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REWIND: International Business News #19

Posted on April 16th, 2012 | Author: admin

  • German patent courts have become a hub for patent challenges.   It is estimated that two-thirds of all patent claims in Europe are brought to the German patent courts for swift resolution.  In the past few years, tech giants such as Apple, Motorola and Microsoft have either introduced or defended themselves against patent claims in Germany. As opposed to other European countries, the German patent courts make it easier to obstruct the sale of a rival company’s product before an infringement claim is verified.  As a result, the German patent system is being abused as many of the patent claims are nuisance claims brought for strategic business reasons.
  • China’s inflation rate rose from 3.2% in February to 3.6% in March.  The rise in China’s inflation rate is attributable in part to the volatile price of food.  The pricing of certain foods have increased substantially due to extreme weather conditions; however, such price increases will unlikely have a long term effect.   Nonetheless, the current inflation levels may continue over the course of the next few months due to increases in fuel prices.  Additionally,China has seen sharp rises in the cost of consumer goods, housing and raw materials.  Moreover, economic growth has slowed in the past few months due to government constraints, as well as the European debt crisis which has reduced the demand for Chinese goods.
  • Amid concerns surrounding Europe’s debt crisis, the European Central Bank this past winter lent European financial institutions billions in money with the intent that banks would buy more bonds from their own sovereign governments in order to reduce national borrowing costs.  Financial institutions in Spain and Italy have been purchasing their government debt in record amounts and have consequently increased their holdings in government securities.  Although borrowing costs have been reduced, banks have created a new risk, as the health of the government of Spain and Italy are now tied to the health of their banks.  Unfortunately, the banks of Italy and Spain hold troubled mortgages and have been lending mainly to their governments as opposed to businesses.  As a result, foreign investors have stayed away from investing in bonds issued by Spain and Italy.  Although some European banks have bought Spanish and Italian bonds, these banks have not purchased bonds issued by Spain and Italy in large quantities.
  • The World Bank lends billion of dollars a year around the world to bolster  economic development in the poorest and most underdeveloped countries.  The Obama administration has nominated Jim Yong Kim, a physician and anthropologist and the current President of Dartmouth College, as a presidential candidate to the World Bank.   Despite Dr. Kim’s strong background in health care, Dr. Kim has very little experience in banking, finance and foreign policy.  As a result, the United State’s World Bank presidential nominee has been met with much criticism.  Nonetheless, Dr. Kim is likely to win the presidential nomination as Europe usually supports the United State’s nomination and Dr. Kim has strong support in the global health community.
  • There is a growing trend of non-U.S. shipping companies seeking U.S. bankruptcy protection.  The jurisdictional requirement to file for Chapter 11 protection in federal bankruptcy court is not onerous, requiring either a place of business or property in the United States.  As a result, a foreign shipping company organized in a foreign jurisdiction and having assets around the world, is permitted to file for Chapter 11 bankruptcy so long as it has a bank account in the United States.  Filing for Chapter 11 protection in the United States is appealing to struggling foreign companies as it offers broad protections, allowing a company to continue their operations, restructure their organization and stave off creditor claims.