Piaget v. Vygotsky free essay sample

Both Jean Piaget and Lev Vygotsky have had a huge impact on learning and teaching methods. Although they have different views on how children learn, they both suggest helpful methods of teaching. Piaget and Vygotsky both focus on the idea of constructivism. Constructivist theories believe learning includes real-world situations, language, interaction, and collaboration with others. Piaget believed in cognitive constructivism and Vygotsky believed in social constructivism. They both had logical ideas with some similarities, but their theories also differed. First off, Piaget was a strong believer in cognitive constructivism and offered that children learn with schemes, accommodation, and assimilation. He also suggested that learner go through stages of learning. These include the sensorimotor stage, the preoperational stage, the concrete operational stage, and the formal operational stage. The sensorimotor stage occurs before the age of 2 and includes learning through movement and senses. Towards the end of this stage, children begin to develop object permanence. We will write a custom essay sample on Piaget v. Vygotsky or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Between the ages of 2-7, the child is at the preoperational stage. At this age, children are not able to think about their actions and believe everyone has the same viewpoint as themselves. They also pick up the idea of conservation at this stage. Next is the concrete operational stage which happens between 7 to 11 years of age. By this time, children have intelligence based on logic and concrete references. Eleven years and up is considered the formal operational stage. During this stage, abstract thinking really takes off and a child can think about probabilities and analogies. An example of a classroom that involves Piaget’s cognitive constructivism theory would include challenging activities for the children such as simulations, field trips, and model building. Overall, his theory includes providing a child with knowledge that is meaningful and relatable. On the other hand, Lev Vygotsky believed in social constructivism as a means of learning. His theory suggested that children learn best in a collaborative environment involving socialization. He believed that a child must interact with the social environment on an interpersonal level. Once this has occurred, the child can internalize their experience and construct new ideas. For Vygotsky, culture and social context are critical in learning and he believed that’s when children learn the best. He came up with the ZPD, which stands for zone of proximal development. The ZPD is the distance between what a learner can do with help and what they can do without help. He thought that children learn best within this zone because it advances their learning and challenges them. Vygotsky believed that with the help of a teacher or mentor, students could understand concepts that they wouldn’t be able to know on their own. A classroom including Vygotsky’s social constructivism theory would include meaningful content and content that relates to the real-world. Teacher-student and student-student interaction are key in the classroom according to Vygotsky and will produce strategies such as questioning, summarizing, predicting, and clarifying. A similarity between Piaget and Vygotsky is that they both provided views on cognitive development using constructivism. They were both interested in furthering the learning of children using cognitive processes. Also, another similarity that they share is that they both believed that societal influences established cognitive growth in children. They agreed that learning is affected by the context in which a subject is taught. Although their contexts were different, the students’ beliefs and attitudes contributed to the way a child learns. Even though their theories differed, they both believed internalizing the information learned was important and constructivism allows the student to analyze, gather, filter, and reflect on the information they are provided. As for differences, Piaget and Vygotsky had quite a few. Obviously, their theories differed especially with social context. Vygotsky believed that development must include social context, unlike Piaget. Vygotsky focused on learning from the environment, while Piaget didn’t see the significance of this. Also, Piaget thought learning happened after development and Vygotsky proposed that learning takes place before development. While Vygotsky focused on language and socializing, Piaget viewed language as a stepping stone to development and didn’t view it as much of an importance. Another difference is that Vygotsky thought that student-student interaction is vital because of the social aspect. On the other hand, Piaget saw student-student collaboration as helpful because it could stimulate thinking, but it wasn’t nearly as important in the cognitive development of children. Also a difference is that Piaget believed in four different stages and ages of development, whereas Vygotsky didn’t believe in any set stages. As we know now, there are multiple intelligences and no two children learn the same. It is hard to choose one theory or the other because every child’s need should be implemented. Teachers should include group work along with individual work and not resort to only one. Piaget and Vygotsky both have valid suggestions for learning, but I believe that time and learning has changed over the years. They both made huge contributions to learning and development and even though their views are different, they both offer logical theories that are still important today.

buy custom Lee Harvey Oswald essay

buy custom Lee Harvey Oswald essay President John F. Kennedy was killed in Dallas 46 years ago on November 22, 1963 by assassins' bullets. Whenever that awful day comes to memory, Friday, November 22, 1963 for millions of Americans, that was the very first time we had come across the murder of a president. When the smoke cleared a bit finally, and the people saw a bruised, gaunt Oswald in custody, many doubted whether a lone gunman who had fired an old, bolt-action rifle could have been responsible (Fagin, Stephen 18-23). As the Americans tried to digest this while mourning for their fallen president, Jackie, his beautiful wife, and their small children, other appalling events were yet to unfold. There are several reasons to make us believe that only Lee Harvey Os was involved in President Kennedys murder. The Warren commission findings of 1964 came with a conclusion that Oswald acted alone and wasnt part of any conspiracy whether domestic or foreign. There is reliable evidence that the shooting in the assassination of Kennedy was done from a window on sixth floor of the Texas school of Book Depository Building, where Lee Harvey Oswalds rifle was discovered (Piereson, James 45-46). Several eye witness accounts claimed to have seen discharge of smoke from a gun out of a window on the 6th floor of the School brook Depository Building. Evidence that is reliable also shows that no more than three shots were fired at President Kennedys limousine, one of which hit Kennedys head, Another, passed through Kennedys neck and then through the wrist and chest of Governor Connelly, and another missed (Piereson, 45-52). Oswald possessed the correct firearm type(Rodman, Peter 72). According to Warren commission Exhibit 399, a 6.5 mm Mannlicher - carcano bullet, was discoverd on a stretcher in parkland Hospital. The warren Commission confirmed that the said bullet had passed through the bodies of Connelly and Kennedy, shattering Connellys wrist and ribs. Found in the Texas school Depository was a bolt action 6.5 caliber Mannlicher-Carcano rifle, which had a telescopic sight. It was found out that Lee Harvey Oswald was the owner, having ordered by mail order the second war Italian rifle (Rodman 72). FBI tests confirmed that a Mannlicher-Carcano rifle could actually load and re shoot within 2, 3 seconds. The warren commission came to a conclusion that there were possibly three shots and that it was the two hits, not the three shots that came within 5.6 seconds of each other (Rodman 72). The missed shot could have come last, or first, though it most probably came first, meaning that the gunma had more than eight seconds to do the shooting, and more than five seconds which was ample time between the two hits. Even with the miss coming between the two hits, there would still have been 2.8 seconds enough to fire and re-fire- enough time even for an amateur like Oswald used to handling gun. The activation of neuron, ballistics, analysis findings this claim that the supposedly defective riffle had fired the bullet that deposited lead in the wrist of Connelly and also the one that hit Kennedy in the skull. That weapon must have been used by someone very effectively(Baird Shuman 23). Oswald scope together with his training was sufficient enough to carry out the said assassination with no much difficulty. However, critics say of the riffle as one of the worst military weapons in the world. The case for multiple assassins usually consists of three main lines of argument: 1) That there wasnt enough time for one gunman to have done all what Oswald is said to have done. 2) Compelling ear and eye witnesses together with photographic testimony puts a second gunman on this fabled grassy knoll; 3) The evidence found through Kennedys wounds and his bodys reaction to the shots establishes that there was more than one assassin. A lot of the evidence of the multiple shooters conspirators is thoroughly misinterpreted. Considering the issue of timing, there were possibly three shots and that the two hits, not the three shots, came within 5.6 seconds of each other. The missed shot could have come last, or first, though it most probably came first. This means that the gunman had more than eight seconds to do the shooting, and more than five seconds which was ample time between the two hits (Baird 54). However, critics dispute that the scope of Oswald was misaligned to a point that it would haven created a small roomfor mistakes even for a world class sniper of which Oswald wasnt. Were there really shots from the said grassy knoll by another assassin? Allegedly, compelling ear and eye witnesses and the photographic testimony puts another gunman on the fabled grassy knoll. However, the most important ear and eye witnesses Abraham Zapruder together with his secretary were on that knoll, on a three-foot high concrete pedestal overlooking the said scene and directly the whole area behind(U.S. News 56). There is no possible way these two could not have heard the gun shots or seen the two alleged assassins to their right front half way down the third-base line, firing two explosive shots(U.S. News 56). The evidence on the wounds of Kennedy and the reaction on his body to the shoots establishes there being more than one assassin. The original autopsy notes had been destroyed because they had been covered in bodily fluids, but were copied before being destroyed. There are several reports claiming that the body of John F. Kennedy was altered; this is completely not accurate. There are also rumors that claim the doctors that performed his autopsy were not conversant with a gunshot wound which is also not true. Several eye witnesses had seen Lee Harvey Oswald escaping from the Schoolbook Depository Building which is where according to reports; the shots that had killed John F. Kennedy were projected to have come from(Carter, Richard 6). A paper that had been used as a gun carrier was later found near the murder window on the sixth floor, and Oswalds finger prints were found on it. The killer rifle, which fired the bullets and shells were later found on the sixth floor. Oswalds palm and finger prints were found also on the brown bag and the card boxes that are used as a gun prop. Also, the two eye witnesses who had seen the gunman in the window had identified Oswald as the gunman. Oswald had left the building soon after the shooting; he had retrieved a jacket that was light colored and a pistol from his room around 45 minutes after the shooting(Carter 6). In another incident Lee Harvey Oswald was seen shooting J.D. Tippit, a Dallas policeman, in this case in there were twelve eyewitnesses wh o had seen the act(Carter 6). The warren Commission findings of 1964 showed that Oswald had acted alone and wasnt part of any conspiracy was discredited officially by the 1976 House select committee on assassinations, which came with a conclusion in 1979 that there had been a conspiracy in all probability(Rubinstein, William 76). The report of WC has been said to be lacking in time and resources used in their investigations. This has led to the case being relinquished to the higher authorities, the FBI .The moment the WC handed over their rights to FBI the immediate reaction by the public was a dissatisfactory one and a sense of an inconclusive investigation had to be held. To conclude, Oswald; 1) worked in Schoolbook Depository Building which was the only source of shots; 2) owned the one and the only gun used to carry out the assassination; 3) brought the rifle with him the very morning of murder; 4) was at the murder window at the time JKF was shot; 5) left the murder scene soon after the shooting; 6) shot an officer and then forcibly resisted arrest; 7) lied about important matters of fact when being interrogated. a Buy custom Lee Harvey Oswald essay

