978-0073524597 Bonus A Part 4

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Bonus A – Working Within the Legal Environment

PPT A-30

Number of Identity Theft Complaints

1. This slide highlights the rise in the number of

identity theft complaints according to the Federal

Trade Commission.

2. Ask the students, What has given rise to the

growing number of identity theft complaints? Do

you know anyone who has experienced identity

theft?

3. If you believe you have been a victim of identity

theft, the Federal Trade Commission advises you

to do the following:

• File a police report.

• Check your credit reports.

• Notify creditors and dispute any unauthor-

ized transactions.

PPT A-31

Taxes

Taxes can be used to raise revenue or adjust behavior.

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A-56

PPT A-36

How Assets Are Divided in Bankruptcy

PPT A-37

Going, Going, Gone

1. This slide profiles the bankruptcies of 2008–

2011.

2. Have students research the companies listed in

the slide. Why did these businesses go bankrupt

instead of their competitors?

3. Ask the students, Is there a pattern of why busi-

nesses survive or go bankrupt? What mistakes do

failed businesses make that others do not? What

are the effects on the consumer when businesses

fail? What are the effects on the economy as a

whole?

PPT A-38

Deregulating Commerce

Today some believe the airline industry could use more

government regulation since passenger services have de-

creased, delays and flight cancellations have increased,

and charges such as baggage fees have become common.

A-57

PPT A-39

Hamburger Regulations

PPT A-40

Progress Assessment

1. The purpose of antitrust law is to foster competi-

tion in the free market.

2. Describe bankruptcy provisions under Chapters 7,

11, and 13.

• Chapter 7— liquidation of nonexempt as-

sets used by business and individuals.

• Chapter 11—reorganizations of firms as-

sets used by businesses

• Chapter 13—allows small businesses and

individuals to pay back creditors over a

three- to five-year time period

3. Deregulation occurs when the government with-

draws certain laws and regulations that seem to

hinder competition. Examples of deregulation in-

clude telecommunications and the airline indus-

try. Deregulation of the banking and investment

industries has not been successful.

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lecture

links

lecture link A-1

THE DIFFERENCES BETWEEN PATENTS, COPYRIGHTS,

AND TRADEMARKS

Patent is the abbreviated term for letters patent. The Constitution gives Congress the power to en-

act laws relative to patents in Article I, section 8. The first Patent Law was enacted in 1790. The most re-

cent revision was the American Inventors Protection Act of 1999. Patents are issued by the United States

Patent and Trademark Office (USPTO) of the U.S. Department of Commerce. Generally, the term of a

patent is 20 years from the date on which the patent was filed.

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While registering a trademark with the USPTO gives the holder some advantages, registration is

not necessary to establish legal rights. In fact, the symbols TM or SM may be used with a person’s mark

to inform the public of his or her claims. However, the “R in a circle” mark can be used only after the

USPTO actually registers it. Also, a mark cannot be registered unless it had been used “in commerce” or

unless the applicant files an “intent to use” application.

lecture link A-2

NORTEL’S PATENT AUCTION

In early 2009, the telecommunications company Nortel Networks filed for Chapter 11 bankruptcy

in Delaware, Canada, and Europe. In order to cover some of the costs of its financial downfall, the com-

pany hired a small law firm specializing in intellectual property to help sell its cache of patents. While a

patent auction may not carry the same glitz as priceless paintings or jewelry on the block, their value far

exceeds that of any standard trinket sell-off. Analysts estimate the patent portfolio will sell for no less

than several billion dollars.

Whoever ends up in possession of the patents will hold a powerful position in the wireless world.

