A Comic Book-Inspired Law School Final Exam

Lawrence M. Friedman is a partner at Barnes, Richardson & Colburn, LLP and an adjunct professor at the John Marshall Law School’s Center for International Law.  He is also the author of the Customs Law Blog.  He sent me this final exam, which he recently gave in his Trade Remedies class.  According to Prof. Friedman, “I stressed to my students that the names and locations were not particularly relevant. Nevertheless, I have no doubt they are wondering what I was thinking. It is a bit of a scavenger hunt for random DC universe references, from the well-known to the obscure.”  Thank you to Prof. Friedman, and I hope you all enjoy reading it as much as I did!

IBT 705 International Trade Remedies Law

Spring 2014

Final Exam: The Dark Knight Edition

Instructions:

  1. To complete this exam, you may rely on your class notes, textbook, and a calculator. No other resources can be consulted.
  2. Read the facts below and respond accordingly. Credit will be earned by properly identifying legal issues, stating the relevant rules, applying the facts to the rules, and logically stating your advice to the client.

You are an associate in the International Trade Department of Grabemann, Loring and Ross in Ivy Town, USA. Jean Loring, one of the name partners, has called you into her office. She is meeting with a Mr. Alfred Pennyworth, who is there on behalf of your firm’s biggest client, Wayne Enterprises.  Ms. Loring and Mr. Pennyworth relayed the following facts to you.

From 2011 on, there have been only three companies in the United States that produce high quality bullet proof body armor. Those companies are Wayne Enterprises, Queen Consolidated, and Kord Industries. Wayne Enterprises produces approximately 60% of the body armor made in the United States. The remaining approximately 40% is divided evenly between Queen Consolidated and Kord Industries (each with 20%). Because of the nature of the product and federal government restrictions, there is a limited U.S. market for body armor.

The basic technology underlying the design and manufacturing of this body armor was invented by Lucius Fox, an employee of Wayne Enterprises. In 2008, Mr. Fox secured a patent covering the technology and its production. He assigned that patent to Wayne Enterprises, making Wayne Enterprises the owner of the patent. Wayne Enterprises has granted non-exclusive licenses to exploit the patent to both Queen Consolidated and Kord Industries. Wayne Enterprises also owns the U.S. trademark rights to “Ballistic Armor Technology” and “BAT” to describe the body armor. Both marks are registered with the U.S. Patent and Trademark Office and appear on the principal register of trademarks.

Somewhere in the central Asian republic of Nanda Parbat (a WTO member), a shadowy company called Demon’s Head Ltd. has been making inferior body armor and supplying it free of charge to the local criminal market. Mr. al Ghul, the president of Demon’s Head, has vowed to enter the U.S. body armor market with the express intention of pushing Wayne Enterprises, Queen Consolidated, and Kord Industries out of the market. That will allow Demon’s Head to sell BAT® body armor to members of the criminal underworld, making al Ghul the leader of a criminal army in the United States. To do that, al Ghul has enlisted the League of Corporate Assassins to launch his four-step plan.

  1. First, in 2011, al Ghul instructed his associate Antonio Diego to kidnap Mr. Fox in a successful effort to secure the information needed to produce BAT® body armor using the patented production methodology. Fox was later rescued unharmed by Wayne Enterprises Chief of Security Barbara Gordon.
  2. AlGhul then convinced RamaKushna, President ofNandaParbat, that additional exports to the United States would be good for the local economy. To help encourage economic activity, the President made three declarations having the force and effect of law as of January 1, 2012.
    1. All companies in Nanda Parbat that export goods are entitled to a credit against their overall corporate income tax liability equal to 1% of the value of the exported products.
    2. No bank in Nanda Parabat making loans to domestic producers of textiles and apparel may charge interest in excess of 3% per annum but the government will pay the bank to make up any difference between the 3% fixed rate and the prevailing market rate of 15% per annum.
    3. Every company in Nanda Parabat that employs more than 100 people will receive an annual grant to support on-site child care for workers’ children.
  3. Next, al Ghul instructed Anthony Ivo, Chief Scientist at Demon’s Head, to begin production of BAT-style body armor suits using Wayne Enterprise’s patented BAT® technology. This product proved to be far superior to his prior efforts, due to the stolen BAT® technology. As a result, in January 2012, Demon’s Head began selling body armor to the Nanda Parabat police and army for the dollar equivalent of $5000 per full suit (not including optional cape). At the same time, Demon’s Head continues giving away body armor suits to criminals in Nanda Parabat.
  4. Simultaneously, Demon’s Head began shipping body armor to the U.S., where it is imported by the Talia Distributors, a company set up and wholly owned by Demon’s Head. Mr. al Ghul is the president of both companies. Talia Distributors repackages, markets, and sells the body armor at wholesale to Cobblepot & Co., H. Dent Corp., and Sionis Systems Ltd. who sell to retail customers in the United States (both legal and criminal enterprises). Under a strict transfer pricing methodology, Talia Distributors pays Demon’s Head $2500 per full suit. The price to Cobblepot, Dent, and Sionis is set at $3000 per full suit. Talia Distributors keeps the $500 as a commission to cover its costs.