Statue of Zeus at Olympia

Statue of Zeus at Olympia The Statue of Zeus at Olympia was a 40-foot-high, ivory and gold, seated statue of the god Zeus, king of all the Greek gods. Located in the sanctuary of Olympia on the Greek Peloponnese Peninsula, the Statue of Zeus stood proudly for over 800 years, overseeing the ancient Olympic Games and being acclaimed as one of the 7 Wonders of the Ancient World. The Sanctuary of Olympia Olympia, located near the town of Elis, was not a city and it had no population, that is, except for the priests that took care of the temple. Instead, Olympia was a sanctuary, a place where members of the warring Greek factions could come and be protected. It was a place for them to worship. It was also the place of the ancient Olympic Games. The first ancient Olympic Games was held in 776 BCE. This was an important event in the history of the ancient Greeks, and its date as well as the foot-race winner, Coroebus of Elis was a basic fact known by all. These Olympic Games and all that came after them, occurred in the area known as the Stadion, or stadium, in Olympia. Gradually, this stadium became more elaborate as the centuries passed by. So did the temples located in the nearby Altis, which was a sacred grove. Around 600 BCE, a beautiful temple was built to both Hera and Zeus. Hera, who was both the goddess of marriage and the wife of Zeus, was seated, while a statue of Zeus stood behind her. It was here that the Olympic torch was lit in ancient times and it is also here that the modern Olympic torch is lit. In 470 BCE, 130 years after the Temple of Hera was built, work began on a new temple, which was to become famous around the world for its beauty and wonder. The New Temple of Zeus After the people of Elis won the Triphylian war, they used their spoils of war to build a new, more elaborate temple at Olympia. Construction on this temple, which would be dedicated to Zeus, began around 470 BCE and was done by 456 BCE. It was designed by Libon of Elis and centered in the middle of the Altis. The Temple of Zeus, considered a prime example of Doric architecture, was a rectangular building, built upon a platform, and oriented east-west. On each of its long sides were 13 columns and its shorter sides held six columns each. These columns, made of local limestone and covered with white plaster, held up a roof made of white marble. The exterior of the Temple of Zeus was elaborately decorated, with sculpted scenes from Greek mythology on the pediments. The scene over the entrance of the temple, on the east side, depicted a chariot scene from the story of Pelops and Oenomaus. The western pediment depicted a battle between the Lapiths and the Centaurs. The inside of the Temple of Zeus was much different. As with other Greek temples, the interior was simple, streamlined, and meant to showcase the statue of the god. In this case, the statue of Zeus was so spectacular that it was considered one of the Seven Wonders of the Ancient World. The Statue of Zeus at Olympia Inside the Temple of Zeus sat a 40-foot-tall statue of the king of all Greek gods, Zeus. This masterpiece was designed by the famous sculptor Phidius, who had previously designed the large statue of Athena for the Parthenon. Unfortunately, the Statue of Zeus no longer exists and so we rely on the description of it left us by second century CE geographer Pausanias. According to Pausanias, the famous statue portrayed a bearded Zeus sitting upon a royal throne, holding a figure of Nike, the winged goddess of victory, in his right hand and a scepter topped with an eagle in his left hand. The entire seated statue rested upon a three-foot-high pedestal. It was not the size that made the Statue of Zeus unequaled, although it was definitely large, it was its beauty. The entire statue was made from rare materials. Zeus’s skin was made out of ivory and his robe was made up of plates of gold that were intricately decorated with animals and flowers. The throne was also made of ivory, precious stones, and ebony. The regal, godlike Zeus must have been amazing to behold. What Happened to Phidius and the Statue of Zeus? Phidius, the designer of the Statue of Zeus, fell out of favor after he finished his masterpiece. He was soon jailed for the offense of placing his own and his friend Pericles’ images within the Parthenon. Whether these charges were true or trumped up by political disfavor is unknown. What is known is that this master sculptor died in prison while waiting for trial. Phidius’ Statue of Zeus fared much better than its creator, at least for 800 years. For centuries, the Statue of Zeus was carefully cared for oiled regularly to avoid damage done by the humid temperatures of Olympia. It remained a focal point of the Greek world and oversaw hundreds of Olympic Games that occurred next to it. However, in 393 CE, Christian Emperor Theodosius I banned the Olympic Games. Three rulers later, in the early fifth century CE, Emperor Theodosius II ordered the Statue of Zeus destroyed and it was set on fire. Earthquakes destroyed the rest of it. There have been excavations done in Olympia that have not only revealed the base of the Temple of Zeus, but the workshop of Phidius, including a cup that once belonged to him.

An investigation of the role that the Libyan government and civil Essay

An investigation of the role that the Libyan government and civil society organization can play in facilitating the humanitarian activities of the Libyan red crescent - Essay Example The research is based on the challenges that are faced by LRC or Libyan Red Crescent in terms of providing quality service to all those victims who are affected. The Libyan Red Crescent in the recent years has been deprived of many such facilities that were provided by the civil society organizations. This in turn has resulted into more serious issues for LRC as they are finding it difficult to maintain their humanitarian activities. This study would be focused towards identifying the key issues along with the probable solutions so that the organization can achieve the stage of sustainability in its business operations. The Libyan Red Crescent organization was incorporated in the year 1957 and it comprised of 34 branches in total across Libya. The Libyan government and even the civil society organization of Libya have made the operations of this voluntary aid organization LRC worsen due to lack of support and negligence on their behalf. The primary functions of this organization have greatly been affected due to the unavailability of resources and support that was required to be extended by the Libyan Government. The research study would not be based on the total LRC organization but it would focus majorly on one branch that is Zintan branch. This branch is selected mainly because the researcher is the indigene of the town so it would enable the researcher to gather more appropriate information about the challenges faced by the organization. The major aim of this research study is to identify the possible solutions that would help the organization to enhance their activities by means of leveraging the civil society as well as Libyan government.

Climate Change, Global Warming, Renewable and Nuclear Energy Essay

Climate Change, Global Warming, Renewable and Nuclear Energy - Essay Example However, the recently experienced variation particularly in the rise of global temperatures is arguably not as a result of natural variation alone but also the contribution of human activities. These activities are responsible for the heightened Carbon Dioxide levels and other heat trapping gases. Carbon Dioxide (CO2) and other Green House Gases (GHGs) such as Methane (CH4), and Nitrous Oxide (N20), contribute to global warming through their green house effect. These gases trap and retain the heat reflected from the earth’s surfaces, hence leading to extreme temperature rise (Turk & Bensel, 2011). The U.S. National Climatic Data Center indicates that global temperatures have been on the rise for the past three centuries. The last century saw an average rise in global temperatures of about 1.58 F with the Arctic warming twice as much (Turk & Bensel, 2011). The past 50 years data on severe temperatures have indicated a significant rise in temperatures; in other words, frosts, cold days and nights were less whereas heat waves, hot days and nights were more prevalent (Turk & Bensel, 2011). Also, this warming has not been attributed to the earth alone but also the oceans which have for the past years absorbed most of the heat present in the atmosphere. As a result, the oceans temperatures have increased significantly too. With time, this heat (from the oceans) will be released back to the atmosphere and this might result in further atmospheric warming. Currently, vast research suggests that global warming is ever increasing due to the high concentration of green house gases within the atmosphere. The green house effect is experienced widely. In fact, scientists at NASA’s Goddard Institute for Space Studies have established that there is a lot of absorption of sun’s energy than its emission. Hence, this imbalance is the chief cause of the green house effect (Pewclimate, 2011). The U.S. Global Change Research Program (USGCRP) produced a report in 2009 regarding the status of impacts of climate change in the U.S. According to it, human activities have greatly contributed to the rise in the concentration of the three main green house gases: Methane, Carbon Dioxide and Nitrous Oxide. Indeed, from the pre-industrial period these gases have increased in astonishing percentages. Carbon Dioxide has increased by 40 percent; Methane by 148 percent and Nitrous Oxide by 18 percent (Harding, 2007). Predictions indicate that with th e current rate in increase of global temperature, 2050 will be devastating as the global average temperatures will exceed to almost 280 C. This will result in sudden and irreversible changes such as loss of the Amazon forest, vast melting of the Greenland cap, and release of Carbon dioxide from the soils (Turk & Bensel, 2011). Worse still, it is feared that smoke, hazes and specks emitted from the fossil fuel and vegetation could be currently mitigating global warming by acting as a cover which could be averting solar energy back to space. The current trend of cleaning up air pollution will eradicate this â€Å"global dimming effect† resulting in future increases in average global temperatures by almost 100 C (Turk & Bensel, 2011). Renewable Energy Recently, there has been a major concern to switch from using fossil fuels to the renewable forms of energy. However, to achieve this, we should take note of two things. First, there should be intensive research so as to offer alte rnative sources of energy in order to cut down on the prices of energies. Second, there is need for the energy prices to depict their true value; in other words, these prices should reflect hidden costs such as the environmental costs which are linked to the

