International Business Law Case Studies: Torts, Product Liability, and Intellectual Property
READING QUESTIONS
CLASS 9
Chapter Four, part 2 – Torts and Products Liability, Host State Regulation
4.4 Dow Jones
An online and print article insulted Joe Gutnick (Victoria, Australian resident). Trial and appellate courts found that Australian courts had personal jurisdiction over Dow Jones (US Company), which appealed to the High Court of Australia. All seven high court justices said that defamation did not happen when the article was published, but when a third party read about Gutnick and thought less of him, therefore damaging his reputation. The article said he was a tax evader and money launderer.
4.5 Volkswagen v Woodson
The Robinsons (New York residents) bought an Audi in Seaway Volkswagen in New York. They left to move to Arizona a year later. Passing Oklahoma, a car crashed in the rear, causing a fire, burning the dad and the two children. They sued in tort in Oklahoma, using theories of product liabilities. Defendants: retailer (Seaway), wholesaler (Worldwide Volkswagen). The defendants were New York corporations and conducted no business in Oklahoma. The defendants entered special appearances claiming that Oklahoma could not exert in personam jurisdiction over them by virtue of the Due Process Clause of the Fourteenth Amendment. The trial court found that it had jurisdiction and the Oklahoma Supreme Court denied the defendant’s request for a writ of prohibition to restrain the trial judge from exercising in personam jurisdiction over them. The U.S. Supreme Court granted cert.
4.7 US v. Blondek
Beginning in or about July 1989 and continuing through February 1990, John Blondek and Vernon Tull, both former employees of Eagle Bus Manufacturing, Inc., allegedly participated in a bribery scheme to pay foreign officials of Saskatchewan $50,000 CAD in connection with the sale of 11 buses to be used by the province. According to the facts alleged in the indictment, Darrell Lowry and Donald Castle, the respective Vice-President and President of the Saskatchewan Transportation Company (“STC”), an instrumentality of the Canadian government, requested payment in the sum of approximately two percent of the purchase price to ensure Eagle’s receipt of the contract. Thereafter, George Morton, Eagle’s Canadian agent, caused a check for $52,000 CAD to be issued to his own Canadian corporation. As alleged, Morton then delivered $50,000 CAD in cash to Castle and, in an effort to conceal such payment and pursuant to Tull’s instructions, prepared a letter on the letterhead of Eagle Ontario Bus Industries, Inc., the Canadian firm assisting Eagle in the sale, falsely stating that STC had been granted a “volume discount” amounting to US $43,940. The District Court dismissed the charges alleged against Castle holding that bribe recipients could not be prosecuted for conspiring to violate the FCPA. The Court of Appeals for the Fifth Circuit later affirmed.
4.8 Touche Ross v. Bank Intercontinental
Touche Ross is a firm of accountants practicing in the Cayman Islands, carried out audit work for Bank Intercontinental, Limited, a company incorporated under Cayman Law. Bank brought suit in Florida alleging professional negligence, maintaining that it was a multinational partnership of accountants with offices in Florida, New York, Cayman Isl. and worldwide.
Touche Ross then initiated suit in the Cayman Islands seeking to restrain the bank from continuing to prosecute the Florida suit.
The court initially granted ex parte (judicial proceeding is conducted for the benefit of only one party), based on plaintiff’s (party who initiates lawsuit) allegations that the Florida proceeding appeared to be an attempt to cloak Touche Ross in a multinational mantle with connection to Florida as a pretext for suing there.
When a firm is deemed to be part of a common enterprise, all firms in the enterprise have joint liability for the obligations of each other. But any particular court may not have personal jurisdiction over many of the foreign firms that form the common enterprise. This, plaintiffs would be well served to bring suit in a state where at least one firm has plentiful assets.
Explain strict liability. Compare strict liability with negligence.
-makes a person legally responsible for the damage and loss caused by his/her acts and omissions regardless of culpability. Under strict liability, there is no requirement to prove fault, negligence or intention. Strict liability is prominent in tort law (especially product liability), corporations law, and criminal law.
