International Business - Module 6

Module 06 Intellectual Property Rights and Other Legal Forces
True / False Questions
1. To what degree a country's legal system is based on the rule of law makes no difference to
international business; it is personal relationships that matter in foreign environments.
True False
2. The source of international law is frequently the United Nations.
True False
3. Customary international law draws on practices that have been followed often for centuries.
True False
4. The U.S. avoids extraterritorial application of its laws.
True False
5. The U.S. enforcement of EEOC law in U.S. companies operating abroad is an example of
extraterritoriality.
True False
6. A choice-of-law clause specifies which law will apply in the event of a dispute and is a good idea to
include.
True False
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7. No worldwide court has the power to enforce its decrees.
True False
8. 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
9. Arbitration provides foreign businesses a forum other than the U.S. court system to address
disputes that involve U.S. sellers or buyers.
True False
10. Incoterms are established by the UN Commission on International Trade.
True False
11. Legal uncertainties constrain the growth of international business.
True False
12. Intellectual property includes patents and trademarks, but not copyrights.
True False
13. The European Patent Organization (EPO) makes filing for a patent in all 28 EU member states
more difficult than it was previously.
True False
14. The World Intellectual Property Organization (WIPO) is a UN agency that administers 24
intellectual property treaties.
True False
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15. Many smaller and developing nations want to reduce patent protection from the current 15 to 20
years down to 5 years or even 30 months.
True False
16. There is one main organization that offers intellectual property (IP) protection, the UN.
True False
17. Global trademark protection follows the Office of Harmonization in the Internal Market approach.
True False
18. Global standardization of trade-related law is progressing slowly.
True False
19. International Organization for Standardization (ISO) is the only international standardizing
organization.
True False
20. 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
21. In the antitrust area, the U.S. is concerned with the impact of the business deal on the consumer,
whereas the EU is focused on the competitive structure of the marketplace, and so pays attention
to its rivals.
True False
22. Japanese cultural values suggest that in Japan, antitrust law against cartels would be strictly
enforced.
True False
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23. The U.S. at times applies antitrust law extraterritorially.
True False
24. The EU does not apply its competition policy beyond the EU.
True False
25. Microsoft is an example of how a company can avoid multiple antitrust laws in multiple
jurisdictions, thanks to equalization agreements.
True False
26. Tariffs are categorized as financial and political forces, but they are usually not seen as legal
forces.
True False
27. The U.S. avoids trade barriers on imports in support of free trade principles.
True False
28. Product liability is an area of torts in which the U.S. courts can make large awards, unlike in other
countries.
True False
29. Contingency fee cases are limited to the U.S.
True False
30. In the U.S. punitive damage rulings have no measureable effect on medical areas.
True False
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Multiple Choice Questions
31. Enforcing contracts that cross international borders is
A. simply a matter of applying the local law to the contract.

B. complicated and governed in most nations by the CISG.
C. secondary to who has possession of the goods, regardless of title.
D. nearly impossible, so negotiation is important.
32. Arbitration is a private solution that is
A. often preferred by foreign litigants because it is perceived as fairer, faster, cheaper, and more
confidential than are the courts.
B. favored by international unions.
C. recommended by the UN for international companies facing litigation in developing countries.
D. discouraged by the U.S. Bar Association.
33. Incoterms include
A. FAS and CIF.

B. CFR and COD.
C. INSAP and ECO.
D. SAE and EBI.
34. Usually, to assume that foreign law
A. will be similar to U.S. law is reasonable.

B. will differ from U.S. law and must be understood is a reasonable approach.
C. won't matter because you and your trading partner will agree to arbitrate is reasonable.
D. will be biased against the foreigner is reasonable.
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35. 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.
36. Patent treatment is 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.
37. Smaller nations would like patent protection
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 enter the game earlier, possibly with generics.
D. extended, so that their profits can increase.
38. WIPO is a
A. UN agency that administers intellectual property treaties and advises countries on intellectual
property-related administrative issues.
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.
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39. 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.
40. Trademarks can be
A. a shape, color, design, sound, phrase, abbreviation by which the product is designated.
B. any visual property consciously associated with the product.
C. a design associated with the product, using color and shape.
D. a mark under which the firm does business.
41. Antitrust law is intended to
A. challenge successful businesses to allow proper levels of competition.

B. prevent large concentrations of economic power, such as monopolies.
C. create a more trusting business environment.
D. allow socialism to flourish.
42. One difference between the U.S. and EU approach to antitrust law is that
A. the U.S. follows the per se concept, wherein actions are illegal whether they have done harm.
B. the EU forbids market dominance by cartels, no matter the conditions, whereas the U.S. does
not.
C. the U.S. focus is on impact on competition, whereas the EU focus is on the consumer.
D. the EU avoids competition, whereas the U.S. seeks it.
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43. The U.S. and the EU both
A. apply antitrust law extraterritorially.

B. oppose the Japanese Anti-Monopoly Law.
C. share a commitment to the per se concept in law.
D. oppose the Japanese Anti-Monopoly Law as a nontariff barrier.
44. The U.S. antitrust law contains both civil and criminal penalties,
A. neither of which can be applied outside the U.S.

B. and the criminal penalties apply to foreign companies even if the conspiracy took place outside
the U.S.
C. but their application to foreign companies is limited to actions that have taken place within the
U.S.
D. and they can be administered by foreign courts.
45. 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 U.S. and the EU.
D. strictly to harm caused by the designer/manufacturer, so no penalties outside of damages can
be awarded.
46. Punitive damages in product liability cases can be awarded in
A. Japan.
B. Japan and the EU.
C. the UK.
D. the U.S.
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47. If an international manager runs afoul of a miscellaneous law while working abroad, calling the
embassy
A. will ensure that the charges are dropped.

B. to let them know of the situation may be a good idea, but usually the embassy cannot help
much.
C. will lead to meetings that will arrange for everything needed for dropped charges.
D. to have them explain the various legal rights you have as a foreigner to the foreign government
judicial official is a reasonable approach.
48. The Foreign Corrupt Practices Act (FCPA) is U.S. legislation that
A. outlines bribery practices that are allowed abroad but not in the U.S.
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.
49. 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.
50. The FCPA has
A. hurt American business because managers cannot use bribes any more.
B. challenged the creativity of American managers and consultants to develop ways to work
around the FCPA.
C. brought the discussion of bribery into the open, which has, overall, been positive.
D. resulted in American foreign business going to Japanese and German businesses.
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51. In the Global Debate, voluntary American dolphin-safe tuna labeling is objected to on what
grounds?
A. Dolphin and tuna are not the same species.

B. The labeling is seen as a nontariff barrier for unlabeled, imported tuna.
C. Mexican tuna cannot be labeled by U.S. regulation.
D. Labeling requires additional expenditure in the fishing process.
52. Transparency International's 2013 Index lists which countries as being among the most
transparent?
A. Switzerland, Singapore, the Netherlands

B. Zaire, Hong Kong, Italy
C. the U.S., Italy, France
D. Russia, Mexico, Spain
53. Anyone studying legal forces affecting international business soon realizes
A. there is a remarkable level of coordination among legal systems in the developed nations.
B. that most laws are predictable, and that, although there is variance, what constitutes illegal
behavior is commonly shared.
C. the variety of these forces complicates the task of understanding the laws.
D. because of the World Court, officials in most legal systems are open to collaborating with their
international colleagues.
54. The existence of the rule of law in a foreign market suggests that
A. lawyers will be necessary in any substantive business transaction.