European Union Trade Law Essay Example for Free

European Union Trade Law Essay Introduction Counterfeiting, piracy and infringements of intellectual property rights are very frequent in the European Union[1]. These take place all over the world and pose a grave danger to national economies and governments. The success of such activities is due to the counterfeiters’ greed for money and also the increase in demand due to consumer ignorance, which makes them prefer these lower cost imitation products[2]. The European Internal Market is characterized by national disparities in the means of enforcing intellectual property rights and counterfeiting, piracy and infringements of intellectual property rights takes advantage of this. These disparities determine the place where counterfeiting and piracy activities within the Community are carried out. The implication of this is that counterfeited and pirated products are manufactured and sold more in those countries which are less effective than others in dealing with counterfeiting and piracy. Therefore this has direct consequences on trade between the Member States[3]. It also has a direct effect on the circumstances controlling competition in the Internal Market. The result of this is that it leads to diversion of trade, distorts competition and creates disturbances in the market. The variation between the systems of penalties, in different nations, creates difficulty in effectively tackling the problem of counterfeiting and piracy[4]. It also results in the problem of improper functioning of the Internal Market. Further, it leads to loss of confidence in economic circles in the Internal Market, resulting in a reduction in investment. Moreover, in addition to the economic and social results, counterfeiting and piracy also hinder consumer protection, particularly in respect of public health and safety[5]. Increasing use of the Internet has enabled pirated products to be distributed very quickly around the globe and last but not the least; this phenomenon seems to be increasingly associated with organised crime. Fighting this trend is therefore very important for the European Community especially when these illegal activities are carried out for commercial purposes or if they result in considerable damage to the right holder. The situation is especially acute in respect of the music industry[6]. Counterfeiting and piracy have resulted in continual and increasing harm being done to business in the form of lower investments and closure of small and medium enterprises; to society by way of job losses and decreasing consumer safety and threat to creativity and governments due to loss of tax revenue. In the case of the   Ã‚  Ã‚  cultural (music, films, videos CDs, DVDs) and software industries the situation has been made worse by the easy access to a global market via the internet[7]. Quite some evidence has been obtained that reveals that counterfeiting and piracy are becoming increasingly linked to organised crime and terrorist activities because of the high profits and the comparatively low risks of discovery and punishment[8]. Reason for action at the EU level At present, as far as legislation in respect of the enforcement of intellectual property rights is concerned, there are important differences in the Member States. These differences are being exploited by Pirates and counterfeiters by carrying out illicit activities in Member States where enforcement mechanisms are applied less effectively. It is hoped that the proposed Directive will reduce counterfeiting and piracy, by reducing differences in national legislations across the EU and by directing Member States to implement tougher sanctions and better remedies against infringements[9]. Intellectual Property Rights or IPR, infringement takes place in most types of rights and virtually any product that can be pirated or counterfeited[10]. It is usually assumed that piracy and counterfeiting take place mainly with regard to some luxury, sports and clothing brands, music and software CDs/DVDs. The reality is otherwise and virtually every IP is being violated at a significant level and that the diversity of fake products is vast, with large software producers as likely to be harmed as small producers[11]. Copyright – Piracy is widespread in all formats with particular focus on digital media, from CDs to VCDs, to DVDs. Further, illegal digital distribution of films, music, pictures, texts and software over the Internet is extensive[12]. Trademarks – Counterfeiting takes place in respect of almost all the products and there fake clothes, footwear, leather goods, watches, toys, cigarettes, pharmaceutical products, car parts, electronic devices, etc. In some countries former business partners continued to use trademarks or designs of the right holders even after the partnership had ended[13]. Technical designs – There have been infringements in respect of design over a vast and diverse range of products like, spectacle frames, wine glasses, sliding doors, textiles, etc[14]. Patents – Many reports were submitted regarding infringements on pharmaceutical products, electrical domestic appliances, industrial machinery, etc[15]. Geographical Indications – In some countries the registration by local producers of trademarks of geographical indications originating in Community Member States is permitted[16]. Data protection –   A number of instances where partial or total lack of protection in respect of information given to national authorities, while lodging patents or during the registration of pharmaceutical products   have come to light[17]. Certain countries like China, Korea, Russia, Turkey, Taiwan, etc, are undoubtedly large scale producers of pirated and counterfeit goods. A major part of their production is exported, however, if there is a large domestic market, part of the production is used for domestic consumption. In developed countries, Uruguay, Brazil, etc, a large number of fake goods is imported. Another category of countries exist, which serve as points of transit for fake goods distributed by international networks[18]. The USA is one such country and despite its being a country generally recognized as having strict and effective enforcement rules and practices, nevertheless, according to official statistics is one of the main countries of origin of pirated or counterfeit goods seized. The reason for this is held to be the vast quantity of counterfeit goods produced in different countries being transported via the US to other destinations. Lastly, in respect of internet based IPR violations, it is very difficult to determine the origin and destination of such traffic. The European Union is an important destination for such goods. In addition to the goods exported into the Community, a sizeable part of the injury caused to the EU right-holders is because of the loss of income and reputation, in the case of fake goods of lower quality, due to sales in any other market. EU countries are also countries of transit for counterfeit goods and pharmaceutical products. The problem is so acute that the EU and the USA have formed a joint strategy to counter it[19]. The efforts of the member state governments are in general ineffective due to lack of a synchronized and effective approach. If the right-holders have the will, the means and the influence to compel the competent authorities to take appropriate action then such measures are successful. The fight against counterfeiting and piracy is hindered not due to obstacles in the substantive law, but due to the unavailability of means the lack of willingness of the enforcement agents to apply the law strictly and efficiently[20]. These enforcement agencies are, frequently, unsuccessful due to manpower shortage, shortage of funds, lack of regulation of the base legislation and general problems caused by insufficient national and international co-ordination including a lack of transparency. To be more specific, this is encouraged by the absence of deterrent punishments for infringers. IPR violations[21] are therefore low risk high profit activities and usually, there is unwillingness to apply criminal sanctions. Further, administrative penalties are in general insufficient to dissuade pirates and counterfeiters and sanctions involving the confiscation of production machinery or the closing of production facilities are not applied systematically. This encourages and perpetuates criminal activities. Trials in these cases are slow, uncoordinated and costly. There are long delays and very few positive results and jurisprudence does not show uniformity. Moreover, the effort is made all the more difficult due to local protection for infringing industries and rampant corruption of the authorities in charge. There is also an absence of trained officials, like legislators, judges, prosecutors, customs officials, police, etc.   A major problem arises due to the public not being fully aware of this problem. Many members of the public do not consider piracy and counterfeiting to be wrong and at times, there is lack of awareness of the fact that using such products is an infringement of the law. In some countries the co-operation of right-holders is accepted in criminal investigations leading to encouraging results, like the seizure of goods and the destruction of criminal networks. For instance the optical disc regulation is a cost-effective way to deal with the piracy problem, because optical disc laws work against infringements of intellectual property rights. Further, these rules make the manufacture of pirated optical discs much more difficult for rogue elements without implementing unjustified regulatory burdens on legal plants. This type of measure has yielded noticeable results in countries like Hong-Kong and the Ukraine. It has been observed that in several instances right-holders have not resorted to the law of the countries where the violations occur, because of a lack of confidence in the local system and also due to lack of ways to defend their rights in a distant country, unawareness of the means available and sometimes due fear of reprisals where criminal organizations are the violators. Several reports have indicated that national producers, accused of infringements are shielded from effective prosecution. In some countries the authorities will unofficially claim that domestic â€Å"job providers† deserve more protection than foreign right-holders. As long as the majority of the public sees IPR violations as a mechanism to obtain basically the same goods at a much lower price, it will not be possible to diminish piracy and counterfeiting[22]. Although, strict action is taken in respect of counterfeit goods which affect consumer health and safety, the sale of imitation luxury brands, software, audio and video products are frequent in many countries and constitute a major attraction for tourists. There is limited public awareness of the bad effects of widespread IPR violations, resulting in loss of foreign investment, discouragement to creativity and research development, loss of international credibility of the countries and the nexus between counterfeiting and piracy with organised crime.[23] In chapter one, a discussion about the response of EU Trade Mark Law against counterfeiting and piracy has been taken up. The causes of piracy and counterfeiting are dealt with briefly. After this, proposed remedies for infringements are considered. Next, the effects of counterfeiting and piracy and the resultant loss to the right holders are described. The enforcement mechanisms for combating piracy and counterfeiting are then analyzed. Subsequently, the different departments and directorates of the EU and their functions and enforcement mechanism are described. Finally, the role of customs department in curtailing piracy and counterfeiting is discussed in brief. As such this chapter, which deals with enforcement mechanisms of the EU trade mark law, reveals that these are not effective enough to deal with this problem. In chapter two, the role of courts in combating piracy is discussed in detail with case laws. After this the working procedures of community trademark court and the complexity of their procedures are discussed. This is followed by a discussion of a number of landmark cases in the history of the struggle against counterfeiting and piracy. Lastly, the latest EU law in respect of these crimes has been discussed in detail. In this chapter, the role of the courts in countering piracy and counterfeiting, though commendable, the disparities in national laws reduce their effectiveness. In chapter three, the responses of parliament in combating the problem of counterfeiting and piracy in the EU have been discussed. In this regard the various acts of parliament that pertain to this problem in various fields have been discussed in detail. These include the various directives, regulations and acts. Moreover, the time after which the trademark will be revoked and the methods by which it will be invalidated have been discussed. Although, parliament has enacted several laws to control the problem of piracy and counterfeiting, the lack of stringency in their enforcement has not been able to control this problem to the level required. Chapter 1    The Response of EU Trade Marks Law against Counterfeiting and Piracy       Causes of Piracy and Counterfeiting Counterfeiting, piracy and infringements of intellectual property rights are constantly on the increase. Their effect is international and they pose a serious threat to national economies. In the European Internal Market, these phenomena take particular advantage of the national disparities that may exist in the means of enforcing intellectual property rights. In other words, counterfeited and pirated products are more likely to be manufactured and sold in those countries that are less effective than others in combating counterfeiting and piracy. Counterfeiting is now a multi-million pound business, run by organised criminals. It is theft, no more, no less. It moves resources from the honest, tax-paying economy to the dishonest, tax-evading economy. It puts the law-abiding employees of brand owning companies out of work. In the worst cases, such as unauthorised pharmaceutical products, aircraft parts or motor vehicle parts, the counterfeit version is sometimes a serious danger to public safety. The principal cause of piracy and counterfeiting is that dishonest traders can make considerable profits, by taking advantage of the creative efforts and investment of others and by selling imitations at a lower cost than those incurred by the producer of genuine products. Clearly, such trade exists due to consumer demand and perception that piracy and counterfeiting are mild violations. Intellectual property theft is not considered by the public to be as bad as fraud, theft or trespass. This is made worse by the failure of the public authorities and commercial organizations in bringing to the notice of the consumers the dangers of using unauthorised products, the harmful social welfare effects from this trade and the imposition of insufficiently restrictive penalties by the judicial authorities. Proposed Remedies    On 15 October 1998, the European Commission presented a Green Paper on the fight against counterfeiting and piracy in the Single Market. The purpose of this paper was to start a debate on this subject with the participation of all the interested parties. The result of this consultation exercise established that the functioning of the Internal Market was being adversely affected due to the differences in the national systems of intellectual property rights[24]. Subsequently, on the 30th of November, 2000 the Commission presented a follow-up Communication to the Green Paper in which it recommended an action plan to deal more effectively with counterfeiting and piracy. Some of the measures proposed were the