The influx of body armor from Nanda Parabat is taking a toll on the domestic industry. Felicity Smoak, who works for Queen Consolidated, prepared the following report showing declining sales of body armor suits in the U.S. At the same time, sales are increasing in Nanda Prabat. She also confirmed that Demon’s Head has no customers outside of Nanda Parabat and the U.S. However, Smoak identified significant potential markets for body armor suits throughout Europe; but, she does believes Demon’s Head is producing at capacity and lacks resources to serve additional markets.

United States
Wayne Queen Kord Demon Total US
2011 60,000 20,000 20,000 - 100,000
2012 57,000 19,000 19,000 5,000 100,000
2013 54,000 18,000 18,000 10,000 100,000
Nanda Parabat
Free Sales Total Nanda Parabat
2011 2,000 - 2,000
2012 2,500 2,000 4,500
2013 3,000 4,000 7,000

According to Pennyworth, to support its continuing massive investment in research and development, Wayne Enterprises wants to raise the price of BAT® body armor suits in the U.S. The U.S. price for a BAT® body armor suit from any of the three domestic producers is approximately $8,000 (not including optional cape). However, neither Queen nor Kord have moved prices upward to offset lost sales. To meet the competition, Wayne has been unable to increase prices and has, therefore, reduced R&D. To cut costs, Queen has fired Chief Marketing Office Roy Harper and will be consolidating its three sales and distribution centers into its main campus in Star City.

Kord has taken another approach. To cut costs and improve its overall profitability, Kord has decided to start production of BAT® body armor in the Balkan country of Markovia. As on January 1, 2014, Kord has shifted 50% of its production from the U.S. to Markovia. All of the Markovia-produced goods will be exported to the U.S. and imported by Kord.

Thus, the expected 2014 industry snapshot is as follows:

United States Sales
Wayne Queen Kord Demon Total US
2014 50,000 17,000 10,000
10,000
13,000 100,000
Origin USA USA Markovia/USA Nanda Parbat

The Kord and Demon’s Head imports will be competing for the same few legal customers in the U.S. while the imports from Demon will also supply the criminal market (about 10% of the total U.S. sales).

In January of 2013, Barbara Gordon of Wayne Enterprises’ reported that she has identified the unauthorized use of the BAT® trademark on inferior body armor being sold in the U.S. market. Her sources have provided shipping and commercial documents indicating that the unauthorized BAT® products are coming from Nanda Parabat.

Ms. Loring called you into the meeting with Mr. Pennyworth to help determine whether any U.S. trade remedy laws might help Wayne Enterprises offset the commercial competition from Demon’s Head. Mr. Pennyworth ominously suggested that fending off the threat from Demon’s Head and Mr. al Ghul has larger implications for the fate of the nation. He asked that you consider all options involving the trade laws. According to Pennyworth, the CEO of Wayne Enterprises is considering other options involving independent acts of self-help.

Ms. Loring has asked you to prepare a memo outlining any potential administrative or judicial actions you see as possible support for Wayne Enterprises. For each potential action, she wants you to explain in as much detail as time permits:

  • Whether Wayne Enterprises, alone or in conjunction with other companies, has standing to commence the action.
  • In what forum is the action commenced and how.
  • What proof will be necessary to secure a remedy?
  • What data will be considered and how will it be used?
  • What problems or opportunities do you see for Wayne Enterprises and the other companies?
  • For administrative action, what judicial review is available?
  • What is the standard of review applied by the relevant courts?
  • Will Wayne Enterprises be likely to prevail?

For no credit other than respect and bragging rights, provide the correct first and last names and popular aliases of the CEOs of Wayne Enterprises, Queen Consolidated, and Kord Industries and the first name of Mr. Pennyworth.