-negligence involves harm caused by carelessness, not intentional harm.
What are sharp practices?
Sneaky or cunning behavior that is technically within the rules of the law but borders on being unethical.
What is FCPA?
Foreign Corrupt Practices Act of 1977: a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials
What is common enterprise liability?
Each member of a common enterprise is individually liable for its conduct and obligations.
READING QUESTIONS
WEEK 10
Chapter Five, part 1 – Foreign Investment
1. Please familiarize yourself with the case 5-5, Bhutan case.
The Bhopal case is an in-depth study of the industrial accident at the Union Carbide factory in India that immediately killed 2,000 people, injured another 200,000 to 300,000 more, and immediately raised questions about plant safety and corporate responsibility around the world. Includes seven detailed appendices: A.) Chronology, B.) Stakeholders and Level of Responsibility, C.) Economic/industrial climate of India, D.) Union Carbide Corporation, E.) Issues in Chemical Processing, F.) Assessing Responsibility: The Legal/Regulatory System, G.) Assessing Responsibility: The Engineers and Scientists, and H.) Technical Expertise and Managerial Responsibility.
2. Please read the memorandum attached.
READING QUESTIONS
WEEK 11
Chapter 9 – Intellectual Property
1. One way of approaching this topic is paying particular attention to the general terms: what is intellectual property, artistic and industrial property, copyright, pecuniary right, right of reproduction, distribution rights etc.
Intellectual Property: refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
- Copyright, patent and trademark (3 types)
Artistic and industrial property: Artistic, literary and musical works. Inventions and trademarks.
Copyright: An incorporeal statutory right that gives the author of an artistic work, for a limited period, the exclusive privilege of making copies of the work and publishing and selling the copies.
Pecuniary right: The right of an author to exploit a copyrighted work for economic gain.
Right of reproduction: The exclusive right of an author to make multiple copies of a copyrighted work.
Distribution rights: The right of an author to place a copy of a copyrighted work into circulation for the first time.
2. Another way of approaching the topic is to study the examples, i.e. cases, against the general definition.
Example 1:
-What is the right of performance? (how would you explain to a friend?)
The right of an author to communicate a copyrighted work to the public.
-Read 9-1, Hickey case. What was the performance in question? How is the Zambian scenario relevant to current Europe, including CR?
A guy running a dancing club was violating the copyrights of music played. He ignored it, and then they put him in to court, and he said he didn’t know about it. He thought the mail that was sent to him saying he was not doing legally was a scam because friends said it was ok. He was infringing copyright.
Example 2:
-What are moral rights (note: moral, not mural)? Explain.
The right of an author to prohibit others from tampering (to interfere in a harmful manner) with a copyrighted work.
-Read 9-2, Seghal. What are the moral rights in question?
-How can moral rights be relevant, now, in Prague? Try to find specific examples.
Amar Seghal designed a mural in New Delhi. It became world-famous. After 20 years, the government decided to break it down and put it into storage. He sued them for the violation of his moral rights. It was an act of mutilation because they dismembered the art, and he was hurt as an artist. Counter Argument of gov: the mural was damaged by fire, and that defendant had all rights transferred. Berne Convention. The court decided to give the mural back to the artist.
3. Yet another way is to find typical issues and discuss them. The IP chapter is ideal for that. Consider the following:
a) Should downloading music and films online be illegal? Discuss. You must bring an argument, a counter-argument, and make a conclusion.
b) If UNYP makes copies of the textbook, would that be a violation of the copyright? Discuss. You must bring an argument, a counter-argument, and make a conclusion.
c) Should making counterfeit products (typically in China) be illegal? Discuss. You must bring an argument, a counter-argument, and make a conclusion. If you reach a different conclusion than in a), explain.
4. What is a patent? When can an idea (invention) be patented?
An incorporeal statutory right that gives an inventor, for a limited period of time, the exclusive right to use or sell a patented product or to use a patented method or process.