presentation of a Directive that would bring about a harmonising of the national provisions on the means of enforcing intellectual property rights. The general opinion of the public is that counterfeiting is a harmless and as the price charged for genuine products are higher, there seems to be a general good will towards these counterfeiters. In accordance with section 111 of the Copyright, Designs and Patents Act 1988 of the United Kingdom, the owner of a copyright can give written notice to the Customs and Excise Department that infringed copies of published literary, dramatic or musical works that are expected to arrive in the UK should be prohibited[25]. From the 1st of July 1999, Regulation (EC) 241/1999 has amended a Council Regulation[26] by extending prohibition to goods infringing patents and supplementary protection certificates and to goods under all forms of customs supervision. This regulation contains a process by which members of Community Trade Marks can make a single application for customs intervention in any number of Member States, accordingly, the European Commission reported that between July 1995 and June 1997 customs authorities had taken action in about 4000 cases in comparison to only 2000 in the previous 7 years before the implementation of this Regulation[27]. Many contraband markets evolve through one or more of the following stages: Grey market, or parallel trading; smuggling; counterfeiting and piracy. The markets for contraband cigarettes, alcohol and pharmaceuticals pass through all three stages in their evolution, while the contraband markets for branded apparel and software might progress directly from grey market trading to counterfeiting. Sometimes when no such grey market goods are available organised crime groups may start producing and distributing counterfeit and pirated goods. In this manner a supply chain that is completely in the hands of organised crime groups is formed. Digitization and access to used manufacturing equipment has allowed the counterfeiting and piracy of cigarettes, apparel, computer software and music CDs. Impact of Counterfeiting and Piracy This Green Paper has assessed that 5% and 7% of world trade is due to counterfeited and pirated goods and the fact remains that this problem is more in certain sectors than in others. The Commission on assessment of levels of counterfeiting and piracy with regard to turnovers of some of the sectors concluded that, it is considerable. It opined that the level of counterfeiting and piracy was 35% in the software industry, 25% in the audio industry and 12% in the toy industry. The music, film and software industry, which are the main copyright industries are severely affected by counterfeiting and piracy. This problem occurs in the branded goods sector or in the industries like clothing, footwear, fragrances and cosmetics, luxury goods, motor car parts, aircraft parts, pharmaceuticals, food and drink and industrial chemicals. In France and Italy counterfeiting is more in respect of luxury goods, whereas in Germany the problem is compounded by the manipulated certification of counterfeited goods[28]. The resulting effects of counterfeiting and piracy are, diminished sales, disadvantages to the legitimate enterprises, due to free utilization of their research and development by their competitors, liability due to defective imitation products, free availability of imitations harmed the prestige and goodwill of a brand, initiation of legal proceedings against infringers and continuous supervision of the markets is expensive[29]. Further, the losses caused to the industry will be reflected in the public revenue, thereby raising the unemployment level in that industry[30]. According to the statistics of International Federation of Phonographic Industry, sales of illegal CDs accounted for 14% of the relevant market in the world. In May 2003, the UK music industry pointed out that the sales of pirated CDs exceeded the sales of genuine products. With regard to the responses to the commission’s green paper on combating the counterfeiting the piracy in the international market it was revealed that within the European Union the counterfeited and pirated goods amounted to 5 to 10 % of vehicle spare parts sales, 10% of sales of CDs, 16% of video and DVD film sales and 22% of shoes and clothing sales[31]. The commission referred to a survey conducted by KPMG in France, in 1998, in a proposal for counterfeiting directive. It was reported by Sofres and the Union des Fabricants that the average losses to the businesses, on which survey was conducted, amounted to 6.4% of the total turnover. According, to a study of 2000 by the centre for economic and business research in relation to global anti counterfeiting group, which calculated the average annual reduction in profits, was â‚ ¬ 1,266 million in the clothing and footwear sector, â‚ ¬ 555 million in the perfumes and cosmetics sector, â‚ ¬ 27 million in the toys and sports articles sector and â‚ ¬ 292 million in the pharmaceutical sector[32]. The losses caused by counterfeiting and piracy with regard to tax and excise fields were considerable. The commission’s proposal for a directive on the enforcement of intellectual property rights, accompanied by a paper of estimation revealing that in the phonographic sector VAT losses amounted to â‚ ¬ 100 million that were incurred by the EU Governments as a result of counterfeiting and piracy[33].    Enforcement The Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, states that till now the main concentration of the EC in the field of intellectual property was on harmonization of substantive law, and also on the formation of a unitary right at the community level. National property rights such as trademarks, designs, patents for bio technological inventions, copyright aspects and its related rights have been harmonized. At the Community level, the Commission has taken steps to formulate unitary rights, which become valid instantly throughout the EC and examples of these are Community trademarks and designs. In respect of Community patents’ formation discussions are going on at the level of the Community ministers. In spite of the fact that the harmonization of substantive law on intellectual property rights has promoted the free movement of goods between member states, the methods of enforcing them has not yet been harmonized. Hence, the present directive is required. Counterfeiting is in different forms. For example, in the absence of any permission from the English Football Club, football shirts are manufactured in the UK. This is being done by a company which is in no way connected with the Football Club. The brake pad manufacturers produced 150,000 brake pads to a required specification by the authorized dealer, though his order was for only 100,000 units. All of these brake pads marked with the company’s logo were supplied to unauthorized distributors. The European Commission represents and upholds the interests of the European Union or EU. It is a politically independent institution, which is the motivating power within the EUs institutional system. Its main roles are proposing legislation to the Parliament and the Council; managing and implementing EU policies and the budget; enforcing European law together with the European Court of Justice and representing the European Union internationally. In 1994, the EU implemented the Customs Regulation[34], which controls the imports of fake goods. In 1998, the Commission issued the Green Paper on Combating Counterfeiting and Piracy in the Single Market[35]. Based on the responses to this Green Paper, the Commission formulated an Action Plan, on 30 November 2000. The Action Plan consists of harmonization of legislation among all EU members in order to protect intellectual property rights; better law enforcement training programs; education programs to increase knowledge of the harm caused by buying imitation and pirated products and the beginning of a study for defining a method of collecting, analysing and comparing data on counterfeiting and piracy. In April 2004, this Action Plan was translated into a Directive[36]   for balancing the implementation of intellectual property rights in the Community by a Regulation[37] that improved customs action against counterfeit and pirated goods. It also extended Europol’s powers to include piracy and counterfeiting. In November 2004, the European Commission implemented a Strategy for the Enforcement of Intellectual Property Rights in Third Countries[38]   outside the Community. Departments of the European Commission The organization of the European Commission is into departments, known as Directorates-General or DGs and services, such as legal services. Each DG accountable for a specific area of policy is controlled by a Director-General who is accountable to one of the commissioners. These DGs work out and plan the Commissions legislative proposals and technical co-operation activities. Some of the Directorates General of the European Commission deal with the enforcement of intellectual property rights. Some examples of these are DG Trade, DG Taxation and Customs Union and DG Internal Market. These are discussed in the sequel. Directorate General for Trade The DG Trade has to develop and observe intellectual property policies in agreement with the trade policies of the EU. One of the main objectives of the EU is to implement better recognition and enforcement of intellectual property rights. Its policy with respect to intellectual property consists of implementing IP protection all over the world; promoting sufficient enforcement of IPRs universally and taking part in the war against violations; making certain that IPRs support public health objectives, cooperating with developing and under developed countries where implementation of intellectual property laws is difficult. The Enforcement Strategy focuses on the implementation of existing IPR laws and intends to illustrate, prioritise and organize the instruments available to the European Commission for achieving its goal. It identifies priority countries and the implementation of specific measures in technical assistance, dispute settlement and other sanction mechanisms, collaborating with like minded private entities, international organizations and countries, etc. It provides information for dealing with piracy, counterfeiting and other IPR violations. The objectives of the Enforcement Strategy are: Identification of priority countries. The focus of the EU action will be on the most problematic countries with regard to IPR violations. Such countries will be identified by a regular survey of all stakeholders. Political dialogue, incentives and technical co-operation. The EU will make all efforts to ensure that technical assistance given to third countries focuses on IPR enforcement. IPR mechanisms in multilateral, bi-regional and bilateral agreements. The EU will address enforcement concerns more systematically, within the framework of these agreements and consult trading partners in order to strengthen IPR enforcement clauses in bilateral agreements. Dispute settlement – sanctions. The EU will recall the possibility that right-holders have to utilize the EU’s Trade Barriers Regulation[39] or of bilateral agreements, where there is a violation of TRIPs. Increasing awareness. The public is made increasingly aware of the disadvantages and harm caused by counterfeiting by means of the EU. Creation of public-private partnerships. The EU supports and participates in local IP networks using mechanisms installed by Commission services like the IPR Help Desk and Innovation Relay Centers to exchange information with right-holders and associations. Moreover, it improves co-operation with companies and associations that actively fight piracy and counterfeiting.    Directorate General, Taxation and Customs Union An essential component for the creation of an integrated single European market and a common commercial policy is the Customs Union. Its purpose is to maintain and defend the Customs Union and ensure uniform application of the classification and origin rules. The Directorate General participates in international commercial negotiations which concern the application of the rules of origin and the preferential trading systems. Custom administrators have to not only collect duties but also have to protect consumers and legitimate traders. On the 22nd of July 2003, the Council of Ministers implemented a new regulation in respect of customs and counterfeiting. This Regulation which replaces the previous one[40] includes additional intellectual property rights like plant variety rights, geographical indications. Moreover, period of validity and request forms have been standardised. It has done away with fees and guarantees in order to help small and medium sized companies or SMEs to make free of cost use of the system. It extends the scope of the ex officio procedure, which permits customs authorities to react even if there is no previous application for action. The extension of the use of this possibility is of especial benefit to SMEs. Further, there is an increase in the quality and quantity of information given by customs to intellectual property right holders. This permits samples to be given to the owners of the intellectual property rights.   It permits checking travellers to ensure that the use of couriers does not hide a large flow of goods. Directorate General, Internal Market         Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The internal market is an essential part of the European Union. It has emerged as a result of the Treaty of Rome. This treaty created a common market in which there was a free movement of goods, persons, services and capital. Unification of the markets of Member States results in economic and political integration. The Treaty establishing the European Community or the EC Treaty brings about a system that ensures undistorted competition in the internal market and approximation of the laws of Member States for the functioning of the common market. This DG mainly concentrates on the knowledge based features of the Single Market and to some extent on the traditional regulatory instruments, which in order to avoid trade barriers harmonize the laws of the Member States. Its goal is to create unitary systems for protecting rights with Community-wide effect. It also focuses on ensuring the proper functioning of the Single Market in the fight against Counterfeiting. In addition, this DG also takes care of debates on the principle of Community exhaustion of trade mark rights and its economic effects on innovation, employment, prices and discussions on Enlargement. In order to get rid of trade barriers and to enable the framework responsive to new forms of exploitation, a considerable amount of intellectual property harmonization has taken place in the EU. The Internal Market DG has to modernise and adapt this acquis to advances in technology or the markets concerned for example, directive on copyright and related rights in the Information Society. Further, it has to improve international negotiations in order to strengthen the IPR internationally. A major contribution in this field by the Internal Market DG has been the Directive, adopted in April 2004, on the enforcement of intellectual and industrial property rights.