First of all, the patents could provide integral assistance for some companies wanting to expand their tele-

communications presence. More than that, though, the patents could prove to be a fierce legal weapon in

the highly litigious wireless industry. This point has regulators at the U.S. Justice Department worried

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lecture link A-3

PIRACY MAY KO UFC

For years, sports leagues have been free of the piracy that has plagued music and movies. Fans

typically like to watch games as they happen, making piracy of a baseball game less appealing to down-

loaders than a film or a song. But as online streaming technology advanced, so too have the pirates’ ef-

forts to get entertainment for free. Thousands of game feeds from the NFL to the UFC now leak onto the

Internet every day. Although company watchdogs constantly scour the Web looking for infringers, the

sheer number of sites involved makes it almost impossible to shut them all down.

lecture link A-4

NEGOTIABLE INSTRUMENT FORGERY AND

THE UNIFORM COMMERCIAL CODE

Frank W. Abagnale was the main speaker at a seminar on document fraud. He is an unlikely ex-

pert, having spent time in French, Swedish, and U.S. prisons 30 years ago for creating and passing mil-

lions of dollars of bad checks. Interpol, Abagnale said, dubbed him a “master forger,” a badge of honor of

sorts, as Abagnale began his career when he was 16 years old and concluded it at age 21 with a stint in a

French lockup. After serving his time there, he was extradited to Sweden and finally to the United States,

doing 12 years. He was released early on the condition that he assist the U.S. government in its battle

against forgers. (The film Catch Me If You Can is based on Abagnale’s career as a forger.)

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Now he’s a “senior advisor” to the FBI’s Financial Crimes Unit. In that role, he assisted in de-

signing the new $100 bill. He also provides consulting services to financial institutions and companies

worldwide.

Disputes over who is liable for bad checks often end up in court. These matters are governed by

the Uniform Commercial Code, or UCC, a set of model statutes designed by legal experts to be used by

all states in order to provide a level playing field for commerce. It is not an all-encompassing federal law,

but rather a guideline for laws to be adopted by the states individually.

States can adopt a provision of the UCC or not. For example, the portion of the UCC concerning

liability in document frauds was amended in 1990. Connecticut adopted the amendment in 1991, but New

York State has not yet done so.

What can a company do to make itself less vulnerable? One powerful weapon is known as “posi-

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Generally, the more difficult a company makes forgery, the less likely it is to be a victim. Forg-

ers, Abagnale said, look for easy targets, of which there are too many. “We make it so easy for people to

steal from us, that people do. People steal from us because we let them,” Abagnale said.

lecture link A-5

GOOGLE’S TAX TACTICS

Tax havens have long been used by multinationals to skirt the stringent corporate tax laws of their

home countries. But for many in and outside the business world, the abundance of tax havens by no

means justifies the revenue they deprive deserving states. Unfortunately, not only is tax sheltering com-

mon, in most cases it is legal. Google, for instance, earned $12.5 billion overseas since 2007, only 2.4%

of which was taxed. Google’s clever, entirely legal money funneling saved the company $3.1 billion and

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lecture link A-6

BAD TIMING FOR BANKRUPTCY LAW CHANGES

In October 2005, the U.S. Bankruptcy Code was changed to make it harder for individuals to file

for bankruptcy. The code sets new limits on personal bankruptcy filing and requires people to get profes-

sional credit counseling before they file petitions. It prohibits most middle-income filers from filing

Chapter 7 petitions, which would allow debts to be erased. Instead, if people judged to have at least $100

a month left over after paying certain debts, they must submit a five-year repayment plan under the more

restrictive rules. During the months leading up to the October transition, bankruptcy petitions hit a record

high.

A study of bankruptcy filing shows that following the biggest hurricanes of the past 30 years

bankruptcy filings were about 50% higher in states that suffered a direct hit. When storms hit areas with

less expensive buildings (rather than expensive beachfront condos), the increase in bankruptcy rates goes

even higher. The highest increase in bankruptcy filings occurred when Hurricane Elena hit Mississippi in

1985.

Once the new bankruptcy bill went into effect, everyone—regardless of income and regardless of

the reason for filling—was required to file extensive new paperwork and meet the new procedural re-

quirements. The new rules demand more payments for car lenders and credit card issuers. Many workers

discovered that the bankruptcy court may believe they have phantom income for repayment—money

from jobs they held before the storm. The court may presume they still have income even when those jobs

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The Justice Department has acknowledged the problems but has not changed the rules or guaran-

teed expedited treatment. When the stunned and exhausted victims of Hurricane Katrina finally arrive in

bankruptcy courts, they will find that the bankruptcy laws now offer less relief than before the storms

struck.iv

endnotes