B. personal relationships will be less effective than in a country governed outside the rule of law
system.
C. legal rulings will be the basis of any dispute resolution.
D. foreign investors can assume that their interests will be protected.
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55. The main 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. nonexistent at this point.
56. Extraterritoriality is
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.
57. The Alien Tort Statute allows foreigners to
A. sue in the U.S. courts for residency in the U.S.

B. file claims in U.S. courts for violations of international law that may have occurred beyond the
U.S. borders.
C. file claims in U.S. courts for alleged violations of foreign laws.
D. file claims against other foreign nationals for violation of U.S. EEOC law.
58. Where litigation in international disputes should occur is
A. usually evident from the documentation available.

B. at times unclear, in which case, the UN International Court of Justice will make a jurisdictional
ruling.
C. often complex, so contracts should include choice of law and choice of forum clauses.
D. dictated by where the problem arose; a problem arising in India is adjudicated in India.
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59. 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.
60. 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 the U.S. court system.
C. more discreet, although more costly than the court system.
D. less bureaucratic than the court system of any country.
61. 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.
62. Legal uncertainties have affected international business (IB)—
A. they have slowed down IB growth.

B. they have not, though, slowed down the growth of IB; instead, they have made conducting IB
more complex.
C. prices and insurance costs have risen.
D. fewer large businesses want to be involved across national borders due to the uncertainties of
the legal environment.
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63. 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 things created using someone's intellect.
64. 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.
65. With patents, there is standardization,
A. to some degree, through the EPO within the EU.

B. yet this is in name only, so often companies file many patents applications in different countries.
C. with total harmonization reached through UN accords.
D. thanks to the accounting harmonization process.
66. WIPRO 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.
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67. 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.
68. Trade names are protected under
A. national laws in all UN member countries.

B. the International Convention for the Protection of Industrial Property.
C. many local laws in most countries, so that illegal trademark use is a local issue.
D. long-standing convention, but no legal agreements.
69. Standardization of law
A. would challenge international business because IB would lose protection.

B. would make IB work more smoothly because uniform, predictable laws would result.
C. has not been progressing due to nationalism and patriotism.
D. does not take into account cultural aspects of legal regulations.
70. 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.
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71. In the U.S. and EU, attitudes toward competition
A. are quite similar.

B. are based on differing assumptions, with the U.S. following a per se concept and the EU
concerned about the existence of harm.
C. differ because the EU is anticompetitive; its Commission on Competition ensures competition
isn't too severe.
D. differ on the role of market dominance; the U.S. supports it and the EU wants to avoid it.
72. U.S. antitrust law is applied
A. to all U.S. firms doing business in the U.S.

B. as widely as possible, whether or not the alleged corruption took place inside the U.S. and
whether or not the business is American.
C. to U.S.-owned firms with assets in the U.S.
D. to all firms with assets in the U.S.
73. 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.
74. Unlike antitrust or competition proceedings in the EU, in the U.S. such proceedings
A. may involve civil and criminal penalties.

B. are heard at the local level.
C. involve only the top management team.
D. are head by a three-judge panel.
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75. Antitrust laws differ among countries, and complying with them is often difficult for the firm, so
A. international firms have had to increase their legal staffs to ensure compliance.
B. the U.S. government is pushing for a world organization to clear antitrust issues.
C. firms have moved toward fewer mergers and more regionalized organizations.
D. firms expect to be in antitrust litigation and act accordingly.
76. 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, and noncompliance can carry punishment.
77. 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.
78. In the U.S. 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.
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79. Running afoul of miscellaneous laws in a foreign country is
A. an error easily forgiven by foreign police.

B. a serious error, so the local law should be known.
C. not a major issue, as the embassy can work out your release.
D. not a serious issue because both your country and your company stand behind you.
80. 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 U.S.
D. introduced clear, concise terminology into the discussion of corruption.
81. Where litigation should occur in a dispute on an international transaction
A. has to do with the location of the problem.

B. is clear to both the defendant and plaintiff.
C. is determined by where the transaction took place.
D. is often a complex issue to untangle.
82. Many U.S. laws affect activities of international firms, and
A. their impacts have been coordinated.

B. there is no coordination or consolidation of them.
C. as long as the action is outside of the territorial U.S., these laws won't apply.
D. in the case of conflict in laws, the international business is allowed to choose which path to
follow.
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83. The U.S. Foreign Corrupt Practices Act
A. clearly stipulates terminology and behavior that is illegal on the part of U.S. businesses and
foreign business operating in the U.S.
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 U.S.
D. is an attempt to support U.S. businesses by exporting U.S. values that indirectly aid business.
84. Anticompetitive legislation can be seen from a foreigner's perspective as
A. a barrier to trade.
B. an attempt to create a level playing field.
C. a way to support domestic agriculture.
D. a way to increase capitalist values.
85. Tax law
A. is exempt from extraterritoriality.

B. is highly standardized, making tax payments mostly an accounting operation.
C. is mostly local and needs to be followed.
D. is often applied globally.
86. Chinese courts
A. follow the rule of law and are perceived as fair.

B. are perceived as favoring Chinese litigants.
C. expect payments to be made to judges to soften any penalties.
D. will not hear cases involving foreigners and allocate them Hong Kong jurisdiction.
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87. Arbitration is
A. often preferred by foreign litigants in the U.S., for speed and privacy.
B. avoided by foreign litigants because it is costly and perceived to be biased.
C. a way to increase the likelihood of a partial ruling.
D. a favored forum for foreign divorce in the U.S.
88. In Japan, anti-trust legislation
A. was introduced by the U.S. 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.
89. Trade obstacles can take the form of
A. political, financial, or legal regulations.

B. financial or economic regulations.
C. economic or environmental regulations.
D. marine safety rules and import duties.
90. 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.
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91. 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.
92. One area of U.S. tort cases of concern to international businesses is that they
A. can result in large monetary awards.

B. often lead to malfeasance claims against the business.
C. may result in personal embarrassment to corporate officers and require apologies.
D. often continue for years and can result in exorbitant legal fees.
93. Strict liability requires
A. no proof of the manufacturer's negligence.

B. the manufacturer knows 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.
94. Punitive damages are found
A. throughout legal systems based on common law.

B. only in the U.S.
C. in the U.S., EU, and Asia.
D. in both secular and religious-based legal systems.
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95. 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.
96. 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.
97. 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.
98. 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.
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99. 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.
100. If you are an international businessperson arrested and taken into custody in a foreign country, the
best approach is to
A. notify your embassy, try to understand the issues, and contact local assistance, such as a lawyer.
B. assert that you be released to your ambassador.
C. contact the local press and describe the situation.
D. resist talking at all.
101. The source of most international law is
A. bilateral and multilateral treaties, many initiated by the UN.

B. the World Court.
C. national law that is applied extraterritorially.
D. waiting to be discovered, since the amount of international law is quite limited.
102. The legal system of a country is
A. the collection of governing principles, legislation, and regulations enacted to provide for the
welfare of the country.
B. the laws and their interpretation by citizens, but not noncitizens.
C. whatever the local sheriff or ruler says it is.
D. a collection of folkways, rules, and regulations whose goal is to support civil harmony.
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103. Civil law is based on
A. a collection of codes and tends to be bureaucratic.

B. precedents found in judgments made by judges.
C. an adversarial understanding of the law.
D. codes combined with any religious law in the area.
104. In Sharia law, interest is forbidden
A. so the acquisition of working capital is severely limited.