[41] It makes it mandatory for all 25 EU Member States to apply successful, inhibitive and impartial remedies and penalties against those engaged in counterfeiting and piracy and thereby bring about a level playing field for right holders in the EU. This new Directive brings about uniformity, to the extent possible, in national legislation throughout the EU. This uniformity is respect of civil sanctions and remedies and it is in accordance with best practices in one or several member states. It consists of procedures in respect of evidence and its protection, and interim actions like injunctions and seizure. Right holders have several remedies like destruction, recall or permanent removal of illegal goods, financial reparation, injunctions and damages. It also implements a right to information, which permits judges to compel certain persons to disclose particulars of people involved in counterfeiting and piracy. Under this Directive, member states have to appoint national correspondents to cooperate and exchange information with each other and the Commission. In addition to benefits to right holders, the Directive contains suitable safeguards against abuse, guarantees the rights of the defence and contains references to protect personal data and confidential information. Directorate General, Enterprise DG Enterprise has founded the IPR-Helpdesk[42] whose main aim is to help prospective and current contractors who are participating in European Community funded research and technological development projects concerned with IPR issues. This helpdesk gives advice on Community diffusion and protection rules and issues relating to IPR in international research projects. Another international purpose of the action is to increase knowledge of the European research community on IPR issues, with particular reference to their European dimension. It also conducts several training courses and information seminars on intellectual property matters.    Directorate General Justice, Freedom and Security      Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The DG Justice, Freedom and Security have common regulatory responsibilities as IPR enforcement is connected with law enforcement both within and outside the Community. This DG is at present working on a legislative project on approximation of national legislation and sanctions on counterfeiting and piracy. Specific field operations are taken care of by the European Anti-Fraud Office (OLAF).    Customs Regulation Moreover, the European Union has introduced a Customs Regulation that empowers Customs officials to seize suspected counterfeit or pirated goods. Under this Regulation, EU Customs Authorities can detain suspected goods, for a short period, before the end of which, the rights owner have to initiate legal action against the alleged counterfeiter or pirate. Proper implementation would make this Regulation a very powerful weapon for rights holder with a good, anti-counterfeiting, intelligence network. This move to enact the Directive on enforcement of intellectual property is subsequent to the UK’s recent effort to tackle the problem of piracy by enacting the Copyright, Etc. and Trade Marks (Offences and Enforcement) Act 2002. The implication of this law is that those who deal in pirated goods and specifically, those who produce such goods and those who distribute them, will get stiffer fines and if the crime is serious enough they may be imprisoned. The requirement of this Directive will be that each of the Member States will have to apply the same procedure in infringement proceedings and this would include damages awarded, injunctions, provisional measures and sentencing[43]. Intelligence, appropriate criminal sanctions and Courts that enforce these sanctions, are essential factors in combating counterfeiting. In the absence of precise information on the source, time of supply and place of transfer it is very difficult to stop their entry onto the market. In order to limit piracy within the EU the EC has revealed plans to put into practice an anti-piracy law that aims at harmonizing anti-piracy law throughout the Member states. This chapter has dealt with the enforcement of trade mark laws, in order to prevent piracy and counterfeiting. Evidently, this problem cannot be curbed because of the disparities in the domestic laws of the member states. As such the pirated and counterfeited goods, though not produced in the EU, freely flow into it with great damage being done to the right holders. In the next chapter the role of the courts in dealing with this problem will be discussed. Chapter 2       Responses of the Courts to Counterfeiting and Piracy    In the absence of effective methods for enforcing intellectual property rights, innovation and creativity will be discouraged and investment will be reduced. It is therefore necessary to ensure that the substantive law on intellectual property, which is a part of the acquis communautaire, is applied effectively in the Community. The acquis communautaire includes all the treaties, regulations and directives passed by the European institutions as well as judgments laid down by the Court of Justice, which member countries have to adopt, implement and enforce in order to be admitted to the EU[44]. The means of enforcing intellectual property rights are of vital importance for the success of the Internal Market. The discrepancies between the systems of the Member States in respect of the means of enforcing intellectual property rights are harmful to the proper functioning of the Internal Market. These discrepancies also make it impossible to ensure that intellectual property rights have the same level of protection throughout the Community[45]. This situation hinders free movement and does not create an environment that is favorable to healthy competition. Formerly, the commission’s ability for providing criminal sanctions under the first pillar was suspect. Hence, the EU commission submitted a draft directive, which entails the harmonization of law to facilitate the single market. The directive which is the foundation instrument would have been adopted by the council and the parliament under the co decision method. Moreover, the commission has submitted a draft framework decision, which contains criminal sanctions. A framework decision is a third pillar instrument that is adopted by the council exclusively. Hence, the parliament has not taken any part in this process. The commission was disinterested in splitting up the draft legislation into two legal instruments, a directive and a framework decision; hence, it initiated proceedings against this mechanism before ECJ. On the 13th September 2005, the ECJ, in its judgment in commission v council[46] held that provisions of criminal law that promote the effective implementation of community law come under the first pillar. After this decision, the European Parliament’s involvement in the legislative process has been on the increase. Due to this milestone decision, the European Commission has presented a second draft directive on 28th April 2006. This legislation consists only of one legal instrument, a directive. The proposal of the commission has to be adopted by the European Parliament and the council under the co decision procedure[47]. The latest changes come from the case law of the European Court of Justice rather than the European legislator. Regulation 1383/2003 applies at the EU’s external borders to export, import, transshipment and external transit. This is according to Article 1 (1) of Regulation 1383/2003. Most of the border measure cases concern to transit and transshipment cases and the provision of Article 1 (1) is a â€Å"TRIPS plus† provision. This is because it transcends Article 51 of the TRIPS Agreement, which is restricted to imports. However, recent developments in the case law of the ECJ may bring about a change this approach. In Class International[48], the ECJ held that the external transit of grey market goods is not the use of a trade mark. Counterfeited and pirated goods under Regulation 1383/2003 are defined much more narrowly than the scope of protection awarded to owners of trade mark, copy and design rights. In Article 2 (1) (a) of Regulation 1383/2003 counterfeited goods are defined as â€Å"goods [] bearing without authorisation a trade mark identical to the trademark validly registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such a trademark.† therefore, customs in order to take border measures have to be in the presence of a semi identical sign applied to identical goods and this is at variance with the Community law concept of risk of confusion normally resorted to in trade mark law. The definition of pirated goods, as per the provisions of Article (2) (1) (b) of Regulation 1383/2003, is the following, â€Å"goods which are or contain copies made without the consent of the holder of a copyright or related right or design right.† Further, the border measure Regulation states that the infringing goods have to be copies, whereas Community law employs the concepts of reproduction and designs. The danger with the definition in Regulation 1383/2003 is that goods blocked by customs for infringing an IPR may not be classified under this very restrictive definition of counterfeited and pirated goods. This could result in the courts being forced to hold that these goods were wrongly confiscated. This is very important because in practice the customs authorities do not follow the restrictive definitions of the border measure Regulation. The definition of goods infringing a trade mark, copyright or design right should be analogous to the definition of other infringing goods, where the Regulation takes recourse to the Community or national law. If there is a challenge to a trade mark registration for non-use, then the proprietor has to demonstrate, under both the UK law and the Community Trade Mark Regulation, authentic use in the applicable period or produce valid reasons for non use. In the trade mark LABORATOIRE DE LA MER the latest Court of Appeal decision established clear guidelines in respect of registered proprietors and parties considering applications for revocation[49]. In this case an application was made by La Mer Technology, Inc, which had registered a number of UK trade marks as â€Å"DE LA MER†; to revoke Goemar’s registration for the trade mark LABORATOIRE DE LA MER in the UK that was in respect of perfumes and cosmetics containing marine products in class 3. In the preliminary hearing the revocation application was dismissed as its use by the five sales was real and amounted to genuine use of the registered mark in the relevant non-use period. La Mer’s appeal made the High Court seek interpretation from the ECJ under Article 234 of the EEC Treaty. In January 2004 the ECJ gave its decision, wherein it held that the answers to the questions raised could be inferred from its earlier judgement[50] in the case of MINIMAX. In other words a registered proprietor of a trade mark defending an application for revocation on the grounds of non-use has to furnish evidence of genuine use in an unequivocal form and easily understood form to the tribunal considering the case, and proof that it is not for merely safe guarding the registration. A slogan, while being registered, should be accorded the same measure of scrutiny as any other word mark. In Das Prinzip Der Bequemlichkeit or The Principle of Comfort[51], this principle was upheld by the ECJ. Nevertheless, applications for slogan marks at the OHIM[52] may be objected to for being descriptive of the goods or services or for being devoid of distinctive character. The Court of First Instance held that the lack of evidence of promotional use of the mark did not signify that the slogan indicated the commercial origin of those goods or services. It also held that it was essential to consider the slogan in connection with the goods and services, and whether it was capable of being used in a descriptive or promotional context. Though the applicant showed that this mark had been registered in non-EU countries, the CFI refused to change its decision and held that the Community trade mark regime is an autonomous system and all assessments must be exclusively on the basis of the CTM Regulation, as interpreted by the Community judicature and not on precedent or on the basis of what had happened in other countries. The Board of Appeal has refused to take account of precedent slogan marks and the mark FUELING BRAND POWER[53], applied for in connection with a range of services in Classes 35, 41 and 42 was refused. The OHIM were able to show examples of third party use only of the words â€Å"FUELING† and â€Å"BRAND POWER†, separately. From the preceding it becomes clear that slogan marks are likely to be considered to be unregistrable if they are not imaginative or creative. On the basis of public opinion the OHIM considers such slogans as not having a distinctive character and this opinion is highly subjective. For this reason, registrable slogans should have a highly individualistic nature and this should be in addition to what would in general be necessary for a word mark to be registered. This is in direct contrast to the ECJ’s statements in relation to â€Å"The Principle of Comfort†. Notwithstanding this, if there is no evidence that the mark has obtained a distinctive character then such slogans may not be accorded registration by the OHIM[54]. In Signal Communications Ltd v Office for Harmonisation in the Internal Market (Trade Marks, Patents and Designs (OHIM)[55], The applicant wanted the Court of First Instance to annul the contested decision and pass such orders as would amend the Community trade mark application No 837096 to show TELEEYE instead of TELEYE. Under Article 63(6) of Regulation 40/94, the office has to take the necessary measures to comply with judgments of the ECJ. Hence, the Court of First Instance cannot issue directions to the Office. The applicants argument was based on Article 29(1) of Regulation No 40/94, which states that application for the Community trade mark and the trade mark relied on for the right of priority must be the same. In case it was unclear to the examiner that the applicant was applying for the Community trade mark with the same spelling as that used in the United States trade mark application should have been obvious to the examiner then changing the discrepancy between these two trade marks does not amount to a significant modification. In practice the importance of intellectual property rights depends on whether the holder can take effective measures to prevent others from infringing them. The right holder can not only take the infringer to court but he can also warn the infringer to desist from the acts in question. Sometimes, the main objective may be to arrive at an agreement with the infringer, in which case the right-holder will simply inform the infringer of the position with regard to IP rights and offer to discuss terms and conditions. Hence, judicial enforcement is a major test of effectiveness for the rights given by the intellectual property system. A vital necessity is that successful protection against infringement should be obtainable at reasonable cost to the right holder. However, if such effective judicial procedures are already in place then these procedures by themselves already ensure that IP rights are not violated. The right to prevent others from doing certain specific acts is the basis for the legal protection of intellectual property. A right-holder can obtain an injunction to prevent an infringer from manufacturing or distributing the infringing product, from using it or performing certain other acts. Such emphasis on the right to disallow differentiates intellectual property protection from the protection offered in other civil law matters concerning the breach of an owners rights. In civil courts the usual sanction is the award of compensation to the plaintiff for infringements of his rights which have already transpired, usually in relation to personal injury or property damage. The European domicile system was unable to generate a large body of European case law, because first, judgments revoking or cancelling a registered industrial property right had to be taken by the courts of the country for which the right had been granted. As the defendants in patent infringement proceedings generally file a counterclaim for invalidity, the prospects