40 Responses to A Comic Book-Inspired Law School Final Exam

  1. Wow. I like this professor! Gotta respect someone who knows as much about the DCU as I do!

  2. Ori Pomerantz

    “First, in 2011, al Ghul instructed his associate Antonio Diego to kidnap Mr. Fox in a successful effort to secure the information needed to produce BAT® body armor using the patented production methodology. Fox was later rescued unharmed by Wayne Enterprises Chief of Security Barbara Gordon.”

    Assuming the patent is valid, this seems like overkill. A valid patent allows an average practitioner of the art to replicate the patented technology.

    • That’s a fair point, but the exam says the patent covers only “[t]he basic technology underlying the design and manufacturing of this body armor” (emphasis added). The actual production armor may include additional trade secret technologies not disclosed in the patent.

      Also, pre-AIA a patent was required to disclose the best mode for practicing the invention, but the best mode did not have to be indicated. It’s possible that the patent discloses a great many possible variations on the armor—one of which is notably more effective than the rest—without indicating their relative effectiveness. It might be expensive to determine which variation is used in the BAT armor. Kidnapping Fox would be a shortcut around that.

      (Post-AIA the best mode requirement is now effectively toothless.)

  3. James Pollock

    “Also, pre-AIA a patent was required to disclose the best mode for practicing the invention”

    Does Al-Ghul care? The fact pattern says he’s been making inferior armor.

    • JoeNotCharles

      WAS producing inferior armour. After the theft of the BAT secrets he started producing competitive armour.

      Also, the best production mode may not give an advantage in quality of the end product, it may just make it cheaper to produce. Perhaps the information that can be gleaned from the patent is correct but prohibitively expensive to use.

      • James Pollock

        It’s apparently taking a while to retool the factory; they got the processes in 2011 but in 2013 are still shipping inferior product.

        “In January of 2013, Barbara Gordon of Wayne Enterprises’ reported that she has identified the unauthorized use of the BAT® trademark on inferior body armor being sold in the U.S. market.”

        Since it’s got counterfeit trademarks on it, Al Ghul doesn’t have to care if his customers are satisfied… their anger will be redirected to WE, Kord, and Queen Consolidated.

      • JoeNotCharles

        For some reason there’s no “Reply” button next to James’ reply to this, so I’ll have to reply to myself…

        It also says that in 2012, al Ghul started selling BAT armour to the Nanda Parbat police and military, and, “This product proved to be far superior to his prior efforts, due to the stolen BAT® technology.” He also provides body armour to two other groups: “At the same time, Demon’s Head continues giving away body armor suits to criminals in Nanda Parabat… Simultaneously, Demon’s Head began shipping body armor to the U.S., where it is imported by the Talia Distributors.” It’s not explicit whether those two other groups are BAT armour or the old armour – only the armour sold to official Nanda Parbat forces is explicitly noted to be the new armour.

        So, a couple of options here:

        (1) The knockoff BAT armour is far superior to al Ghul’s original armour, but still inferior to real BAT armour. (So the theft of the secrets did lead to a better product, just not as good as it could have been.)
        (2) The knockoff BAT armour is reserved for Nanda Parbat forces, and al Ghul provides others with old inferior armour. (Presumably this is to flood the market with poor armour so that the Nanda Parbat forces have an advantage when he incites a war.)
        (3) Gordon CLAIMS that the armour using the unauthorized BAT trademark is inferior, but she’s just pumping up her company’s position. In fact any differences from the real thing are only cosmetic.

      • James Pollock

        Option 1 is what I gathered.
        Option 2 is incorrect, because the inferior armor is showing up in the USA.
        Option 3 could be correct, but probably isn’t, if we assume Gordon is smart enough to know that you get your best results from your legal advisors if they have as much accurate information to work with as possible. You have a different problem if they’re putting out stuff as good as yours at a lower cost than you have if they’re putting out an inferior product with your trademark on it.

        Whether it’s #1 or #3, you still get the conclusion that Al Ghul doesn’t have to care nearly as much about the QC of his product because he’s not trading on his own reputation, he’s trading on Wayne’s. That poor QC is part of the justification for having the government enforce trademark law as well as leaving it as a private cause of action.

      • Great discussion. Keep in mind that this was a trade remedies class. The facts point out that there is a patent covering the product. The point was to get students to consider and expound upon a Section 337 action. The fact that the goods from Demon remain inferior is to allow for a discussion of whether Customs can exclude the merchandise without an ITC exclusion order on the basis that the mark is counterfeit. Even if not counterfeit, it is materially different and possibly subject to exclusion. I admit that is a stretch as there is no reason to treat these goods as gray market rather than counterfeit. Maybe they are Kord products from Markovia, shipped via Nanda Parbat.