B. so equity partnerships, where business risk is shared, tend to be the approach to developing
working capital.
C. but mostly this prohibition is simply a pretense, and interest is usually paid but termed
something else.
D. which greatly limits the development of international businesses.
105. A company from a Sharia-based legal system
A. has the right to use that system globally, regardless of the issues.
B. can follow that system internally and also has to follow the local law of the host country.
C. must accept that interest will need to be a part of foreign contracts.
D. can opt out of Sharia law if their business is international.
Fill in the Blank Questions
106. __________ describes the set of rules nations have agreed to follow to help set the context for stable
relationships among nations.
________________________________________
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107. International law comes from several sources, the most important of which are bilateral and
multilateral ___________ between nations.
________________________________________
108. Many countries try to enforce their laws outside their borders, a process known as ____________
application of laws.
________________________________________
109. The ______ Tort Statute allows some non-U.S. nationals to file lawsuits in U.S. courts for alleged
violations of international law, including human rights violations.
________________________________________
110. An alternative to settling an international dispute in a U.S. court is to use ____________.
________________________________________
111. The Canadian company Research in Motion settled a dispute with a U.S. citizen over the use of the
word ______________ via arbitration.
________________________________________
112. Predefined commercial terms established by the International Chamber of Commerce are known
as __________.
________________________________________
113. A creative work or invention that is protectable by patents, trademarks, trade names, copyrights,
and trade secrets is known as __________.
________________________________________
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114. The _____________, according to Lawrence Lessig, is the place intellectual property is least
respected.
________________________________________
115. There are three types of ____________ available in the U.S.: utility, design, and plant.
________________________________________
116. In the U.S., the first _______________ has the right to the patent, whereas in the EU, it goes to the first
to register.
________________________________________
117. According to the U.S. Chamber of Commerce Global Intellectual Property Center, ______________
has the best momentum on the protection of intellectual property rights.
________________________________________
118. A shape, color, design, phrase, abbreviation, or sound used by merchants or manufacturers to
designate and differentiate their products is known as a ____________.
________________________________________
119. ___________ gives intellectual property protection to computer software in the U.S. and the EU.
________________________________________
120. A ___________ is any information not generally known to the public and that a business wishes to
hold confidential.
________________________________________
121. _____________, the most common form of IP protection, do not require that the process or
innovation be shared with the government.
________________________________________
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122. Competition or antitrust laws are intended to prevent __________.
________________________________________
123. One major difference between the U.S. and the EU in antitrust law is that U.S. law follows the
____________ concept in its approach.
________________________________________
124. In the U.S., trust-busting activities can be initiated by private parties, whereas in _________ they are
initiated by the Federal Trade Commission (FTC).
________________________________________
125. In Japan the FTC does not require a __________ to raid a firm suspected of being in violation of trust
law.
________________________________________
126. Legal systems are based on __________, common law, or civil law.
________________________________________
127. The civil law system is based on __________ and thus is bureaucratic.
________________________________________
128. The ____________ approach relies on previous decisions made by judges and statutes made by
legislatures.
________________________________________
129. In the __________ system, the trial is adversarial, and the defendant is presumed innocent until
proven guilty.
________________________________________
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130. International businesspeople need to know that the country in which they are doing business
follows ______________ and not the rule of a political dictatorship or ruling elite.
________________________________________
131. _____________ describes the set of rules that nations have agreed to follow.
________________________________________
132. Immunity from prosecution of visiting foreign heads of state is an example of ______________.
________________________________________
133. Three areas of special concern to international business managers because they affect activities in
the international setting and not in the domestic setting are performance of contracts in an
international setting, litigation in an international setting, and ___________.
________________________________________
134. The ______________ allows non-U.S. nationals to file lawsuits in U.S. courts for some alleged
violations of international law.
________________________________________
135. The UN's contribution to resolution of issues related to international sales and the rights and
duties of sellers and buyers is the UN _______________.
________________________________________
136. Many people outside of the U.S. would prefer to solve a dispute through _________ rather than
through the U.S. legal system.
________________________________________
137. The process of finding facts of a case relevant to the litigation is the process of ___________.
________________________________________
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138. A creative work or invention that is protectable by patents, trademarks, trade names, copyrights,
and trade secrets is known as ______________.
________________________________________
139. In the EU, _____________ protects property rights of an innovation that is absolutely novel and not
available to the public in any form.
________________________________________
140. People who buy patents that were mistakenly granted, mostly to failed companies, and try to cash
in on them are known as ______________.
________________________________________
141. A ______________ is a name used by a merchant or manufacturer to designate and differentiate its
products and is protected.
________________________________________
142. Ideas are not protectable; they must be written to be protected by _____________.
________________________________________
143. ____________ are the most common form of IP protection that international businesses pursue.
________________________________________
144. The International Chamber of Commerce's _______________ are an example of successful

harmonization.
________________________________________
145. Competition laws are intended to prevent inappropriately large concentrations of economic
power, such as _____________.
________________________________________
6-28
146. The EU _________________ articles dealing with restrictive trade practices do not contain this per se
illegality concept of U.S. antitrust law.
________________________________________
147. A cartel that allows consumers a fair share of the benefits is legally acceptable in the _____.
________________________________________
148. In Japan, antitrust legislation was introduced by the ________.
________________________________________
149. In __________, the FTC operates separately from the court system, unlike in the EU and the United
States.
________________________________________
150. A World Trade Organization (WTO) panel ruled that __________ labeling requirements violated
international trade rules.
________________________________________
6-29
Module 06 Intellectual Property Rights and Other Legal Forces Answer
Key
True / False Questions
1. To what degree a country's legal system is based on the rule of law makes no difference to
international business; it is personal relationships that matter in foreign environments.
FALSE
The rule of law encourages international business and foreign investors because relevant
interests will be protected.
AACSB: Reflective Thinking

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
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
2. The source of international law is frequently the United Nations.
TRUE
Many of the treaties that establish international law have been sponsored by the UN.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-02 Describe the rule of law and its sources.
6-30
3. Customary international law draws on practices that have been followed often for centuries.
TRUE
Customary international law is found in practices that nations respect, such as the immunity of
foreign heads of state.

Blooms: Remember
Difficulty: 1 Easy
4. The U.S. avoids extraterritorial application of its laws.
FALSE
Just the opposite is true, which can make for some interesting issues. During a conflict with Iran,
the U.S. froze all Iranian assets in U.S. banks, including their foreign branches. Iranians in
London using U.S. banks could not access their funds, and the result was that British loans to
Iranians defaulted.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-03 Discuss the general legal concerns in global business.
6-31
5. The U.S. enforcement of EEOC law in U.S. companies operating abroad is an example of
extraterritoriality.
TRUE
This is the case, Americans working for American companies abroad are protected by U.S.
EEOC regulations. This may cause problems in countries where there are social mores that are
not harmonious with those of the U.S., such as men and women working together or closed
hiring systems.

Blooms: Remember
Difficulty: 1 Easy
6. A choice-of-law clause specifies which law will apply in the event of a dispute and is a good
idea to include.
TRUE
With no choice-of-law clause (or choice-of-forum clause), jurisdiction can be a complex matter
to decide.

Blooms: Remember
Difficulty: 1 Easy
6-32
7. No worldwide court has the power to enforce its decrees.
TRUE
Because worldwide courts don't have the power to enforce their decrees, enforcing contracts
across international borders is often complicated.

Blooms: Remember
Difficulty: 1 Easy
8. 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
If the traders are in countries that have ratified CISG, then it automatically applies unless they
opt out.

Blooms: Remember
Difficulty: 1 Easy
9. Arbitration provides foreign businesses a forum other than the U.S. court system to address
disputes that involve U.S. sellers or buyers.
TRUE
Foreign businesses do not like to litigate in the U.S. due in part to the discovery process, and
arbitration is faster, less expensive, and less formal.