of internationalizing the domicile principle are limited. Divergence in the case law of the EU member states is due to the cross-border injunction. Second, hindrance to liberalizing the domicile principle takes place due to cross-border competence being limited to the courts of the country where the defendant is lives or mainly conducts his business. Such competence does not extend to the country where the infringing act occurred, which, is of particular importance to the plaintiff[56]. Complexity An infringement action brought before a Community trademark court makes it extremely easy to enforce registered Community trademarks across the whole of the European Union. In case the court decides that there has been infringement, this judgment will be imposed in all EU member states in which infringement took place. Further, the damages award will be based on all such infringing acts. Finally, an injunction against any further infringement may be obtained for the whole European Union. In November 2004 the Alicante Juzgado de lo Mercantil, acting as Community Trademark Court of First Instance, issued the pan – EU injunction in a trademarks infringement case, in respect of the selling of fake VIAGRA and PFIZER on the internet. Since the respondent was absent at the time of the hearing, the court had issued an ex parte injunction and made an order consisting of broad measures of protection. The court ordered the defendant to cease all use of terms like VIAGRA and PFIZER, in respect of the selling of any of the products in the EU, or on the internet and also ordered the defendant to desist from using the term VIAGRA as a domain name. In IMS Health Inc v Commission of the EU Communities[57], it was held that the aim of intellectual property protection is the right to exclude. On some occasions the legal capacity to exclude is referred to as monopoly. From this situation much controversy spins around the interaction of Intellectual Property Rights and Competition Law. Competition authorities have made efforts to balance the protection of intellectual property rights and market competition. Europe has taken these issues into consideration in a recent set of decisions implicating a supplier of pharmaceuticals sales data and its copyright protected data matrix. The balance between competition regulations and IP rights remains a topic for debate in most of the nations including European countries. If an IP right blocks entry into a genuinely needed facility for competing, there may be lawful public argument in order to compromise the IP right for promoting competition. However, such compromise should not be a matter of mere public convenience or a bare recommendation to the competitors, where competition is not threatened. Even IP rights serve a valuable public policy objective to encourage and reward creativity and to safeguard public interest. Policy makers should make sure that interference in the matter of protecting competition fulfils that objective instead of the less productive goal of simply making life easier for competitors.    In Anheuser-Busch Inc v Budejovicky Budvar Narodni Podnik[58], Anheuser-Busch Inc, instituted proceedings in the Finnish courts to prevent the defendant from using certain trade marks, which were claimed to have been infringed. In an appeal to the Supreme Court, the matter was stayed for making a reference to the ECJ on issues concerning the interpretation of TRIPS agreement. The ECJ held that in case of a disagreement between a trademark and sign that was suspected to have infringed the trademark TRIPS agreement will be applied, where the disagreement arose before the date of application of TRIPS but continued beyond that date. The relevant laws of Finnish trade marks had to be interpreted as far as possible in the wording and purpose of the provisions of Directive 89/04 on trade marks and TRIPS. A trade name could constitute a sign within the meaning of article 16(1) of TRIPS[59]. The exceptions to article 17 of TRIPS were targeted to make a third party able to use a sign which is similar to a trade mark that indicates its trade name, provided that such use was according to the sincere practices in industrial and commercial matters. A trade name which was unregistered but established by its use in the member state in which the trade mark was registered could be considered as an existing prior right as per the meaning of the third sentence of Article 16(1) of TRIPS[60]. The Silhouette Case This legal ambiguity has resulted in disagreements and in the case of Austrian sunglasses Silhouette, the ECJ ruled that community wide exhaustion is the appropriate interpretation in accordance with the 1989 Directive[61]. This judgement indicates that Article 7(1) of the Directive barred Member States from implementing an exhaustion regime that was wider than community exhaustion. In the Silhouette case the Austrian discount chain, Hartlauer, bought a consignment of Silhouette sunglasses from a Bulgarian company, which had purchased the goods from Silhouette International in Austria. Silhouette claimed that the sale of the sunglasses was subject to the stipulation that these sunglasses should not be re-imported into Austria. Hartlauer were taken to court, in Austria, on the charge that the trademark rights had not been exhausted. The ECJ held that the 1989 Trademark Directive was to be considered as a complete harmonization of the Member States’ rules for trademarks. In accordance to this ruling all Member States have to apply the principle of regional exhaustion. Nevertheless, such states that are in the EEA but outside the EU need not do so. Thus the ECJ has ruled that exhaustion occurs only when the products are being sold in the EEA and this establishes that the principle of international exhaustion is not applicable within the EEA if the goods had been first placed on non EEA markets. Hence, the rights owner was able to enforce its rights in the Silhouette trademark against the defendant, Hartlauer, even though these products were genuine and had been placed on the Bulgarian market with the consent of the trademark owner. The issue of consent was adjudged in the Sebago case, where it was held that consent under Article 7(1) of the Directive had to necessarily relate to each item of the product in respect of which exhaustion is pleaded. The Swedish Competition Authority, in a report, referred to the ruling of the EFTA Court in the Maglite case[62] which preceded the Silhouette ruling by six months. In this case a Norwegian company was importing Maglite lanterns from the US. The Norwegian general agent sued the importer for breach of Norwegian trademark law as well as the EU Trademark Directive. The EFTA Court held that the EEA agreement did not entail any common trade policy in relation to a third country and that a regional exhaustion requirement would severely restrict freedom of trade in respect of third countries. According to the Maglite and Silhouette rulings though regional exhaustion is applied in the EU, non-EU members of the EEA can resort to parallel imports into the EU through those countries legally. This could result in considerable legal uncertainty[63].    Bibliography.    Anderson, Ross. The Draft IPR Enforcement Directive – A Threat to Competition and to Liberty. Fipr. Retrieved from http://www.fipr.org/copyright/draft-ipr-enforce.html on September 23, 2006 Annual Enforcement Report 2004. The patent Office. DTI United Kingdom. Retrieved from http:// www.gov.uk/about/enforcement/annreport04.pdf on September 23, 2006 Case of Ansul B.V. v Ajax [2003] ECR I-2439 [2003] RPC 40 ECJ Baker W, Raymond. Case Study Belarus. Retrieved from http://www.capitalismsachillesheel.com /BelarusCaseStudyPDF.pdf on September 23, 2006 Teleye Case R 219/1998-1 Deutsche Post EURO EXPRESS GmbH v. OHIM (EUROPREMIUM) ]Case T-334/03 Nestlà © Waters France v OHIM (Shape of a bottle)Case T-305/02 Eden SARL v OHIM Case T-305/04 Shield Mark v. Joost Kist. Scents Case C-273/00 Societe des produits Nestle SA v Mars UK Ltd Case C-353/03 Case C-39/37, Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc, paragraph 17 Case R 152/2000 Silhouette v Hartlauer Case c-355, [1998] CEC 676 Sebago et Ancienne Maison Dubois et Fils v. GB-Unic SA Case C-173/98 Case No. 4 Ob 95/91, Decision of the Austrian Supreme Court (Nov. 5, 1991), reprinted in 25 INT’L REV. INDUS. PROP. COPYRIGHT L. 126 (1994) (protecting design of Le Corbusier lounge chair under copyright law) Citicorp v. OHIM Case T-320/03 Class International case C-405/03 Class International / Colgate-Palmolive Company and others (C-405/03) Commercial Piracy Report 2003. ifpi. Retrieved from http://www.ifpi.org/site-content/antipiracy/piracy2003-priority-territories.html on September 23, 2006 Commission Regulation No 1891/2004 (21/10/04) Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights Council Regulation 40/94 on the Community Trademark (Dec. 20, 1993), 1994 O.J. (L 11) 1. Council Regulation 40/94 on the Community Trademark (Dec. 20, 1993), 1994 O.J. (L 11) 1 Commission v. Council case C-276/03 Commission v France C-23/99 (26 September 2000) Council Regulation (EC) No 792/2002 of 7 May 2002 Countering Counterfeiting. A guide to protecting enforcing intellectual property rights,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Counterfeiting Intelligence Bureau, International Chamber of Commerce, 1997. Counterfeiting and Organized Crime. Union Des Fabricants copyright 2003. Retrieved   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   from http://www.interpol.int/Public/FinancialCrime /IntellectualProperty/Publications   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   /UDFCounterfeiting.pdf#search=%22counterfeiting%20and%20organized%20crime%22   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   on September 23, 2006 Current and Emerging Intellectual Property issues for Business: A Roadmap for Business and Policy Makers. Retrieved from http://www.iccwbo.org/policy/intellectual_property/pages/IP_Roadmap-2005.pdf on September 23, 2006 Decision No 276/1999/EC of the European Parliament and of the Council of 25 January 1999 Directive 98/71/EC of the European Parliament and of the Council on the Legal   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Protection of Design (Oct.28, 1998), 1998 O.J. (L 289) 1 Directive 2006/24/EC of the European Parliament and of the Council 15 March 2006 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 Directive 2000/46/EC of the European Parliament and of the Council of 18 September 2000 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 Donoghue, Andrew. Counting the cost of Counterfeiting.. ZD Net News publication dated May 22, 2006 ENANTON/ENANTONE v ENANTYUM Case R 222/1999-2, paragraph 47    EU backs tighter rules on piracy. BBC NEWS. March 9, 2004. Retrieved from http://news.bbc.co.uk/2/hi/technology/3545839.stm on September 23, 2006 European private and public sectors join forces†¦intellectual property abuses. February 27, 2003. Retrieved from http://www.deltha.cec.eu.int/en/news_2003 /eu%20IPR%20Network.pr.en_27_2_03.htm on September 23, 2006 First Council Directive 89/104 to Approximate the Laws of the Member States Relating to Trade Marks, art. 2., 1989 O.J. (L 40) 1, 2.    FUELING BRAND POWER Case R62/2005-1    Gillette Company v LA-Laboratories Ltd C-228/03, ECJ (17 March 2005) Ide Line Aktiebolag v. Philips Elecs. NV, [1997] E.T.M.R. 377 (Stockholm Dist. Ct. 1997).    IFPI Music Piracy Report Retrieved from http://www.ifpi.org/site-content/library /Piracy2000.pdf on September 23, 2006    IMS Health Inc v Commission of the European Communities (Case T-184/01 R), Vesterdorf P, 10 August 2001 Industry welcomes new EU – US joint strategy to fight †¦ counterfeit and pirate goods. Vienna 20 June 2006. Retrieved from http://www.bsa.org/poland/press/newsreleases /polandpressrelease20june2006.cfm on 23 September, 2006 INTERNATIONAL INTELLECTUAL PROPERTY ALLIANCE 2005 SPECIAL 301 REPORT Retrieved from http://www.iipa.com/rbc/2005   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   /2005SPEC301UKRAINE.pdf on September 23, 2006. Lidl Belgium GmbH Co KG v Etablissementen Franz Colruyt NV Case C-356/04, (29   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   March 2006) Maglite 1997 E-2/97 EFTA Court report 127. Montres Rolex S.A. and others (Case C-60/02, 7 January 2004) Montex Holdings Ltd and Diesel S.p.A. (C-281/05, 2 June 2005). Michelle Warren, Jeans case between Tesco and Levis may be paused, Sunday Business   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Post, 7 November 1999. Pat Treacy Anna Wray â€Å"IP Crimes: The Prospect of EU – Wide Criminal Sanctions – A Long Road Ahead?† EIPR [2006] Proposal for a European Parliament and Council Directive on the Legal Protection of   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Design (Dec. 3, 1993), 1994 O.J. (C 345/14) 1. Proposal for a European Parliament and Council Regulation on the Community Design   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  (Dec. 3, 1993), 1994 O.J. (C 29/20) 1. Philips Elecs. NV v. Remington Consumer Prods, 1998 R.P.C. 283 (Eng. Ch.) Polo Lauren/Dwidua I (Case C-383/98) Reckitt Colman Prods. Ltd. v. Borden Inc., [1988] F.S.R. 601 (U.K. H.L.) (lemon   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   shaped container). Regulation (EC) No 733/2002 of the European Parliament and of the Council of 22 April 2002 Council Resolution of 25 March 2002 Regulation (EC) No 45/2001 Rioglass v Transemar C-115/02 (23 October 2003) Signal Communications Ltd v Office for Harmonisation in the Internal Market (Trade Marks, Patents and Designs (OHIM) Case T-128/99 Siemens AG v VIPA Gesellschaft fà ¼r Visualisierung und Prozeßautomatisierung mbH,Case C-59/05, ECJ (23 February 2006) Tesco v Levi Strauss joined cases C- 414/ 99 to C- 416/99 ECJ 20 November 2001. Testimony March 8, 2006. Piracy and Counterfeiting in China. Retrieved from http://www.nam.org’s_nam/bin.asp on September 23, 2006 Trademark Law Treaty Implementation Act, Pub. L. No. 105-330, 112 Stat. 3064 (1998), tit. I. Trade Dress Protection Act, H.R. 3163, 105th Cong. (1998). World Intellectual Property Organization Geneva. Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications. SCT/5/3 DATE: June 8, 2000    Zino Davidoff SA v. AG Imports Limited, CH-1998 D No. 4517 [2005] EWCA Civ 978 – Laboratoires Goemar SA and La Mer Technology Inc http://www.europa.eu.int/comm/internal_market/en/indprop/patent/index.htm http://europa.eu.int/ISPO/legal/en/ipr/ipr.html http://europa.eu.int/eur- ex/LexUriServ/site/en/oj/2004/l_328 /l_32820041030en00160049.pdf http://trade-info.cec.eu.int/doclib/docs/2004/august/tradoc_113229.pdf http://www.publications.parliament.uk/pa/cm199899/cmselect/cmtrdind/380/38013.htm#n291 http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2004 /l_328/l_32820041030en00160049.pdf http://www.lawdit.co.uk/reading_room/room/view_article.asp?name=../articles/European%20Commission.htm http://europa.eu.int/eur-lex/en/com/pdf/2003/com2003_0046en01.pdf, p. 9, Part Two, Section A IPR-Heldesk.org http://europa.eu.int/eur-ex/lex/LexUriServ/site/en/oj/2004/l_360 /l_36020041207en00080011.pdf http://www.ecta.org/position_papers/Directive_draft_criminal_measures_2006.pdf. http://www.dyoung.com/newsletters/tmnews1105.htm http://www.epip.eu/papers/20030424/epip/papers/cd/papers_speakers/Stauder_Paper_EPIP_210403.pdf http://curia.eu.int/jurisp/cgi-bin/form.pl?lang=enSubmit=Submitdocrequire=judgementsnumaff=c-245datefs=datefe=nomusuel=domaine=mots=resmax=100 http://www.europa.eu.int/comm/internal_market/en/indprop/patent/index.htm http://europa.eu.int/ISPO/legal/en/ipr/ipr.html http://europa.eu.int/eur-lex/lex/LexUriServ/site/en /oj/2004/l_328 /l_32820041030en00160049.pdf http://curia.eu.int/jurisp/cgi-bin/form.pl?lang=enSubmit=Submitdocrequire =judgementsnumaff=c-245datefs=datefe=nomusuel= domaine=mots=resmax=100

