Chapter 12 The Importance of Intellectual Property
1) Metroleap Media, Inc., places music lyrics on the Internet. The major hurdle that Metroleap
Media had to overcome to become a legitimate business was to:
A) find ways to protect its trademark
B) find ways to protect its trade secrets
C) obtain a copyright on its Web site
D) obtain a patent on the functionality of its Web site
E) develop a protocol for obtaining licensing agreements from the music industry
Answer: E
Rationale:
The primary challenge for Metroleap Media, Inc., which places music lyrics on the Internet,
would be obtaining licensing agreements from the music industry. This is because using
copyrighted lyrics without permission would infringe on the rights of the copyright holders.
Developing a protocol for obtaining these licensing agreements would be crucial for the
company to operate legally and avoid copyright infringement issues.
2) Which of the following is an example of intellectual property?
A) Microsoft's headquarters in Redmond, Washington
B) Nike's swoosh logo
C) the computer that you use
D) AirTran's fleet of planes
E) the trucks that deliver White Wave soymilk to grocery stores
Answer: B
Rationale:
Intellectual property refers to creations of the mind, such as inventions, literary and artistic
works, designs, symbols, names, and images used in commerce. Nike's swoosh logo is a clear
example of intellectual property, specifically a trademark, as it is a distinctive symbol used to
identify and distinguish Nike's products from others in the market.
3) Which of the following is not an example of intellectual property?
A) Proactiv's formula for acne medication
B) Google's trademark
C) the Internet domain name www.nytimes.com
D) Microsoft's Windows operating system
E) a computer mouse
Answer: E
Rationale:
Intellectual property includes intangible creations of the mind, such as inventions, designs, and
artistic works. A computer mouse, while a physical product, is not considered intellectual
property in the same way that a trademark, formula, or software would be.
4) Which of the following was not identified in the textbook as one of the common mistakes that
entrepreneurs make regarding intellectual property?
A) not fully recognizing the value of their intellectual property
B) not properly identifying all their intellectual property
C) not properly registering their Internet domain names
D) not using their intellectual property as part of their overall plan for success
E) not taking sufficient steps to protect their intellectual property
Answer: C
Rationale:
While registering Internet domain names is important for establishing an online presence, it is
not specifically related to intellectual property protection. The other options are common
mistakes entrepreneurs make regarding intellectual property, such as undervaluing it, failing to
identify all forms of IP, not integrating IP into their business strategy, and not adequately
protecting it.
5) There are two primary rules of thumb for deciding if intellectual property protection should be
pursued for a particular intellectual asset. First, a firm should determine if the intellectual
property in question is directly related to its competitive advantage. Second, a firm should
determine if its intellectual property:
A) is less than 20 years old
B) could be licensed to another company
C) has value in the marketplace
D) is something that was developed "in-house"
E) rightfully belongs to the firm or the employees who developed it
Answer: C
Rationale:
The second rule of thumb for deciding if intellectual property protection should be pursued is
whether the intellectual property has value in the marketplace. Intellectual property protection is
typically sought for assets that have commercial value and can be used to gain a competitive
advantage or generate revenue through licensing.
6) The What Went Wrong feature in Chapter 12 focuses on Dippin' Dots, a company that sells
ice cream snacks. Dippin' Dots lost the patent on its small beads of ice cream primarily because:
A) it failed to obtain permission from a patent holder that has "prior art" pertaining to the claims
in its patent
B) it had sold its ice cream product one year prior to applying for a patent
C) it filed its patent application incorrectly
D) its patent infringes on the patent of a competitor
E) it failed to renew its patent on time
Answer: B
Rationale:
Dippin' Dots lost the patent on its small beads of ice cream because it had sold its ice cream
product for more than one year prior to applying for a patent. In the United States, an invention
must be novel, and public disclosure or sale of the invention more than one year before filing a
patent application can invalidate the patent.
7) Which of the following are the four key forms of intellectual property protection?