6-33
Blooms: Remember
Difficulty: 1 Easy
10. Incoterms are established by the UN Commission on International Trade.
FALSE
Incoterms are established by the International Chamber of Commerce.

Blooms: Remember
Difficulty: 1 Easy
11. Legal uncertainties constrain the growth of international business.
FALSE
Just the opposite; despite legal uncertainties, international business is growing.

Blooms: Remember
Difficulty: 2 Medium
12. Intellectual property includes patents and trademarks, but not copyrights.
FALSE
Copyrights are also a form of intellectual property.

Blooms: Remember
6-34
Difficulty: 1 Easy
Learning Objective: 06-04 Identify methods to protect intellectual property.
Topic: Property Rights and Intellectual Property Rights
13. The European Patent Organization (EPO) makes filing for a patent in all 28 EU member states
more difficult than it was previously.
FALSE
The EPO makes the filing easier, because it is only one filing, compared to 28.

Blooms: Remember
Difficulty: 1 Easy
14. The World Intellectual Property Organization (WIPO) is a UN agency that administers 24
intellectual property treaties.
TRUE
WIPO also advises developing nations on intellectual property rights.

Blooms: Remember
Difficulty: 1 Easy
6-35
15. Many smaller and developing nations want to reduce patent protection from the current 15 to
20 years down to 5 years or even 30 months.
TRUE
Yet multinational corporations (MNCs) need the protection to incentivize their investments.

Blooms: Remember
Difficulty: 1 Easy
16. There is one main organization that offers intellectual property (IP) protection, the UN.
FALSE
The UN, the WTO, and ACTA (proposed) would be the framework for IP protection.

Blooms: Remember
Difficulty: 1 Easy
17. Global trademark protection follows the Office of Harmonization in the Internal Market
approach.
FALSE
Trademark protection is harmonized in the EU, but country by country everywhere else.

Blooms: Remember
Difficulty: 1 Easy
6-36
18. Global standardization of trade-related law is progressing slowly.
TRUE
There are tax conventions and some antitrust treaties, and the EU has made progress, but in
general, legal matters go country by country.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-05 Discuss the standardization of laws among nations.
19. International Organization for Standardization (ISO) is the only international standardizing
organization.
FALSE
The ISO is joined by the International Electrotechnical Commission (IEC).

Blooms: Remember
Difficulty: 1 Easy
20. 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
The per se aspect of U.S. law is not shared in the EU.

6-37
Blooms: Understand
and accounting.
21. In the antitrust area, the U.S. is concerned with the impact of the business deal on the
consumer, whereas the EU is focused on the competitive structure of the marketplace, and so
pays attention to its rivals.
TRUE
This different focus is the case.

Blooms: Understand
and accounting.
22. Japanese cultural values suggest that in Japan, antitrust law against cartels would be strictly
enforced.
FALSE
The zaibatsu, Japanese conglomerate, is hampered by antitrust legislation, which was originally
imposed after WWII by the U.S.

Blooms: Understand
and accounting.
6-38
23. The U.S. at times applies antitrust law extraterritorially.
TRUE
The U.S. Supreme Court has allowed overseas application of U.S. law.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
24. The EU does not apply its competition policy beyond the EU.
FALSE
The EU engages in the extraterritorial application of its competition policy.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
25. Microsoft is an example of how a company can avoid multiple antitrust laws in multiple
jurisdictions, thanks to equalization agreements.
FALSE
Microsoft offers an example of how a company can get bogged down in these legal areas, with
antitrust issues in the U.S., the EU, and China.

Blooms: Remember
6-39
Difficulty: 1 Easy
and accounting.
26. Tariffs are categorized as financial and political forces, but they are usually not seen as legal
forces.
FALSE
Tariffs are certainly legal forces, as well. See Table 6.3.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
27. The U.S. avoids trade barriers on imports in support of free trade principles.
FALSE
The U.S. applies tariffs and other trade barriers.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-40
28. Product liability is an area of torts in which the U.S. courts can make large awards, unlike in
other countries.
TRUE
Other countries restrict award amounts.

Blooms: Remember
and accounting.
29. Contingency fee cases are limited to the U.S.
TRUE
This is the case. Outside the U.S., often when the defendant wins a case, the plaintiff may be
charged to pay the defendant's legal fees.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
30. In the U.S. punitive damage rulings have no measureable effect on medical areas.
FALSE
Just the opposite—often medical equipment and drug companies will not sell in the U.S.
because they cannot obtain product liability insurance.

6-41
Blooms: Remember
Difficulty: 1 Easy
and accounting.
Multiple Choice Questions
31. Enforcing contracts that cross international borders is
A. simply a matter of applying the local law to the contract.

B. complicated and governed in most nations by the CISG.
C. secondary to who has possession of the goods, regardless of title.
D. nearly impossible, so negotiation is important.
CISG usually applies, and arbitration is another possibility.

Blooms: Remember
Difficulty: 1 Easy
6-42
32. Arbitration is a private solution that is
A. often preferred by foreign litigants because it is perceived as fairer, faster, cheaper, and
more confidential than are the courts.
B. favored by international unions.
C. recommended by the UN for international companies facing litigation in developing
countries.
D. discouraged by the U.S. Bar Association.
Non-U.S. potential litigants try to avoid the U.S. court system, as do many U.S. potential
litigants.

Blooms: Remember
Difficulty: 1 Easy
33. Incoterms include
A. FAS and CIF.

B. CFR and COD.
C. INSAP and ECO.
D. SAE and EBI.
A selection of Incoterms is explained in Table 6.2.

Blooms: Remember
Difficulty: 1 Easy
6-43
34. Usually, to assume that foreign law
A. will be similar to U.S. law is reasonable.

B. will differ from U.S. law and must be understood is a reasonable approach.
C. won't matter because you and your trading partner will agree to arbitrate is reasonable.
D. will be biased against the foreigner is reasonable.
Foreign law needs to be understood and is quite likely to differ from U.S. law.

Blooms: Remember
Difficulty: 1 Easy
35. 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.
There is some standardization in patents, and this description is accurate.

Blooms: Remember
Difficulty: 1 Easy
6-44
36. Patent treatment is 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.

Blooms: Remember
37. Smaller nations would like patent protection
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 enter the game earlier, possibly with generics.
D. extended, so that their profits can increase.
Smaller nations have called for patent protection to be reduced.

Blooms: Remember
Difficulty: 1 Easy
6-45
38. WIPO is a
A. UN agency that administers intellectual property treaties and advises countries on

intellectual property-related administrative issues.
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.
WIPO is active in developing countries and has helped them appreciate the importance of
protecting intellectual property.

Blooms: Remember
Difficulty: 1 Easy
39. 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.
Patent trolls are the patent law equivalent of ambulance chasers.

Blooms: Remember
Difficulty: 1 Easy
6-46
40. Trademarks can be
A. a shape, color, design, sound, phrase, abbreviation by which the product is designated.
B. any visual property consciously associated with the product.
C. a design associated with the product, using color and shape.
D. a mark under which the firm does business.
A trademark may be a sound.

Blooms: Remember
Difficulty: 1 Easy
41. Antitrust law is intended to
A. challenge successful businesses to allow proper levels of competition.

B. prevent large concentrations of economic power, such as monopolies.
C. create a more trusting business environment.
D. allow socialism to flourish.
Antitrust or competition law is meant to prevent large, harmful concentrations of economic

power.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-47
42. One difference between the U.S. and EU approach to antitrust law is that
A. the U.S. follows the per se concept, wherein actions are illegal whether they have done
harm.
B. the EU forbids market dominance by cartels, no matter the conditions, whereas the U.S.
does not.
C. the U.S. focus is on impact on competition, whereas the EU focus is on the consumer.
D. the EU avoids competition, whereas the U.S. seeks it.
It is true that the U.S. follows the per se concept; all of the other statements are incorrect.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
43. The U.S. and the EU both
A. apply antitrust law extraterritorially.