Cleopatra :: essays research papers

Cleopatra’s father was Ptolemy XII, who began his rule of Egypt in 80 BC but he was not respected and thought to be weak. His nickname was â€Å"Auletes†, which means flute player in Greek. Cleopatra’s mother could possibly be Cleopatra V, who either died or disappeared in 68 BC. Cleopatra had two older sisters, two younger brothers, and one younger sister.   Ã‚  Ã‚  Ã‚  Ã‚  Ptolemy XII ruled until his death in 51 BC. His will said that Cleopatra and Ptolemy XIII were heirs to the throne. The two married and jointly ruled Egypt. Ptolemy II had established these brother-sister marriages as custom, when he married his sister Arsinoe II. Cleopatra and her brother ruled jointly, though the marriage was solely in law. Cleopatra was about 18, and Ptolemy XIII was about 10. They were named King and Queen of Egypt in 51 BC. Cleopatra did most of the ruling and left her brother out it.   Ã‚  Ã‚  Ã‚  Ã‚  Ptolemy served as a puppet for power-hungry advisors and in 48 BC kicked Cleopatra out of the palace. Cleopatra retaliated by building her own army outside the city. Cleopatra knew that she had to get to Caesar and tell her side of the story. She had herself smuggled into the palace in a rug. The young Queen enchanted Caesar, and the two spent the night together. Ptolemy XIII was called to the audience and was dismayed to see that Cleopatra was at his side.   Ã‚  Ã‚  Ã‚  Ã‚  What was a war between Cleopatra and Ptolemy XIII, evolved onto a war between Ptolemy XIII and Caesar? Caesar had given Cyprus back to Egypt, and Arsinoe IV and Ptolemy XIV were named rulers. Arsinoe appeared to believe that she should also be Queen of Egypt, because of her alliance with Ptolemy XIII against Caesar.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Caesar may have had Pothinus beheaded because of what he did to Pompey, or he may have died in the fighting. Way, he was either dead or missing. Ptolemy XIII, hearing of this, threw his crown down and stormed out of the palace. He supposedly later drowned trying to leave the city. Caesar took prisoner Arsinoe IV.   Ã‚  Ã‚  Ã‚  Ã‚  Cleopatra was then restored to the throne and again married to her brother, Ptolemy XIV. It was 47 BC, and Cleopatra was 22 years old, and Ptolemy XIV was 12. Cleopatra again acted as sole ruler, and this time managed to keep Ptolemy XIV from influence. Since Arsinoe IV was considered a traitor, Cyprus was now under the direct rule of Cleopatra

Capital investment analysis and inflation and capital investment analysis with taxation Essay

