Legal Environment of Global Markets
Alexander Consulting Enterprise
3/23/2016
Legal Systems in International Markets
Common Law
Code Law
Islamic Law
Socialist Law
Alexander Consulting Enterprise
3/23/2016
Islamic Law and Business
Islam is not just religion but source of law, arbiter of social behavior, and guide
for politics. Prophet Mohammed transmitted literally the word of god in the
Koran: fundamental, immutable source of Islamic doctrine. The words of
Mohammed and his life are recorded in the Hadith. Muslims see Islam as
continuation of Judeo-Christian tradition. There was always one religion and one
god. God sent from time to time prophets: Moses, David, Jesus, and Muhammad.
Muhammad is last prophets since all things are now revealed.
Mohammed did not leave a male offspring and did not give instructions for his
succession ( The Shiite believe he chose Mohammed Ali). His closest
companions chose Abu Bakr as Caliph. Mohammed Ali, Mohammed’s son in
law was not selected, so he created Shiism.
Sharia (path to the source of life) is the code of law based on religious principles
regulating commercial, social and political life. In Saudi Arabia, sharia is the
only code of law, in Egypt’s constitution sharia is the basis for legislation, in
Turkey sharia is excluded from state’s legal and administrative affairs.
Alexander Consulting Enterprise
3/23/2016
Legal Dispute Situations
Between Governments
Between Companies and Governments
Between Companies
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3/23/2016
Determination of Legal Jurisdiction
There is no Supranational System of Laws for
Disputes
among Companies. Disputes have to be Settled under
National Law.
Jurisdiction is determined by:
- Jurisdictional Clauses Included In Contract
- Domicile
- ‘purposeful availment’ of doing business in
particular country. Ex: shipping goods, signing
contract etc.
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3/23/2016
International Dispute Resolution
-
Conciliation or Mediation
 Not Legally Binding
 No Disclosure of Information
-
Arbitration
 Arbitration Centers
 Arbitration Clauses
 Enforcement of Arbitration
-
Litigation
 Costly
 Time Consuming
Alexander Consulting Enterprise
3/23/2016
Intellectual Property Rights in Global Markets
1. What are Intellectual Property Rights?
- Intangible Assets
- Right to Use and Prevent Others from Using
- Source of Competitive Advantage
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3/23/2016
2. Manifestation of Intellectual Property Rights
- Patents
- Trade Marks
- Industrial Design
- Trade Secrets
- Copy Rights
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3/23/2016
3. International Protection of Intellectual
Property Rights
- IPR Regulated by National Law
- Bilateral Agreements and International Conventions
WIPO: Surveillance over most Multinational Agreements
Extension of National Treatment to Foreigners
Lack of Enforcement Power
- Multilateral Agreements
TRIPS: Multilateral Agreement under WTO Surveillance
Sets Minimum Standards
Extension of Most Favored Nation Treatment to All WTO
Members
Provides Enforcement and Dispute Settlement Mechanism
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3/23/2016
4. The Battle Continues
- Inefficient Legal Framework for New Technologies
Internet
Biotechnology
- Lack of Enforcement
 5-8% of all Goods are Counterfeit
 U.S. Business Looses $200 Billion Annually
 750 000 Jobs Lost in U.S.
 75% of all Medicines are Counterfeit in India
- High Demand for Counterfeit Goods
 Price Incentive
 “Robin Hood Mentality”
- Cultural Differences
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3/23/2016
Patent Law
The United States vs. Japan
United States
Japan
Protects individual
inventors.
Promotes technology
sharing.
Patent applications are
secret.
Patent applications are
public.
Patents granted in up to
24 months.
Patents granted in
4 to 6 years.
Patents valid for 17 years
from date issued.
Patents valid 20 years from
application date.
Alexander Consulting Enterprise
3/23/2016
5. Differences in Underlying Philosophies
- Position of Most Developed Nations
“Protection of IPR is a means to encourage creative
activity, industrialization, investment, and honest trade.”
- Position of Many Less Developed Nations:
“Intellectual property should be considered the common
property of mankind and relevant laws should facilitate
access to intellectual property as a development tool rather
than place restrictions on it.”
Alexander Consulting Enterprise
3/23/2016
- Potential Functions of IPR Laws
Protection of Consumers from Deception and Confusion
Protection of Companies From Unfair Competition
Incentives for Investments in Research and Development
Encouragement of Direct Investment
Alexander Consulting Enterprise
3/23/2016
6. Potential Drivers of Consumer
Demand for Pirated Goods*
-Economic Factors
-Knowledge Societal Consequences
-Fear of Legal Prosecution
-Access to Pirated Goods
-Attitudes Towards Piracy
- Social Norms
-Culture
-Demographics
* See: Moores, Trevor, Alexander Nill, and Marcus Rothenberger (2009). “Knowledge of Software
Piracy as an Antecedent to Reducing Piracy Behavior”. Journal of Computer Information Systems,
50(1):82-90.
Alexander Consulting Enterprise
3/23/2016
7. Traditional Remedies Against Infringements of IPR
- Legal Pressure
- Diplomatic Pressure
- Technological Devices
Supply
- Awareness Advertising
Inform Consumer about Counterfeits
- Anti-Counterfeit-Advertising
Persuade Consumer not to Buy
- Legal Pressure
Demand
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3/23/2016
Strategic Importance
High
Low
8. Potential Strategic Responses to Piracy*
I
III
II
IV
High
Low
Likelihood of Infringement
I =
II =
III =
IV =
Use cost-effective tactics to preempt and fight piracy
Anticipate and incorporate piracy in your strategy,
determine an optimal level of protection, and exhaust
all options to preempt and fight piracy accordingly.
Don’t bother
Observe closely and meet reasonable precautions to
preempt piracy
*See: Nill, Alexander and Clifford Shultz (2009). “Global software piracy: Trends and strategic
considerations”. Business Horizons, 53(3): 289-298.
Alexander Consulting Enterprise
3/23/2016