Two reasons: patents are confirmation of the private property rights of the inventor, and that a patent is a grant of a special monopoly to encourage invention and industrial development.
5. What is a trademark? What is the main requirement for a trademark to be registered?
A trademark is a mark/symbol/sign that you can use to distinguish your business’ goods or services from those of other traders.
The main requirement is distinctiveness, meaning that the design has to be unique to distinguish.
6. Consider 9-5, L’Oréal v. eBay. Is eBay in a position to enforce trademark rights of right holders?
7. One part of Chapter 9 applies IP to competition law (534 – 554). You may find it useful to review the old competition law we studied so far, under the light of the IP rules. In general though, this part may not require your full attention.
8. What is a compulsory license? Why does such a rule exist?
One of the fascinating debates around this subject concerns the ethical dimension of drug patenting, including generic drugs. You may get an idea from Reading 9-2, or from your own research – you may start at https://en.wikipedia.org/wiki/Generic_drug.
READING QUESTIONS
WEEK 12
Chapter 10 – Sales, part I.
CISG: Convention for the International Sale of Goods
1. How can parties opt into CISG and how they can opt out of it? Explain.
Parties to a contract may exclude or modify GISG’s application by a choice-of-law clause: contractual provision that identifies the law to be applied in the event of a dispute over the terms or the performance of the contract.
“Opting in” could be a problem. Possible unless they end up in a state that says it will only apply CISG to CISG-ratifying states.
2. Study Case 10-1. What did parties want? What did they have in the contract?
Lawsuits arise out of a dispute involving the sale of electronic components. Plaintiff (Asante Technologies Inc) filed the action in the Superior Court for the state of California. Defendant (PMC Sierra, Inc) removed the action to this court. Defendant asserts that Plaintiff’s claims for breach of contract and breach of express warranty are governed by the UN Convention on Contracts for the International Sale of Goods. Plaintiff disputed jurisdiction and filed a Motion to Remand…
3. If a German buys goods in Prague, does CISG apply? Explain.
Yes, unless these 6 categories are affected as they are excluded. Excluded transactions (a,b,c) and excluded goods (d,e,f).
a. good bought for personal, family or household use
b. auction sale
c. sales “on execution or otherwise by authority of law”
d. stocks, shares, investment securities, negotiable instruments, or money
e. ships, vessels, hovercraft, or aircraft
f. electricity
4. When the court tries to determine the intent of the parties, what does it look at?
a. Subjective intent approach – rule that contracts should be interpreted according to the actual intent and understanding of the parties at the time they made their agreement.
b. Objective intent approach – rule that contract should be interpreted according to the understanding that a reasonable person would have had at the time the agreement was made.
5. What must an offer for international sales of goods contain to be definite?
Article 14, the proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and price.
An offer must describe the goods with sufficient clarity that the parties know what is being offered for sale, and it must also state the quantity and price.
6. Must a contract for international sales of goods be in writing?
a. No, Article 11 says that the contract of sale does not need to be concluded in or evidenced by writing, it may be proved by any means, including witnesses.
b. Article 96, authorizes a contracting state whose legislation requires contracts to be written to make a declaration at the time of ratification to disprove article 11.
7. If the contract for international sales of goods does not state the price, is the contract invalid?
No, it is still a valid offer. They offer is assumed to have ‘impliedly made reference to the price generally charged.
8. What is a firm offer? Does CISG allow firm offers?
An offer that the offeror promises to keep open for a fixed period of time.
The doctrine of consideration (i.e. one in which the office pays the offeror for the promise the offeror for the promised to keep the offer open) does not apply to CISG, however, and firm offers are enforceable.
9. Can silence be acceptance?
Silence or inactivity, does not, in and of itself, constitute acceptance. When someone makes you an offer and you do not respond to it, you normally will not be bound to a contract. Your silence is generally not considered an acceptance if you do not truly intend to accept. This is generally true even if the person making the offer specifically says that your silence is considered an acceptance.