A) patents, copyrights, trademarks, and trade secrets
B) discoveries, covenants, trademarks, patents
C) patents, official documents, copyrights, inventions
D) discoveries, Internet domain names, innovations, trademarks
E) convents, inventions, opportunities, and copyrights
Answer: A
Rationale:
The four key forms of intellectual property protection are patents, copyrights, trademarks, and
trade secrets. These forms of IP protection are essential for safeguarding different types of
intellectual assets, such as inventions, creative works, brands, and confidential information.
8) Which of the following is not one of the four key forms of intellectual property protection?
A) trade secrets
B) copyrights
C) trademarks
D) innovations
E) patents
Answer: D
Rationale:
"Innovations" is not one of the four key forms of intellectual property protection. The correct
forms are patents, copyrights, trademarks, and trade secrets, which encompass a wide range of
intellectual assets and their protection mechanisms.
9) A grant from the federal government conferring the rights to exclude others from making,
selling, or using an invention for a specific period of time is referred to as a(n):
A) trademark
B) copyright
C) idea secret
D) innovation
E) patent
Answer: E
Rationale:
A patent is a grant from the government that gives the holder the exclusive right to make, use,
and sell an invention for a specified period, typically 20 years from the filing date of the patent
application. This exclusive right allows the patent holder to exclude others from making, using,
selling, or importing the patented invention without permission.
10) Which form of intellectual property protection is the only one expressly mentioned in the
original articles of the U.S. Constitution?
A) assurances
B) patents
C) copyrights
D) trade secrets
E) trademarks
Answer: B
Rationale:
Patents are the only form of intellectual property protection expressly mentioned in the original
articles of the U.S. Constitution. Article I, Section 8, Clause 8 of the Constitution grants
Congress the power to promote the progress of science and useful arts by securing for limited
times to inventors the exclusive right to their discoveries.
11) The sole entity responsible for granting patents in the United States is the:
A) U.S. Patent and Trademark Office
B) Federal Patent, Copyright and Trademark Office
C) Securities and Exchange Commission
D) U.S. Departments of Patents
E) U.S. Treasury Department
Answer: A
Rationale:
The U.S. Patent and Trademark Office (USPTO) is the government agency responsible for
granting patents in the United States. It examines patent applications, determines whether an
invention is eligible for patent protection, and grants patents to inventors.
12) Since the first patent was granted, there have been over ________ patents granted in the
United States.
A) 500,000
B) 3 million
C) 5 million
D) 7 million
E) 9 million
Answer: D
Rationale:
Since the first patent was granted in the United States, there have been over 7 million patents
granted. This number reflects the vast amount of innovation and creativity that has been
protected through the patent system.
13) Which of the following selections correctly identifies the three types of patents?
A) manufacturing patents, process patents, and plant patents
B) usefulness patents, purpose patents, and genetic patents
C) explicit patents, implicit patents, and plant patents
D) utility patents, design patents, and plant patents
E) manufacturing patents, service patents, and other patents
Answer: D
Rationale:
The three types of patents are utility patents, design patents, and plant patents. Utility patents are
the most common and cover new and useful inventions. Design patents cover new, original, and
ornamental designs for manufactured products. Plant patents cover new and distinct plant
varieties.
14) ________ patents are the most common type of patent and cover what we generally think of
as new inventions.
A) Value
B) Product
C) Method
D) Utility
E) Design
Answer: D
Rationale:
Utility patents are the most common type of patent and cover what we generally think of as new
inventions. They protect the functional aspects of an invention, such as how it works or how it is
used.
15) There are three basic requirements for a patent to be granted. The subject of the patent
application must be:
A) useful, difficult to copy, and novel in relation to prior arts in the field
B) based on cutting-edge science or technology, not obvious to a person of ordinary skill in the
field, and rare
C) useful, novel in relation to prior arts in the field, and not obvious to a person of ordinary skill
in the field
D) rare, difficult to copy, and not obvious to a person of ordinary skill in the field
E) useful, scientific, and novel in relation to prior arts in the field
Answer: C
Rationale:
For a patent to be granted, the subject of the patent application must meet three basic
requirements: it must be useful, novel (new) in relation to prior art in the field, and non-obvious
to a person of ordinary skill in the field.