B. oppose the Japanese Anti-Monopoly Law.
C. share a commitment to the per se concept in law.
D. oppose the Japanese Anti-Monopoly Law as a nontariff barrier.
Both the U.S. and the EU apply their competition or antitrust law extraterritorially.

Blooms: Remember
and accounting.
6-48
44. The U.S. antitrust law contains both civil and criminal penalties,
A. neither of which can be applied outside the U.S.

B. and the criminal penalties apply to foreign companies even if the conspiracy took place
outside the U.S.
C. but their application to foreign companies is limited to actions that have taken place within
the U.S.
D. and they can be administered by foreign courts.
This is another example of extraterritoriality.

Blooms: Remember
and accounting.
45. 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 U.S. and the EU.
D. strictly to harm caused by the designer/manufacturer, so no penalties outside of damages
can be awarded.
In the U.S., strict liability applies to harm done without a need to prove negligence.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-49
46. Punitive damages in product liability cases can be awarded in
A. Japan.
B. Japan and the EU.
C. the UK.
D. the U.S.
The defendant can be punished in the U.S. by the jury, a punishment known as punitive
damages.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
47. If an international manager runs afoul of a miscellaneous law while working abroad, calling the
embassy
A. will ensure that the charges are dropped.

B. to let them know of the situation may be a good idea, but usually the embassy cannot help
much.
C. will lead to meetings that will arrange for everything needed for dropped charges.
D. to have them explain the various legal rights you have as a foreigner to the foreign
government judicial official is a reasonable approach.
There usually is not much the home embassy can do to help victims of foreign miscellaneous
laws. So you should know what these laws are.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-50
48. The Foreign Corrupt Practices Act (FCPA) is U.S. legislation that
A. outlines bribery practices that are allowed abroad but not in the U.S.
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 prohibits bribery by American companies abroad.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
49. 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.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-51
50. The FCPA has
A. hurt American business because managers cannot use bribes any more.
B. challenged the creativity of American managers and consultants to develop ways to work
around the FCPA.
C. brought the discussion of bribery into the open, which has, overall, been positive.
D. 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.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
51. In the Global Debate, voluntary American dolphin-safe tuna labeling is objected to on what
grounds?
A. Dolphin and tuna are not the same species.

B. The labeling is seen as a nontariff barrier for unlabeled, imported tuna.
C. Mexican tuna cannot be labeled by U.S. regulation.
D. Labeling requires additional expenditure in the fishing process.
The voluntary labeling operates to discriminate against tuna operations that don't meet the
labeling requirements.

Blooms: Remember
and accounting.
Topic: Resolving International Business Disputes
6-52
52. Transparency International's 2013 Index lists which countries as being among the most
transparent?
A. Switzerland, Singapore, the Netherlands

B. Zaire, Hong Kong, Italy
C. the U.S., Italy, France
D. Russia, Mexico, Spain
The Corruption Perception Index (Table 6.4) lists the 2013 results.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
53. Anyone studying legal forces affecting international business soon realizes
A. there is a remarkable level of coordination among legal systems in the developed nations.
B. that most laws are predictable, and that, although there is variance, what constitutes illegal
behavior is commonly shared.
C. the variety of these forces complicates the task of understanding the laws.
D. because of the World Court, officials in most legal systems are open to collaborating with
their international colleagues.
There is remarkable diversity among legal systems and approaches to the law.

Blooms: Remember
Difficulty: 1 Easy
6-53
54. The existence of the rule of law in a foreign market suggests that
A. lawyers will be necessary in any substantive business transaction.

B. personal relationships will be less effective than in a country governed outside the rule of
law system.
C. legal rulings will be the basis of any dispute resolution.
D. foreign investors can assume that their interests will be protected.
Rule of law suggests a process known in advance and offers protection from arbitrary decisions
and forces such as blackmail.

Blooms: Remember
Difficulty: 1 Easy
55. The main 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. nonexistent at this point.
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.

Blooms: Remember
Difficulty: 1 Easy
6-54
56. Extraterritoriality is
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.

Blooms: Remember
Difficulty: 1 Easy
57. The Alien Tort Statute allows foreigners to
A. sue in the U.S. courts for residency in the U.S.

B. file claims in U.S. courts for violations of international law that may have occurred beyond
the U.S. borders.
C. file claims in U.S. courts for alleged violations of foreign laws.
D. file claims against other foreign nationals for violation of U.S. EEOC law.
Foreign nationals have the right to sue in U.S. courts for violation of international law beyond
the U.S. borders. This is an example of extraterritoriality.

Blooms: Remember
Difficulty: 1 Easy
6-55
58. Where litigation in international disputes should occur is
A. usually evident from the documentation available.

B. at times unclear, in which case, the UN International Court of Justice will make a
jurisdictional ruling.
C. often complex, so contracts should include choice of law and choice of forum clauses.
D. dictated by where the problem arose; a problem arising in India is adjudicated in India.
Jurisdictional issues can be very complex, so it is best to include a choice of forum and choice
of law clause in any contract that covers actions crossing borders.

Blooms: Remember
Difficulty: 1 Easy
59. 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.
Usually companies from the same country will handle their disputes within their own country's
court system.

Blooms: Remember
Difficulty: 1 Easy
6-56
60. 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 the U.S. court system.
C. more discreet, although more costly than the court system.
D. less bureaucratic than the court system of any country.
Arbitration is seen as a desirable alternative to the U.S. court system by non-U.S. companies. In
particular, discovery, jury trials, and punitive torte awards are seen as problematic.

Blooms: Remember
Difficulty: 1 Easy
61. 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.

Blooms: Remember
Difficulty: 1 Easy
6-57
62. Legal uncertainties have affected international business (IB)—
A. they have slowed down IB growth.

B. they have not, though, slowed down the growth of IB; instead, they have made conducting
IB more complex.
C. prices and insurance costs have risen.
D. fewer large businesses want to be involved across national borders due to the uncertainties
of the legal environment.
Legal issues have added to the growth of complexities in IB, but they have not slowed down
IB's growth.

Blooms: Remember
Difficulty: 1 Easy
63. 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 things created using someone's intellect.
IP includes all results of the intellect, whether tangible or intangible.

Blooms: Remember
Difficulty: 1 Easy
6-58
64. 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.

Blooms: Understand
65. With patents, there is standardization,
A. to some degree, through the EPO within the EU.

B. yet this is in name only, so often companies file many patents applications in different
countries.
C. with total harmonization reached through UN accords.
D. thanks to the accounting harmonization process.
There is quite considerable standardization in patents, especially in the EU.

Blooms: Remember
Difficulty: 3 Hard
6-59
66. WIPRO 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.
These two efforts to add to the protection of IP come from the UN and the WTO (Table 6.1).

Blooms: Remember
Difficulty: 1 Easy
67. 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.

Blooms: Remember
Difficulty: 1 Easy
6-60
68. Trade names are protected under
A. national laws in all UN member countries.

B. the International Convention for the Protection of Industrial Property.
C. many local laws in most countries, so that illegal trademark use is a local issue.
D. long-standing convention, but no legal agreements.
The International Convention for the Protection of Industrial Property protects trade names.

Blooms: Remember
Difficulty: 1 Easy
69. Standardization of law
A. would challenge international business because IB would lose protection.