10. What is an assent by performance? Explain.
If the offeror asks for the performance of an act rather than the indication of acceptance, the acceptance is effective at the moment the act is performed. The offer must take it clear that the offeree is not required to notify the offeror.
11. What is the Battle of the Forms?
Two persons intending to contract but tendering differing form contracts rendering the conclusion as to the terms of the contract, or a determination as to whether there was a contract, difficult.
12. What happens if the acceptance contains modifications?
This scenario occurs when merchants use preprinted forms both to make offers and to send back acceptances. Under CISG, if the inconsistencies are ‘material’ the would-be acceptance is a counteroffer.
Additional or different terms are considered to alter the terms of the offer materially.
Terms that are not material are considered to be proposals for addition that will become part of the contract unless the offeror promptly objects.
13. What is specific performance? Give a scenario when specific performance is a practical solution.
A court order directing a party to carry out the obligations he had contractually promised to do (such as delivering groups)
Example: Rina offers to buy Beth’s house and Beth accepts, but later decides to keep the property. Real estate is considered to be unique. Since there is no other piece of property or house exactly like Beth’s, Rina may be entitled to specific performance on the contract. Beth would be compelled to go through with the sale.
14. Read 10-3, Filanto.
READING QUESTIONS (Class 13)
Chapter 10 – Sales, part II.
STUDY PROBLEMS 1-10 on pages 607 – 608.
Make sure you are able to refer to specific provisions of the CISG.
Fundamental breach: A fundamental breach of a contract, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages.
Avoidance: Notification by a party that he is canceling a contract and returning everything already received.
Specific Performance: A court order directing a party to carry out the obligations he had contractually promised to do.
Third-party Claim: A claim made by a defendant within existing legal proceedings seeking to enjoin a person not party to the original action, to enforce a related duty. Third-party claims include the assertion of ownership and rights in intellectual property such as patents, copyrights, and trademarks.
Waiver: An intentional relinquishment or abandonment of a known right or privilege.
The party may 1) excuse the seller from complying, or 2) impliedly excuse the seller if they buyer knew or could not have been unaware that the goods were nonconforming.
Passage of Risk: The point in time when the buyer becomes responsible for losses to the goods. The legal concept of the passage of time determines who is responsible for the loss.
Basic Incoterms: FOB, FAS, EXW
- FOB: Free on board. Term in international commercial law specifying at what point the seller transfers ownership of the goods to the buyer.
- FAS: Free alongside ship. Means that the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment.
- EXW: Ex Works. The seller makes the goods available at their premises. This term places the maximum obligation on the buyer and minimum obligations on the seller.
Nachfrist Notice: The fixing by the buyer of an additional reasonable period of time in which the seller may perform.
What are Buyer’s Remedies?
- Suspension of performance
- Avoidance in anticipation of a fundamental breach
- Avoidance of an installment contract
- Damages
Suspension of Performance: Remedy available to either party when it becomes clear that the other party will not perform a substantial part of his obligation because of a serious deficiency in his ability to perform his creditworthiness, his preparations for performing, or his performance.
Anticipatory Avoidance: Remedy available to either party when it becomes clear that the other party will commit a fundamental breach.
Duty to Mitigate Losses: Aggrieved (or non-breaching) party’s obligation to make reasonable efforts to limit additional losses, after a damaging event (or a breach of contract) has occurred. Failure in this duty may prevent the aggrieved party from obtaining compensation for avoidable losses. See also mitigation of damages.
Force Majeure: From French “superior force”. An event or effect that cannot be reasonably anticipated or controlled.
CASES
10-5, Chicago Prime Packers
Chicago Prime Packers, Inc. (“Chicago Prime”) brought a two-count amended complaint against Northam Food Trading Co. (“Northam”) and Nationwide Foods, Inc. d/b/a Brookfield Farms (“Brookfield”) for breach of contract. The purchaser of its ribs that arrived in an “off condition”. Chicago Prime and Brookfield subsequently entered into a settlement, and Count II of Chicago Prime’s Amended Complaint, which was its claim against Brookfield, was dismissed with prejudice. Thus, the only remaining claim is against Northam for breach of contract.