  4. James Pollock

    Did Professor Friedman give extra points (or deduct points) if the students suggested sending a covert agent to sabotage or destroy Al Ghul’s manufacturing centers and render Al Ghul to law enforcement agents extrajudicially?

    • Such courses would seem clearly beyond the scope of “administrative or judicial actions” that the exam question specifies, and well into the political if not outright paramilitary — and likely unlawful for a private citizen. While I am not a lawyer, it seems that (save to dissuade a client who had suggested such actions first) even alluding to such ought to be a gross breach of professional canons.

      • James Pollock

        Like everything else on a law school exam, it largely depends on the presentation. It is sometimes required to point out that a legal remedy isn’t the best one (Yes, you COULD sue because you were overcharged $.75 on your lunch order, but a lawsuit probably is NOT the best solution.)

        In the fact pattern, Mr. Pennyworth has suggested that it his employer is considering “self-help” solutions. As has been pointed out many times, Batman is usually on shaky legal ice when he operates.

      • I’m pretty sure that suggesting an illegal course of action is always going to be a reason for not doing well on a law exam. You could of course argue that the client’s best course of action would be to do something such as hire better security, urge your client’s government and other governments to issue tarriffs against the criminal’s nation etc., but none of that is openly illegal.

        Companies may be given so newer leeway in certain parts of the world to have private military companies protecting their employees, vehicles, buildings and merchandise, but I do not believe that anywhere in the world (and most definitely not in the U.S.) is it currently legal to send an armed group to attack another company’s buildings or kidnap their employees.

    • Exactly what I had in mind as self-help. Good catch.

      • James Pollock

        But, Prof. Friedman, what did you consider the right answer? Were your students expected to caution Mr. Pennyworth against self-help of this sort? To point out that non-legal remedies (as opposed to illegal ones) are sometimes available and might be more advantageous to pursue? Both? Neither?

        This sounds like a class I might have taken, had it been offered by my law school at a time I could take it.

  5. Jamas Enright

    Definitely amusing, and clearly I will never go anywhere near a law exam… however, the use of Felicity Smoak says that he is using the TV series, and who exactly is running Queen Consilidated changes over the course of the series… and I can’t remember where’s it left at the end of season 2… (and I could speculate, but spoilers!) So not sure how to answer that part…

    • Jamas Enright

      In many ways, that’s an open question for this blog to possibly address!

      • James Pollock

        The problem is that the show is not particularly clear (and quite possibly incorrect.)

        They had some boardroom maneuvering somehow not only leave the Queen family out of control, but also broke.

        The way I followed is that given the temporary control Oliver handed over, she called a board meeting, showed the board that she’d been doing the work all along, covering for Oliver, and they fired him and installed her as chief executive. That would seem to be what they were going from (she’s taken his company away) but… then they act as if losing control somehow emptied their bank accounts and drained away their 50-ish percent stake in the company. I just don’t see how that part happened.

        Of course, anyone who took BA II can discuss any of the options Oliver has for retaking control of the company (and fans of the TV show can include “have your bodyguard shoot her”.)

    • While Felicity was popularized in the Arrow TV series, I don’t think it’s reasonable to conclude that this is based on that canon. Two major opposing facts:

      The city is called Star City rather than Starling City here.

      Roy has never worked at Queen Consolidated in the TV series, and certainly would not be qualified for a high-level position.

      I find it more likely that the universe used is simply an invented one, drawing inspirations both from the comics and their popular spin-offs, and that we can simply assume Bruce, Oliver, and Ted are in fact in charge of their respective companies.

      • I struggled with the Star City/Starling City question. But, I’m a Felicity fan and could not leave her out. Other than that, I tried to draw from books, not TV. As someone suggested, I did not stick to cannon. Rather, I pulled characters and locations as needed to get the fact pattern right and to amuse myself.

  6. Alfred’s name is right there in the first paragraph after the instructions. But wow, this must be one of the most interesting perks of any career.

  7. Christopher L. Bennett

    This should totally be the plot of the next Batman movie.

    • What Christopher L. Bennett said. And DC should hire this law professor.

    • James Pollock

      I’m not sure two-plus hours of discussion of WTO wrangling is what the average Batman fan is looking for in a Batman movie.