B. would make IB work more smoothly because uniform, predictable laws would result.
C. has not been progressing due to nationalism and patriotism.
D. does not take into account cultural aspects of legal regulations.
Standardization would simplify a complex area of IB. Interestingly, tax is one area where some
standardization has been achieved.

Blooms: Remember
6-61
70. 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.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
71. In the U.S. and EU, attitudes toward competition
A. are quite similar.

B. are based on differing assumptions, with the U.S. following a per se concept and the EU
concerned about the existence of harm.
C. differ because the EU is anticompetitive; its Commission on Competition ensures
competition isn't too severe.
D. differ on the role of market dominance; the U.S. supports it and the EU wants to avoid it.
The U.S. follows a per se principle toward antitrust, while the EU is concerned about the
existence of harm.

Blooms: Remember
and accounting.
6-62
72. U.S. antitrust law is applied
A. to all U.S. firms doing business in the U.S.

B. as widely as possible, whether or not the alleged corruption took place inside the U.S. and
whether or not the business is American.
C. to U.S.-owned firms with assets in the U.S.
D. to all firms with assets in the U.S.
The U.S. applies antitrust law globally.

Blooms: Remember
and accounting.
73. 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.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-63
74. Unlike antitrust or competition proceedings in the EU, in the U.S. such proceedings
A. may involve civil and criminal penalties.

B. are heard at the local level.
C. involve only the top management team.
D. are head by a three-judge panel.
U.S. rulings can be more severe and costly for the firm.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
75. Antitrust laws differ among countries, and complying with them is often difficult for the firm, so
A. international firms have had to increase their legal staffs to ensure compliance.
B. the U.S. government is pushing for a world organization to clear antitrust issues.
C. firms have moved toward fewer mergers and more regionalized organizations.
D. firms expect to be in antitrust litigation and act accordingly.
Such an organization would probably operate as a clearinghouse for merger filings.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-64
76. 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, and noncompliance can carry punishment.
Many trade obstacles are legislated, and they are part of a formal institution.

Blooms: Remember
Difficulty: 3 Hard
and accounting.
77. 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.
Trade obstacles lead to higher costs to the consumers.

Blooms: Remember
Difficulty: 3 Hard
and accounting.
6-65
78. In the U.S. 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 U.S. are known to receive very large rewards.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
79. Running afoul of miscellaneous laws in a foreign country is
A. an error easily forgiven by foreign police.

B. a serious error, so the local law should be known.
C. not a major issue, as the embassy can work out your release.
D. not a serious issue because both your country and your company stand behind you.
Miscellaneous foreign laws can be treacherous, so best to know about them and avoid the
areas they control (drinking alcohol in Saudi Arabia, chewing gum in Singapore, etc.)

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-66
80. 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 U.S.
D. introduced clear, concise terminology into the discussion of corruption.
Much to the surprise of some critics, the FCPA has brought the discussion into the sunlight. The
EU and Britain on its own have passed similar laws, as well.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
81. Where litigation should occur in a dispute on an international transaction
A. has to do with the location of the problem.

B. is clear to both the defendant and plaintiff.
C. is determined by where the transaction took place.
D. is often a complex issue to untangle.
The location of the litigation is often the first problem that litigants face, which is why a
statement of which law should apply and in what forum any litigation should occur is
recommended as a part of the contract.

Blooms: Remember
and accounting.
6-67
82. Many U.S. laws affect activities of international firms, and
A. their impacts have been coordinated.

B. there is no coordination or consolidation of them.
C. as long as the action is outside of the territorial U.S., these laws won't apply.
D. in the case of conflict in laws, the international business is allowed to choose which path to
follow.
There is no consolidation; at times the laws may be at cross-purposes, as well, and affect the
competitiveness of the business.

Blooms: Remember
and accounting.
83. The U.S. Foreign Corrupt Practices Act
A. clearly stipulates terminology and behavior that is illegal on the part of U.S. businesses and
foreign business operating in the U.S.
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 U.S.
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 UK.

Blooms: Remember
and accounting.
6-68
84. Anticompetitive legislation can be seen from a foreigner's perspective as
A. a barrier to trade.
B. an attempt to create a level playing field.
C. a way to support domestic agriculture.
D. a way to increase capitalist values.
Each country prefers its own approach to anticompetitive legislation, so there has been little
standardization. Thus, a nation's approach can be seen to function as a trade barrier because it
does give local businesses an advantage in that they already have business models that are in
harmony with the nation's legal values.

Blooms: Remember
Difficulty: 3 Hard
and accounting.
85. Tax law
A. is exempt from extraterritoriality.

B. is highly standardized, making tax payments mostly an accounting operation.
C. is mostly local and needs to be followed.
D. is often applied globally.
The U.S., for example, applied tax law globally. It recently charged the mayor of London, who
holds a U.S. passport, for nonpayment of his tax on income earned in the UK.

Blooms: Remember
6-69
and accounting.
86. Chinese courts
A. follow the rule of law and are perceived as fair.

B. are perceived as favoring Chinese litigants.
C. expect payments to be made to judges to soften any penalties.
D. will not hear cases involving foreigners and allocate them Hong Kong jurisdiction.
Chinese courts have, in the past few years, greatly increased their perceived fairness. Mainland
Chinese courts today rule in favor of foreign litigants more often than do the courts in Hong
Kong.

Blooms: Remember
Difficulty: 3 Hard
and accounting.
87. Arbitration is
A. often preferred by foreign litigants in the U.S., for speed and privacy.
B. avoided by foreign litigants because it is costly and perceived to be biased.
C. a way to increase the likelihood of a partial ruling.
D. a favored forum for foreign divorce in the U.S.
Foreign litigants prefer arbitration in the U.S. for its privacy and speed.

Blooms: Remember
and accounting.
6-70
88. In Japan, anti-trust legislation
A. was introduced by the U.S. 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 a

hindrance, but have developed ways to satisfy Westerners that they are incorporating antitrust
thinking into their strategies.

Blooms: Remember
and accounting.
89. Trade obstacles can take the form of
A. political, financial, or legal regulations.

B. financial or economic regulations.
C. economic or environmental regulations.
D. marine safety rules and import duties.
Trade obstacles can be political, financial, or legal in their origins. A boycott is political, a tariff
may be financial, and an antimonopoly regulation is legal.

Blooms: Remember
and accounting.
6-71
90. 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.

Blooms: Remember
and accounting.
91. 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.

Blooms: Remember
and accounting.
6-72
92. One area of U.S. tort cases of concern to international businesses is that they
A. can result in large monetary awards.

B. often lead to malfeasance claims against the business.
C. may result in personal embarrassment to corporate officers and require apologies.
D. often continue for years and can result in exorbitant legal fees.
Tort claims can result in large monetary awards in the U.S.

Blooms: Remember
and accounting.
93. Strict liability requires
A. no proof of the manufacturer's negligence.

B. the manufacturer knows 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.

Blooms: Remember
and accounting.
6-73
94. Punitive damages are found
A. throughout legal systems based on common law.

B. only in the U.S.
C. in the U.S., EU, and Asia.
D. in both secular and religious-based legal systems.
Punitive damages are awarded by juries in the U.S. and only in the U.S., where huge damages
can be levied against the defendant to "teach a lesson."

Blooms: Remember
Difficulty: 1 Easy
and accounting.
95. 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.
That the onus is on the plaintiff makes for a difficult case, especially in complex and/or high-
tech areas.

Blooms: Remember
and accounting.
6-74
96. 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.

Blooms: Remember
and accounting.
97. 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 does come 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.

Blooms: Remember
and accounting.
6-75
98. 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.

