Legal systems develop in response to the needs of economic growth.  It’s therefore little surprise that as China’s economy has mushroomed, so too has its corresponding body of laws and regulations.  Among its newest additions is an anti-monopoly law that went into effect last year.  While from a purely legal perspective, the adoption of such anti-monopoly principles represents a significant step in the harmonization of the rule of law between countries; its implementation has led to some business surprises.

Why?  Well, it was originally thought that the new law would be a factor in the burgeoning mergers and acquisitions area.  Yet, some lawyers are creatively applying the new law on behalf of consumers to file private actions against large Chinese companies. 

By way of comparison, in the U.S. private antitrust suits are usually filed by companies or similarly situated plaintiffs who file as a group in a class action suit.  They are not typically filed by individual consumers.  As a result the Chinese application of the anti-monopoly law could lead to some interesting liability exposure.  If these suits are sanctioned by China’s Supreme People’s Court it is entirely possible that such consumer actions could be brought against foreign companies operating in China too. 

You might say that that’s the way the fortune cookie crumbles, but, the creative use of anti-monopoly is but one example of how the assumptions we may have about our own legal system may not translate well when conducting business internationally.  With more businesses going global every day, understanding the legal playing field and developing confidence in your ability to successfully navigate it can make the difference between business success and failure.

If you would like to learn more about the common legal mistakes managers and executives make when dealing abroad and how to avoid them, please join me on December 3^rd at 8 pm Eastern (5 pm Pacific) when I’ll be hosting international legal expert Carol Emory on Ask the No Nonsense Lawyer.  Better yet, if you have a question that you’d like me to ask Carol on Thursday evening click here to submit it and you’ll receive the call-in information to this complimentary program. 

Copyright © 2009, Corporate M.O., LLC 

A trademark smackdown is reportedly brewing between World Wrestling Entertainment Inc. and the Philadelphia Wine School over the word “smackdown.” 

Apparently the Wine School has been holding a competition for food and wine pairings since 2007 called “Sommelier Smackdown.”  When they recently went to register the phrase as a trademark the champions of masked men in tights sent a cease-and-desist body slam letter opposing the registration on the grounds that their own “Smackdown” program had been on the air since 1999 and they already owned the word smackdown for entertainment purposes.

It’s hard to believe that someone would confuse wrestlers with wine connoisseurs, not that professional wrestlers couldn’t enjoy a fine glass of wine.  But, let’s face it – we’re more likely to expect the WWE’s Smackdown show to have wrestlers breaking bottles over each others’ heads than consuming them in the name of entertainment. 

Nonetheless, the smackdown case illustrates how the class distinctions matter in trademark law and how the lack of segmentation within classes can lead to head-butting over who has the right to use a certain word or phrase.

Copyright © 2009 Corporate M.O., LLC

In the State of New York it will pay employers to be legally literate starting November 25, 2009. 

That’s when a new state law goes into effect that gets tougher on wage and hour violations.  More specifically, the penalty for complaints about wage and hour violations will increase from $200 to $1,000 and for employers who retaliate against employees who exercise their legal right to be paid fairly under the wage and hour laws the maximum penalty goes from $2,000 to $10,000.

 I’ve said before that wage and hour laws are no place to cut corners and it’s now truer than ever before.

The significance of the rule of law in business was underscored during the current confirmation hearings for Supreme Court nominee Sonia Sotomayor.  In speaking about her experience as a lawyer in private practice, Sotomayor is reported saying,

In business, the predictability of law may be the most necessary in the sense that people organize their business relationships based on how they understand the courts interpret their contracts.

How right she is.  The rule of law provides predictability, consistency, and stability.  Those are traits we come to expect from the legal system of countries with a developed economies.   

In business we need to know what contracts mean and how they can be enforced.  After all, contracts are the backbone of business — covering everything from the handshake agreement, to the preprinted purchase orders, and the fancy written agreements that most folks think of as a “real” contract.  

When doing business abroad, sometimes the rules we have come to know and expect just aren’t there.  That is particularly true in fast developing economies, where business necessities often outpace the existing rule of law and the law is trying hard to catch-up.  When that happens, business transactions are subject to an additional level of uncertainty and risk.  

In recent years, no economy has grown faster in the world than China’s.  If you’ve ever wondered about the legal aspects of doing business in Greater China, you’re invited to submit your questions about the subject by clicking here.  You are also invited to join me on July 22nd when I’ll be interviewing international legal expert Nicholas V. Chen, a partner in the Pamir Law Group about this very subject in a complimentary teleseminar.  Receive the call-in information by clicking here and submitting a question you’d like me to ask him about this timely topic.  

© Corporate M.O., LLC 2009