Inflation refers to persistent increase in price of goods and services. It is also referred to as average general increases in the price of goods and services. Prior to this time, there had been lots of argument amongst writers in finance on whether or not to ignore or include inflation when computing capital budgeting. The argument has always being that inflation affects both the discount rate and the cash flow hence the effect will always cancel out. During inflation shareholders will always demand for higher rate of return because inflation has a way of eroding the purchasing power of the shareholders but the impact of inflation on the company’s rate of return and the expected cash flow are not always the same. Shareholders are not likely to reflect the entire inflation rate on a single investment because of risk diversification strategy employed by most shareholders. Besides, inflation will not affect all the cash flows in exactly the same way. The impact of inflation on labour for instance will not be the same for material cost and cannot automatically reflect on selling price. Whichever way it is, the question is, How do we incorporate the effect of inflation in capital investment decisions? How do we adjust for inflation? Will the project still be worthwhile after adjusting for inflation? In analysing the effect of inflation in capital budgeting analysis two things should be taken into consideration. i. The effect of inflation on the discount rate – As inflation increases shareholders will demand for increased return to compensate for the reduction in the value of their capital. So there will be increase in the minimum return required by an investor. ii. How to take account of the impact of inflation on future cash flows. There are basically two types of inflation: i. General inflation – this is an increase in the average price of all goods and services in an economy. General inflation affects both the discount rate and the cash flow hence it should be properly estimated. Changes in consumer price indexes are used as a measure of general inflation in Nigeria. ii. Specific inflation – refers to changes in prices of the various components that make up the project under consideration. Various components such as sales prices, labour cost, variable cost etc. Specific inflation affects only the cash flows of the project. The treatment of specific inflation should be detailed as possible. Money Cash flow and Real Cash flow In an inflationary period there is a difference between N10,000 cash and goods and services worth N10,000. The first is the money cash flow while the later is real cash flow. Money Cash flow refers to the actual amount of cash flows in nominal term. To arrive at the money cash flow we adjust each item by its specific rate of inflation. Real Cash flow on the other hand refers to purchasing power equivalent of the actual amount of cash flows. To arrive at the real cash flows we deflate (i.e. discount) money cash flows using the general rate of inflation. In project appraisal, general inflation is usually assumed to be the same throughout the project’s life. It becomes easier to analyse the impact on both cash flows and the discount rate. However specific inflation rate need not be the same throughout the project’s life. Money Cost of Capital (MCC) & Real Cost of Capital(RCC) MCC – Measures the actual discount rate in terms of the actual money. That is, it is the discount rate in nominal terms. RCC – Measures the discount rate in constant price level terms. Return on an investment are usually based on expected returns. The anticipated rate of inflation will be reflected in required rate of return for a project. This relationship has long been recognised in financial economies and it is referred to as fisher’s effect. It is expressed as (1+m) =(1+r)(1+I) Where m= Money cost of capital R= real cost of capital I = General rate of inflation From the equation above, if ‘r’ & ‘i’ are given, m could be computed as: M=(1+r)(1+i)-1 If m and I are given the r can be calculated as r = – 1 If m and r are given, then i can be calculated as follows i = – 1 Rules to follow using MCC & RCC 1. Cash flows in money or nominal terms should be discounted at money or nominal cost of capital 2. Cash flows stated in money terms can be converted to real cash flows by discounting at the general rate of inflation. The real cash flows should then be discounted at real cost of capital. 3. Discounting money cash flow at the money cost of capital and real cash flows at the real cost of capital will give the same NPV for a project. 4. The specific rate of inflation should be effected on specific cash flow only. The cash flow arrived at should then be discounted at the relevant cost of capital which in most cases is the money cost of capital except otherwise stated. 5. Money cash flows should be discounted with money cost of capital and real cash flow should be discounted with the real cost of capital. Raze Ltd is considering a project costing N50,000. The project is expected to have a life of 4 years with a residual value of N4,000. Annual cash revenue from the project is expected to be N35,000 in year 1 rising by 6% per annum for inflation. Running cost are expected to be N15,000 in the first year of the project but would increase by 11% per annum because of inflating labour costs. The general rate of inflation is expected to be 8% and the company’s money cost of capital is 18%. Advice the company on whether or not to accept the project. Rex Ltd have been considering a 5yrs project costing N3m which on an initial estimate would earn N1.1m per annum in contribution without incurring any additional fixed cost but with a nil residual value at the end of year 4. Cumulative discount rate at 15% for 5years is 3.352. The company’s director believes that the project should be undertaken because its NPV was N687,200.00 However, further investigation into the cash flow reveals the following. a. The contribution consists of annual sales of N2.7m and variable costs of N1.6m for 1million units of sales per annum. These are the expected money values in year one. b. The sales would be made through a single distributor, who has asked for a fixed selling price of N2.70 per unit for 3yrs after which prices could increase by 18% for year 4 and held constant for year 5 c. Variable costs of N1.60 per unit in year one consists of material cost of N0.80 which are expected to increase by about 5% per annum and labour costs will rise by an expected 10% per annum for each year because of existing wage agreements with the trade unions concerned and a shortage of skilled labour for the work. Required 1. Is the initial NPV calculated correct 2. Is the project viable Solution Workings Yr 1 2 3 45 Sales2,700,0002,700,0002,700,0003,186,000 3,186,000 Less Material (800,000)(840,000)(882,000)(926,000) (972,405) Labour(800,000)(880,000)(968,000)(1,064,800) (1,171,280) Net MCF1,100,000980,000 850,0001,195,100 1,042,315 Labour at 10% Material at 5% Sales at 18% in years 4 & 5 Yr Cash flowsMCC @ 15%PV 0(3,000,000)1(3,000,000) 11,100,0000.8696956,560 2980,0000.7561740,978 3850,0000.6575558,875 41,195,1000.5718683,358 51,042,3150.4972518,239 The project is viable because it has a positive NPV of N458,010 The initial NPV calculated does not take into consideration the adjustment is sales, material and labour because of inflation. Summary We have looked at the impact of inflation in capital investment appraisal. Inflation refers to the persistent increases in prices of goods and services thus affecting the financing needs if the organisation as well as its cost of debt and WACC. Inflation is treated in capital investment appraisal by discounting inflated values of future cash flows at the money cost of capital or real cash flows at real cost of capital. Review question Idi araba town council plans to build a bridge over the local river to replace the existing ferry service. Building will start in one year’s time, that is 2006 and will take 4 yrs. It has planned to sub contract the building work to a major construction company and the best tender will involve the council in a cash expense of N10m at the start of building and further payments of N5m each year until 2010 once completed, the annual maintenance cost for the bridge will be N1m per annum according to today’s prices; the annual cost is expected to rise with the general inflation rate of 7% p.a. In addition, a major overhaul is expected to be required after the first 15years of use, this will comprise N10m of material plus wage costs of a further N10m in current prices. Material prices are expected to rise with the general rate of inflation for the next 16years and then remain constant; wage cost is expected to increase by 6% over the general inflation rate for the next 3years and then increase in line with general prices. The market interest rate the council consider relevant for the whole life of the project is 17.7%. You can assume that for calculation purpose the life of the bridge is infinite. The expected use of the bridge is 20,000 vehicles per day and toll charge is expected to increase in line with general inflation. Required a. Calculate minimum toll charge in the first year of operation necessary for the bridge to break even over its life, and explain your treatment of inflation. Note: Assume all annual cash flows arise on the last day of the relevant year. b. What other factors do you think the council should consider when deciding upon the toll charge? Note: The statement that â€Å"in addition, a major overhaul is expected to be required after the first 15yrs of use† should be interpreted to mean at the end of the first 15years of use (i.e. year 20.5 +15) (ICAN , 1993) Capital Investment Analysis and Taxation Tax is an important factor to consider when computing capital investment appraisal because of its implications on cash flows. Capital investment appraisal is based on after tax incremental cash flows arising from the project. Thus, when appraising the viability of a project tax that has to be incorporated and then discounted at the relevant cost of capital. Corporation tax This is charged on the profit made on projects that is positive cash flows and then discounted at the appropriate ruling rate. Currently in Nigeria, it is charged at 30%. It is usually charged on a preceding year basis because tax is expected to be remitted 6-11 months after the end of the period in which profit were earned. In capital investment appraisal we assume a year lag for corporation tax payment, that is, tax on taxable profits made in year one will be deemed payable in year 2 except otherwise stated. Also, when losses are made on a project the losses are used to reduce tax liability hence, it is treated as tax benefit. The amount by which tax is reduced is equivalent to cash inflow to the project. Investment Incentives – This is given to encourage investment in fixed assets. The main types include investment allowance and capital allowance. Investment allowances – are receivables which should be brought into the project appraisal in the period in which they are receivable. They are use to reduce the tax liability. Capital allowance- is available to reduce a tax liability if a business is carried on and it has a balance of qualifying capital expenditure. The reduction is treated as cash savings. Capital allowance could be treated on a straight line basis or a reducing balance basis. In Nigeria it is claimed as initial allowance and annual allowance. The Nigerian law permits a company to leave at least N10 in its book as written down value for an asset that is not yet disposed by the company. The Nigerian law also restricts the capital allowances a company can claim in any year of assessment to a certain percentage of the adjusted profit so that companies that have made profit can always increase their tax liability. On disposal of an asset no capital allowance can be claimed in the year of disposal. When disposal is finally made, the difference between the proceeds on disposal and tax written down value treated as: i. A balancing charge – if the sales proceeds exceed the tax written down value. ii. A balancing allowance if the tax written down value exceeds the sales proceeds. Assumptions on Investment allowance and capital allowance claims Two possible assumptions can be made on when to deduct capital allowance claims i. We can assume that the first claim is set – off on profits that occur in year one and it is deductible in year 1 ii. The most acceptable by examiners and in practice is to assume that the first claim occurs in year one and the tax savings occur one year later that is, year 2. Illustration 1 A company purchases a machinery at a cost of N10,000 in respect of a project which has a life of 5years and a residual value of N500. Calculate the capital allowance on a straight line basis that will be used to reduce tax payment in each year of the project. The initial allowance is 50% while the annual allowance is charge at 25%. Year ClaimsPoolAllowance 1. Initial allowance (50% x 10,000) 5,000 10,000 Annual allowance (25% x 10,000) -5,000 -10) 1,247.50(6,247.5)6,247.5 2. written down value c/f3,752.5 Annual allowance(1,247.5)1,247.5 3. written down value c/f2,505 Annual allowance(1,247.50)1.247.5 4. written down value c/f1,257.5 Annual allowance(1.247.5)1.247.5 5. written down value c/f10 Sales proceed(500) Balancing charge 490(490) Illustration 2 XYZ company is considering investing in plant and machinery costing N100,000. The machine has a life of 5 years after which it can be sold for N5,000. The machine would generate annual cost of saving of N35,000. Investment incentive on the machinery will be available as follows: Investment allowance 20%, initial allowance 20%, annual allowance 10% on a straight line basis. Tax rate 35% payable one year in arrears and after tax cost of capital is 15%. Should the machine be purchased? Solution Workings Investment allowance = 20% x 100,000 = N20,000 Capital allowance computation. Year Claims Capital Tax written allowance N down value N 1 Initial allowance ( 20% x 100,000)20,000 Annual allowance(10% x 100,000) – 20,000) 8,000 28,00072,000 2 8,00064,000 3 8,00056,000 4 8,00048,000 5 48,000 – 5000 Computation of tax liability Year 1 2 3 4 5 Cost of savings35,00035,00035,00035,00035,000 Investment allowance(20,000)—- Capital allowance(28,000)(8,000)(8,000)(8,000)(43,000) Taxable profits13,00027,00027,00027,0008,000 Tax at 35%4,550(9,450)(9,450)(9,450)2,800 Computation of NPV Year Machinery Savings Tax Net cash DCF @15% PV 0 (N100,000)- – (N100,000)1 (N100,000) 1 35,000 – 35,0000.869630,436 2 35,000 4,550 39,5500.756129,903.76 3 35,000 (9,450) 25,5500.657516,799.13 4 35,000 (9,450) 25,5500.571814,609.49 5 50000 35,000 (9,450) 30,5500.497215,189.46 6 2,800 2,8000.43231,210.44 8,148.28 The NPV is positive and thus, the machinery should be purchased. Illustration 3 New ventures Nigeria Ltd is considering a project with an initial cost of N5m. The project is to last for 5years with a scrap value of N10,000 .The project involves the production and sales of product X. Estimated future sales quantity and fixed costs are given below: YearSales QtyFixed Costs UnitsN,000 1100,0001,000 2110,0001,100 3120,0001,200 4120,0001,250 5125,0001,300 The selling price of product X is expected to be N50 per unit in year 1 rising by 5% per annum because of inflation. Variable costs are expected to be N25 per unit in year 1 rising by 8% per annum because of inflation. General level of inflation in the country is currently 7.5%. The company can claim capital allowance at the rate of 20% on the reducing balance basis on this project. Tax is currently at the rate of 35% payable one year in arrears. If the company’s after tax real cost of capital is 7%, should the company invest in the project? Solution Workings Computation of cash profit Year Sales Revenue Variable cost (N) Fixed CostProfits(N) 1100,000(N50)100,000(25)1,000,0001,500,000 2110,000(50)(1.05)110,000(25)(1.08)1,100,0001,705,000 3120,000(50)(1.05)2120,000(25)(1.08)21,200,0001,915,800 4120,000(50)(1.05)3120,000(25)(1.08)31,250,0001,916,614 5125,000(50)(1.05)4120,000(25)(1.08)41,300,0002,045,386 Computation of capital allowance(Reducing balance basis) Year Capital allowance Written down value 120% x 5,000,0001,000,0004,000,000 220% x 4,000,000800,0003,200,000 320% x 3,200,000640,0002,560,000 420% x 2,560,000512,0002,048,000 52,048,000 – 10,0002,038,000- Computation of tax liability Year 12345 Profits1,500,0001,705,0001,915,8001,916,6142,045,386 Less cap allowance(1,000,000)(800,000)(640,000)(512,000) (2,038,000) 500,000905,0001,275,8001,404,6147,386 Tax @ 35% 175,000316,750446,530491,6152,585 Cost of capital to use: (1+m) = (1+r)(1+i) i+m = (1.07) (1.075) M = 1.15025 – 1 M = 0.1503 x 100 M = 15.03% Computation of NPV Year Cost/Residual Cash profits Tax liability Net cash flow DCF@15.03% PV 0 (5,000,000) – -(5,000,000) 1 (5,000,000) 1 1,500,000-1,500,000 0.86931,303,900 21,705,000(175,000)1,530,000 0.75571,156.221 31,915,800(316,750)1,599,050 0.65701,050,576 41,916,614(446,530)1,470,084 0.5712839,712 5 10,0002,045,386(491,615)1,536,771 0.4965776,412 6(2,585) (2,585) 0.4317(1,116) 125,755 The company should embark on the project because it has positive NPV Illustration 4 SCG limited is considering a project that has the following cash flow estimates YearCash revenueCash Operating Expenses 1N’000N’000 21,600900 31,8001,100 41,400600 51,200500 500200 The project cost is N1.4m and has an estimated residual value of N10,500. The above cash flow profile has not taken into consideration the effect of changing prices. If effect on changing selling prices are taken into consideration cash revenue are expected to rise by 10% after year 1 and operating expenses by 11% after year 1. General level of inflation in the country is currently 15%.SCG Ltd can claim capital allowance at the rate of 25% on the reducing balance basis on this project. tax is currently at the rate of 35% payable one year in arrears. If the company’s after tax cost of capital is 20%,should the company invest in the project? Solution Workings Computation of cash profit Year Cash revenue (N) Operating expenses(N) Profits(N) 11,600,000 900,000700,000 21,800,000(1.10) 1,100,000(1.11)759,000 31,400,000(1.10)2 600,000(1.11)2 954,740 41,200,000(1.10)3 500,000(1.11)3913,384.50 5 500,000(1.10)4 200,000(1.11)4428,435.92 Computation of capital allowance Year Capital allowanceWritten down value 125% x 1,400,000350,0001,050,000 225% x 1,050,000262,500 787,500 325% x 787,500196,875 590,625 425% x 590,625147,656.25 442,968.75 5N442,968.75 – 10,500432,468.75 Computation of tax liability 12345 Profits 700,000 759,000 954,740 913,384.50 428,435.92 Less capital allowance 350,000 262,500 196,875 147,656.25 432,468.75 Taxable Profit 350,000 496,500 757,865 765,728.25 4032.83 Tax@ 35% (122,500) (173,775) (265,252.75) (268,005) 1,411.5 Computation of NPV Year Cost/Residual Cash Profits Tax liability Net Cash flow DCF@20% PV 0 (N1,400,000) — (1,400,000)1 (N1,400,000) 1 700,000- 700,0000.8333583,310 2759,000(N,122,500) 636,5000.6944441,986 3954,740(173,775) 780,9650.5787451,944 4913,385(265,253) 648,1320.4823312,594 5 10,500428,436(268,005) 170,9310.4019 68,697 61,412 1,4120.3349 473 459,004 The company should embark on the project because it has a positive NPV Summary The effect of taxation on a project will be to increase or reduce tax liability a company pays to the tax authority which will in turn increase or reduce the cash flows that will be used in arriving at the NPV of the project. When taxation is reflected in the cash flows, a post tax cost of capital should be used in evaluating the viability of the project. Review questions 1. Turnaround Nig Ltd is considering an investment that requires an outlay of N100,000 to be spent on the acquisition of necessary plant and machinery. The investment is expected to last for a period of 5 years by which time the residual value of plant and machinery is expected to be N18,000.The net revenue is estimated at Period 12345 Net revenue 30,000 45,000 50,000 52,000 20,000 In addition, turnaround Nigeria Plc expensed an investment of N10,000 in working capital and advertising expenses of N2,000 in period 1 and period 2. Turnaround Nigeria Plc has an after tax cost of capital of 10% and the application tax rate is 40% while the rates of capital allowance are initial allowance 20%,annual allowance 10%.Payment of tax claim may be assumed to be exactly one year in arrears. Required: Determine if the investment is worldwide 1. Links Ltd is considering investing in a project that will involve purchase of plant and machinery costing N150,000.The plant and machinery are expected to have a life span of 5 years and a residual value of N8,000. the project will generate cash profits as follows: Capital allowance is available on the plant and machinery at the rate of 25% of cost on the reducing balance basis. Tax is currently payable at 35% payable one year in arrears. The company’s after tax cost of capital is 18%.advise if the project is worthwhile.