Blooms: Remember
and accounting.
99. 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.

Blooms: Remember
and accounting.
6-76
100. If you are an international businessperson arrested and taken into custody in a foreign country,
the best approach is to
A. notify your embassy, try to understand the issues, and contact local assistance, such as a
lawyer.
B. assert that you be released to your ambassador.
C. contact the local press and describe the situation.
D. resist talking at all.
There is usually nothing an embassy can do except give advice, but that's what you need most.

Blooms: Remember
and accounting.
101. The source of most international law is
A. bilateral and multilateral treaties, many initiated by the UN.

B. the World Court.
C. national law that is applied extraterritorially.
D. waiting to be discovered, since the amount of international law is quite limited.
Most international law is a result of treaties, many of which have begun at the UN.

Blooms: Remember
and accounting.
6-77
102. The legal system of a country is
A. the collection of governing principles, legislation, and regulations enacted to provide for the
welfare of the country.
B. the laws and their interpretation by citizens, but not noncitizens.
C. whatever the local sheriff or ruler says it is.
D. a collection of folkways, rules, and regulations whose goal is to support civil harmony.
Often the principles are described in a constitution, and legislation is enacted by governing
bodies such as local councils, selectmen, and then state or province and national-level bodies.

Blooms: Remember
103. Civil law is based on
A. a collection of codes and tends to be bureaucratic.

B. precedents found in judgments made by judges.
C. an adversarial understanding of the law.
D. codes combined with any religious law in the area.
Civil law, such as Napoleonic law, is based on a collection of codes and tends to not be
adversarial.

Blooms: Remember
Learning Objective: 06-01 Describe the three types of legal systems.
6-78
104. In Sharia law, interest is forbidden
A. so the acquisition of working capital is severely limited.

B. so equity partnerships, where business risk is shared, tend to be the approach to developing
working capital.
C. but mostly this prohibition is simply a pretense, and interest is usually paid but termed
something else.
D. which greatly limits the development of international businesses.
Equity partnerships serve to create working capital. Risk is shared.

Blooms: Remember
and accounting.
105. A company from a Sharia-based legal system
A. has the right to use that system globally, regardless of the issues.
B. can follow that system internally and also has to follow the local law of the host country.
C. must accept that interest will need to be a part of foreign contracts.
D. can opt out of Sharia law if their business is international.
Both legal systems could be followed in a foreign country that does not practice Sharia law, as
long as there was not a conflict between the systems. The host-country's legal system would
need to be followed without question.

Blooms: Remember
and accounting.
6-79
Fill in the Blank Questions
106. __________ describes the set of rules nations have agreed to follow to help set the context for
stable relationships among nations.
International law
International law describes these rules, whose source is often treaties.

Blooms: Remember
and accounting.
107. International law comes from several sources, the most important of which are bilateral and
multilateral ___________ between nations.
treaties
Many of these treaties are initiated by the UN.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-80
108. Many countries try to enforce their laws outside their borders, a process known as ____________
application of laws.
extraterritorial
This is done not by force but by traditional legal means.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
109. The ______ Tort Statute allows some non-U.S. nationals to file lawsuits in U.S. courts for alleged
violations of international law, including human rights violations.
Alien
This statute has been modified by recent court rulings but still offers U.S. courts to some
foreigners.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
110. An alternative to settling an international dispute in a U.S. court is to use ____________.
arbitration
Arbitration is often favored by non-U.S. litigants because it tends to be quicker, less public, and
less costly.

Blooms: Remember
Difficulty: 1 Easy
6-81
and accounting.
111. The Canadian company Research in Motion settled a dispute with a U.S. citizen over the use of
the word ______________ via arbitration.
BlackBerry
This dispute was handled through the World Intellectual Property Organization (WIPO)
Arbitration and Mediation Center.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
112. Predefined commercial terms established by the International Chamber of Commerce are
known as __________.
Incoterms
Incoterms greatly aid international business by standardizing sales agreements and other duties
and obligations of commerce.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-82
113. A creative work or invention that is protectable by patents, trademarks, trade names,
copyrights, and trade secrets is known as __________.
intellectual property
Intellectual property can be protected, and TRIPA and WIPO are primary contributors to that
effort, as will be ACTA, if and when it is passed.

Blooms: Remember
Difficulty: 1 Easy
114. The _____________, according to Lawrence Lessig, is the place intellectual property is least
respected.
Internet
This is interesting, because the Internet is also the most innovative and progressive space we
have.

Blooms: Remember
Difficulty: 1 Easy
115. There are three types of ____________ available in the U.S.: utility, design, and plant.
patents
These are the three categories of patents in the U.S.

Blooms: Remember
Difficulty: 1 Easy
6-83
116. In the U.S., the first _______________ has the right to the patent, whereas in the EU, it goes to the
first to register.
inventor
This is one major difference between patent law in the U.S. and the EU.

Blooms: Remember
Difficulty: 1 Easy
117. According to the U.S. Chamber of Commerce Global Intellectual Property Center, ______________
has the best momentum on the protection of intellectual property rights.
the U.S.
Next are the UK and Australia. Canada is significantly below Australia.

Blooms: Remember
Difficulty: 1 Easy
118. A shape, color, design, phrase, abbreviation, or sound used by merchants or manufacturers to
designate and differentiate their products is known as a ____________.
trademark
Trademarks have been protected since their use in the 14th century.

Blooms: Remember
Difficulty: 1 Easy
6-84
119. ___________ gives intellectual property protection to computer software in the U.S. and the EU.
Copyright
Downloading or copying most protected computer files violated the owner's property rights.

Blooms: Remember
Difficulty: 1 Easy
120. A ___________ is any information not generally known to the public and that a business wishes to
hold confidential.
trade secret
The company must exercise reasonable efforts to protect these secrets, and they are the most
common form of IP protection.

Blooms: Remember
Difficulty: 1 Easy
121. _____________, the most common form of IP protection, do not require that the process or
innovation be shared with the government.
Trade secrets
Trade secrets also do not require registration. Yet once they are made public, anyone can use
them; there is no protection.

Blooms: Remember
6-85
122. Competition or antitrust laws are intended to prevent __________.
monopolies
They differ among countries. For example, a cartel that does not harm is legal in the EU but not
in the U.S.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
123. One major difference between the U.S. and the EU in antitrust law is that U.S. law follows the
____________ concept in its approach.
per se
The per se concept is that activities are illegal in and of themselves, regardless of their impact
on the consumer.

Blooms: Remember
Difficulty: 3 Hard
and accounting.
124. In the U.S., trust-busting activities can be initiated by private parties, whereas in _________ they
are initiated by the Federal Trade Commission (FTC).
Japan
Only once the FTC has investigated can private parties pursue a claim.
6-86
Blooms: Remember
and accounting.
125. In Japan the FTC does not require a __________ to raid a firm suspected of being in violation of
trust law.
warrant
The FTC must be quite sure there is a violation before a raid occurs.

Blooms: Remember
and accounting.
126. Legal systems are based on __________, common law, or civil law.
religious law
religious law is a source of some legal systems—Pakistan and Saudi Arabia, as well as, at less
obvious levels, many other countries' legal systems.

Blooms: Remember
Difficulty: 1 Easy
6-87
127. The civil law system is based on __________ and thus is bureaucratic.
codification
Codification involves a systematic collection of laws to cover all possible areas of concern.
France follows a codified system.

Blooms: Remember
Difficulty: 3 Hard
128. The ____________ approach relies on previous decisions made by judges and statutes made by
legislatures.
common law
Common law goes to legal precedent and statutes.