      I just wish they’d do a movie series that was long enough to really reach into the Rogue’s Gallery, instead of doing three movies with the Joker, the Catwoman, and the Penguin and then rebooting back to Bruce Wayne as a child again. The Nolan films did a better job of this (using the Scarecrow as the first film’s villain, Joker and Two-Face in the second, Bane in the third with Ra’s Al-Ghul as the overarching bad guy. But the animated series hit its peak re-working Mr. Freeze, a virtual nobody.

      If I had a few hundred million sitting around and a license, I’d do lower-budget films on a faster schedule, so I could have a new one out every year. Harry Potter fans stuck around for 8 films and would pay well for a 9th. I bet a studio could do 7-9 Batman films in an annual series and make a bunch of money.

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  9. I just keep reading “the CEO of Wayne Enterprises is considering other options involving independent acts of self-help.” and giggling.

    • Thanks. I was particularly happy with that bit as well. In case anyone is wondering, only one student of eight identified Bruce Wayne and Oliver Queen. I also got an email afterwards noting that Ted Kord/Blue Beatle is unfairly obscure.

  10. James Pollock

    “I also got an email afterwards noting that Ted Kord/Blue Beatle is unfairly obscure.”

    This is probably true. Blue Beetle was featured repeatedly in the “Brave and the Bold” cartoon series, but I still didn’t recognize the name (was this a different BB from the comics?).

    Also, unless I misremember, Blue Beetle was imported into the DC Universe from Charlton comics, so… yeah, unfair reference.

    • How can an optional question worth no extra credit be unfair?

      • James Pollock

        I didn’t say “it had an unfair effect on grades.”

        It could have provided a distraction for those who recognized the other names. “Better” names would have been the better known characters, probably running down the Justice League roster: Kent, Prince, Jordan.

        A non-comics equivalent might be naming your hypotheticals John, Paul, George… and Stu.

        Teachers have been naming hypotheticals after all sorts of inspirations for a very long time. I can remember Fred, Barney, Betty and Wilma; Carol, Marcia, Jan, Cindy and Alice; James, Ronald, George, and William.

    • He wasn’t that obscure–his role in Keith Giffen’s JLA opposite Booster Gold gave him a much higher profile.
      On the other hand, the current Blue Beetle has been Jaimie Reyes for a number of years now.

      • I don’t think Ted Kord is terribly obscure. The only reason he showed up in the exam was to provide a third company that could reasonably be making body armor. Jaimie Reyes, the current BB, did not help with that issue or I would have used him. After Wayne Enterprises and Queen Consolidated, I was running out of DCU companies. I was familiar with Kord, so I ran with it. I suppose I could have gone with S.T.A.R. Labs or whatever company Michael Holt/Mr. Terrific runs (I’d have to look that one up). Maybe I should have said it was a special project of Ferris Aircraft to let Hal Jordan make an appearance.

      • James Pollock

        If you needed a third arms manufacturer, I’d go with Luthor as the third-most-obvious choice..

    • “This is probably true. Blue Beetle was featured repeatedly in the “Brave and the Bold” cartoon series, but I still didn’t recognize the name (was this a different BB from the comics?). ”

      Yes, it was. BatB used Jaime Reyes, the third Blue Beetle. Ted Kord is the second, though he is probably the best known.

      “Also, unless I misremember, Blue Beetle was imported into the DC Universe from Charlton comics, so… yeah, unfair reference.”

      No it isn’t. Several DC characters were imported from Charlton and other comics, and for Blue Beetle this happened back in the 80’s. Captain Atom is another import. Captain Marvel is another DC character who was imported, debuting in the 1939 but not published by DC until the 70’s.

      If Ted Kord is unfair, its only because he’s not well known, not because he is imported.

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  13. It is implausible that LexCorp doesn’t have 5% or more of the marketshare.

    • I can’t see Wayne Enterprises licensing the patent to Luthorcorp. And Luthor would develop his own armor, anyway. He’d never use someone else’s. On the other hand, it’s easy to see Luthor outsourcing production to another county. I don’t know how that would affect the overall question — I read it, but I’m not sure if the Kord connection materially affects the outcome.

  14. The point about Kord shifting production to Markovia is potentially important. If Kord Industries is no longer considered part of the U.S. industry producing the like product, it might be excluded from the analysis of whether the U.S. industry has been injured by imports. Regarding Luthor, for some reason, I was trying to stay closer to Gotham. Queen and Kord strike me as closer to the gritty version of Gotham I was trying to invoke. Once you mention Luthor, Superman can’t be far behind, with his generally (but not always) sunny disposition. I was trying to avoid that. Maybe next year will focus on Metropolis.

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