In accordance with the foregoing Findings of Fact and Conclusions of Law, the Clerk of the Court is directed to enter judgment in favor of the plaintiff Chicago Prime Packers, Inc. and against the defendant Northam Food Trading Co. in the sum of $178,200.00 plus $27,242.63, representing prejudgment interest calculated at a rate of 5% from May 1, 2001, for a total payment of $205,442.63.
10-6, Shoe Seller’s Case
By letter dated 19 September 1992, the Defendant [buyer], owner of a shoe retail business, ordered from the Plaintiff [seller], a shoe manufacturing firm in Italy, 143 pairs of various types of shoes. The shoes were delivered to the buyer on 16 February 1993. Upon conclusion of the contract, the parties had agreed that payment of the net amount of the invoice was to be made either within ten days from the date of invoice yielding a 3% cash discount, or within sixty days after the date of invoice.
By letter of 5 February 1993, the seller invoiced the buyer for the total price of his delivery, i.e., IT£ [Italian Lira] 8,411,000. The buyer did not pay and subsequently was sent a first reminder by seller’s letter of 7 April 1993. The reminder did not lead to payment. Accordingly, the seller sent a second notice, this time also setting a time limit for payment until 13 May 1993. Subsequent to this notice the buyer forwarded a check dated 29 April 1993 to the seller deducting IT£ 2,886,000 for shoes [buyer] noticed as being defective. The shoes for which the buyer gave notice of defect are item nos. (…). The check the buyer sent to the seller was only received on 18 May 1993.
The seller maintains that the shoes for which the buyer refuses to pay were neither defective nor had the buyer validly avoided the sales contract
The seller’s claim is denied.
The seller does not have a right to the residual price and therefore also lacks a valid claim to either the interest sought or any additional damages.
The fact that the buyer gave notice of defect (Article 39(1) CISG) in the correct manner and within the prescribed time limit remains unchallenged.
End of the chapter.
Question 9 – article 73(2)
Question 10 – article 35 & article 50 & (37&48)
READING QUESTIONS
WEEK 14
Chapter 11 – Transportation
1) INCOTERMS:
Trade terms published by the International Chamber of Commerce. If you want to refer to Inconterms, then you have to mention them. For example CIF (Incoterms 2010)
‘Free’ Terms: Free means that the seller has an obligation to deliver goods to a named place for transfer to a carrier
FOB – Free on Board (named port of shipment). The seller fulfills his obligations to deliver when the goods have passed over the ship’s rail at the named port of shipment.
FAS – Free Alongside Ship (named port of shipment). The seller fulfills his obligations to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment.
CIF – Cost, Insurance & Freight (named port of destination). The seller must pay the costs and freight necessary to bring the goods to a named port of destination and must procure marine insurance against the buyer’s risk of loss to the goods during the carriage.
CFR – Cost and Freight (named port of destination). The seller must pay the cost and freight necessary to bring the goods to the named port.
FCA – Free Carrier (named place of delivery). Applies to any form of transportation, and requires the seller to deliver goods to a particular carrier at a named terminal, depot, airport, or other place where the carrier operates. The costs of transportation and the risks for loss shift to the buyer at that time.
EXW – Ex Works (named place of delivery). The seller fulfills his obligations to deliver by making the goods available at his premises. The most least demanding on the seller.
2) Bill of Lading:
An instrument issued by an ocean carrier to a shipper that served as a receipt for goods shipped, as evidence of the contract of carriage, and as a document of title for the goods.
3) Piracy on the Seas:
Pirates with heavy fire power. The Seychelles invited China to set up an anti-piracy base in the islands to help fight the regular piracy attacks. China is considering the proposition. The US wants merchant vessels to have heavily armed security teams.