Blooms: Remember
129. In the __________ system, the trial is adversarial, and the defendant is presumed innocent until
proven guilty.
common law
Common law is more adversarial than civil law, where the trial consists, once the facts are
established, of applying the coded law.

Blooms: Remember
6-88
130. International businesspeople need to know that the country in which they are doing business
follows ______________ and not the rule of a political dictatorship or ruling elite.
the rule of law
Rule of law suggests that investments will be protected and property rights respected.

Blooms: Remember
131. _____________ describes the set of rules that nations have agreed to follow.
International law
International law is usually established by treaties and other multilateral agreements.

Blooms: Remember
Difficulty: 1 Easy
132. Immunity from prosecution of visiting foreign heads of state is an example of ______________.
customary international law
Customary international law is distinguished from statutory law.

Blooms: Remember
and accounting.
6-89
133. Three areas of special concern to international business managers because they affect activities
in the international setting and not in the domestic setting are performance of contracts in an
international setting, litigation in an international setting, and ___________.
extraterritoriality
Often the international company will find itself with duties to two legal jurisdictions, that of the
host and home countries.

Blooms: Remember
and accounting.
134. The ______________ allows non-U.S. nationals to file lawsuits in U.S. courts for some alleged
violations of international law.
Alien Tort Statute
Recent Supreme Court rulings have limited the application of this act to actions occurring within
the U.S. (Kiobel v. Royal Dutch Petroleum, 2013). Previously, U.S. courts would hear cases
brought for injury by non-U.S. parties.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-90
135. The UN's contribution to resolution of issues related to international sales and the rights and
duties of sellers and buyers is the UN _______________.
Convention on the International Sale of Goods
The UN Convention on the International Sale of Goods (CISG) applies automatically to buyers
and sellers of nations who have ratified it.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
136. Many people outside of the U.S. would prefer to solve a dispute through _________ rather than
through the U.S. legal system.
arbitration
Arbitration is quicker, more private, and often less costly.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
137. The process of finding facts of a case relevant to the litigation is the process of ___________.
discovery
Discovery differs by nation. The U.S. discovery process is regarded by many outside of the U.S.
as intrusive.

Blooms: Remember
6-91
and accounting.
138. A creative work or invention that is protectable by patents, trademarks, trade names,
copyrights, and trade secrets is known as ______________.
intellectual property
Intellectual property has property rights and legal protection.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
139. In the EU, _____________ protects property rights of an innovation that is absolutely novel and
not available to the public in any form.
patent law
This differs from patent law in the U.S., which is narrower.

Blooms: Remember
and accounting.
6-92
140. People who buy patents that were mistakenly granted, mostly to failed companies, and try to
cash in on them are known as ______________.
patent trolls
Patent trolls originated in the U.S.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
141. A ______________ is a name used by a merchant or manufacturer to designate and differentiate

its products and is protected.
trade name
Trade names are protected; products with illegal trade names (not counterfeited) are subject to
seizure when imported.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
142. Ideas are not protectable; they must be written to be protected by _____________.
copyright
An idea itself is not protected.

Blooms: Remember
Difficulty: 1 Easy
6-93
and accounting.
143. ____________ are the most common form of IP protection that international businesses pursue.
Trade secrets
Trade secrets maintain the privacy of strategic information (Coke's formula, KFC's herbs and
spices).

Blooms: Remember
Difficulty: 1 Easy
144. The International Chamber of Commerce's _______________ are an example of successful

harmonization.
Incoterms
Incoterms are widely used and have been successful at harmonizing many varying commercial
terms.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
145. Competition laws are intended to prevent inappropriately large concentrations of economic
power, such as _____________.
monopolies
There is low motivation to harmonize competition law because each nation prefers its own.
6-94
Blooms: Remember
Difficulty: 1 Easy
and accounting.
146. The EU _________________ articles dealing with restrictive trade practices do not contain this per
se illegality concept of U.S. antitrust law.
Treaty of Rome
The EU establishing treaty is the Treaty of Rome.

Blooms: Remember
and accounting.
147. A cartel that allows consumers a fair share of the benefits is legally acceptable in the _____.
EU
The EU approach to anticompetition law differs from the U.S. approach.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
6-95
148. In Japan, antitrust legislation was introduced by the ________.
United States
Thus, Japanese anti-competition law has been imposed on the country rather than allowed to
develop from Japanese values, which may see competition in a different way.

Blooms: Remember
and accounting.
149. In __________, the FTC operates separately from the court system, unlike in the EU and the
United States.
Japan
Japan's Fair Trade Commission does not require a warrant and can search on its own authority.

Blooms: Remember
Difficulty: 1 Easy
and accounting.
150. A World Trade Organization (WTO) panel ruled that __________ labeling requirements violated
international trade rules.
"Dolphin Safe"
This is an example of information labeling operating as a barrier to trade.

Blooms: Remember
6-96
and accounting.
6-97

International Business - Module 6

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International Business - Module 6

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Module 06 Intellectual Property Rights and Other Legal Forces

True / False Questions

2. The source of international law is frequently the United Nations.

4. The U.S. avoids extraterritorial application of its laws.

10. Incoterms are established by the UN Commission on International Trade.

11. Legal uncertainties constrain the growth of international business.

18. Global standardization of trade-related law is progressing slowly.

29. Contingency fee cases are limited to the U.S.

31. Enforcing contracts that cross international borders is

A. simply a matter of applying the local law to the contract.

32. Arbitration is a private solution that is

33. Incoterms include

A. FAS and CIF.

34. Usually, to assume that foreign law

A. will be similar to U.S. law is reasonable.

A. property rights for 10 years.

36. Patent treatment is standardized owing to

37. Smaller nations would like patent protection

A. extended, to allow for them to build their competitive advantage.

A. a record of all patents, recorded by the UN.

40. Trademarks can be

41. Antitrust law is intended to

A. challenge successful businesses to allow proper levels of competition.

A. apply antitrust law extraterritorially.

A. neither of which can be applied outside the U.S.

A. to harm done by the designer/manufacturer without the need to prove negligence.

46. Punitive damages in product liability cases can be awarded in

A. will ensure that the charges are dropped.

49. FCPA includes

A. uncertainties that make its application problematic.

50. The FCPA has

A. Dolphin and tuna are not the same species.

A. Switzerland, Singapore, the Netherlands

A. lawyers will be necessary in any substantive business transaction.

A. the UN International Court of Justice.

A. a nation's attempt to enforce its law beyond its borders.

57. The Alien Tort Statute allows foreigners to

A. sue in the U.S. courts for residency in the U.S.

58. Where litigation in international disputes should occur is

A. usually evident from the documentation available.

A. a New York court would hear their complaint.

A. easier to influence an arbiter than a judge.

61. Incoterms attempt to standardize shipping agreements, and include

A. FAS and CIF.

62. Legal uncertainties have affected international business (IB)—

A. they have slowed down IB growth.

A. intangibles, which is why it is a difficult area.

64. Patents are government grants that give the owner

A. exclusive rights to use, sell, manufacture, or exploit the invention or process.

65. With patents, there is standardization,

A. to some degree, through the EPO within the EU.

66. WIPRO and TRIPS represent

A. patent harmonization agreements in SE Asia and the EU, respectively.

A. looking for loopholes in patent protection and exploiting them.

68. Trade names are protected under

A. national laws in all UN member countries.

69. Standardization of law

A. would challenge international business because IB would lose protection.

70. The ISO and the IEC both promote

A. harmonization in international accountancy.

A. are quite similar.

72. U.S. antitrust law is applied

A. to all U.S. firms doing business in the U.S.

73. The EU applies its competition policy