) ________ international law codifies the legal relationships between governments.

Public international law codifies the legal relationships between governments, including laws about diplomatic relations between sovereign nations and all matters involving their rights and obligations.

98) An alternative to settling an international dispute in a U.S. court is to use ________.

Arbitration is often favored by non-U.S. litigants because it tends to be quicker, less public, and less costly.

99) The Nike swoosh is an example of a ________.

A trademark is a shape, color, design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company’s sole use.

100) There are three types of ________ available in the United States: utility, design, and plant.

These are the three categories of patents available in the United States.

101) In the United States, the first ________ has the right to the patent, whereas in the EU, it goes to the first to register an invention.

This is one major difference between patent law in the United States and the EU.

102) A ________ patent runs for 14 years and is for an aesthetic, nonuseful creation.

A utility patent is for an innovative, useful invention or process, and it gives the patent holder 20-year protection against use by others. A design patent is for an aesthetic, nonuseful creation, and it runs for 14 years. The plant patent is for innovations among growing things, such as mutants (genetically modified foods) and hybrids, and it runs for 20 years.

103) ________ gives intellectual property protection to computer software in the United States and the EU.

Downloading or copying most protected computer files violated the owner's property rights.

104) ________, the most common form of IP protection, they do not require that the process or innovation be shared with the government.

Trade secrets also do not require registration. Yet once they are made public, anyone can use them; there is no protection. Others may discover it by inspecting and analyzing the product. And a trade secret may be legally discovered by another person and patented.

105) One major difference between the United States and the EU in antitrust law is that U.S. law follows the ________ concept in its approach.

The per se concept is that activities are illegal in and of themselves, even though no injury or damage results from them. The per se concept illustrates the U.S. focus is on the potential impact of the business deal on the consumer. So the United States looks to consumers first, while the European Union pays attention to rivals’ objections. Both approaches result in benefit to the consumer.

106) Competition laws are intended to prevent inappropriately large concentrations of economic power, such as ________.

There is low motivation to harmonize competition law because each nation prefers its own.

107) In Japan, antitrust legislation was introduced by the ________.

108) Discuss the three forms of legal systems.

109) Discuss the role of litigation in international disputes. Describe how litigation efforts vary between the United States and other countries. Describe how the choice of law affects litigation.

110) Compare and contrast the different forms of intellectual property rights protection. Provide an example of each form.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 06-04 Identify methods to protect intellectual property.
Accessibility : Keyboard Navigation
Topic : Laws Affecting International Business

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Module 06 Intellectual Property Rights And Other Legal Forces

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Michael Geringer, Jeanne McNett, Donald Ball

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