16) The term of a utility patent is:
A) 7 years from the date the patent is granted
B) 15 years from the date of the initial application
C) 15 years from the date the patent is granted
D) 20 years from the date of the initial application
E) 20 years from the date the patent is granted
Answer: D
Rationale:
The term of a utility patent is 20 years from the date of the original patent application. This
means that the patent holder has the exclusive rights to the invention for 20 years from the filing
date of the application.
17) Amazon.com's one-click ordering system, Priceline.com's "name-your-price" business model
and Netflix's method for allowing customers to set up a rental list of movies they want mailed to
them are examples of:
A) copyright extension patents
B) utility patents
C) business process protection patents
D) trademark extension patents
E) business method patents
Answer: E
Rationale:
These examples are all related to business methods or processes that have been patented. A
business method patent is a form of utility patent that covers a new and useful process, machine,
manufacture, or composition of matter related to conducting business.
18) ________ patents are the second most common type of patent and cover the invention of
new, original, and ornamental designs for manufactured products.
A) Aesthetic
B) Utility
C) Visual
D) Blueprint
E) Design
Answer: E
Rationale:
Design patents cover the invention of new, original, and ornamental designs for manufactured
products. While utility patents protect the functional aspects of an invention, design patents
protect the ornamental or aesthetic aspects.
19) A utility patent is good for ________ from the date of the original application, a design
patent is good for ________ from the date the patent is granted, and a plant patent is good for
________ from the date of the original application.
A) 14 years, 14 years, 20 years
B) 20 years, 20 years, 14 years
C) 20 years, 20 years, 20 years
D) 20 years, 14 years, 20 years
E) 14 years, 20 years, 14 years
Answer: D
Rationale:
A utility patent is valid for 20 years from the date of the original application, a design patent is
valid for 15 years from the date the patent is granted, and a plant patent is valid for 20 years from
the date of the original application.
20) ________ takes place when one party engages in the unauthorized use of another party's
patent.
A) Patent breach
B) Patent encroachment
C) Patent violation
D) Patent infraction
E) Patent infringement
Answer: E
Rationale:
Patent infringement occurs when one party engages in the unauthorized use, manufacture, sale,
or importation of a patented invention. This violates the exclusive rights granted to the patent
holder by the patent.
21) The Partnering for Success feature in Chapter 12 starts by talking about Gary Schwartzberg,
who, along with a partner, developed a new type of bagel dubbed the "Begeler," which was
eventually licensed to Kraft. According to the feature, entrepreneurs and inventors, like Gary
Schwartzberg, are finding that large consumer products companies are:
A) ambivalent about what they have to offer
B) increasingly interested in what they have to offer for new products, but are ambivalent about
services
C) increasingly interested in what they have to offer
D) increasingly interested in what they have to offer for new services, but are ambivalent about
products
E) increasingly disinterested in what they have to offer
Answer: C
Rationale:
Large consumer products companies are increasingly interested in what entrepreneurs and
inventors have to offer. This interest is driven by the need for new and innovative products to
stay competitive in the market. Many large companies are actively seeking partnerships and
licensing opportunities with smaller firms and individual inventors to access new ideas and
technologies.
22) There are four types of trademarks:
A) trademarks, service marks, collective marks, and certification marks
B) examination marks, trademarks, combined marks, and service marks
C) shared marks, collective marks, mutual marks, and trademarks
D) service marks, cooperative market, trademarks, and shared marks
E) trademarks, collective marks, documentation marks, and combined marks
Answer: A
Rationale:
The four types of trademarks are trademarks, service marks, collective marks, and certification
marks. Each type serves a different purpose in identifying and distinguishing the source of goods
or services in the marketplace.
23) Which of the following is not a type of trademark?
A) trademark
B) certification mark
C) documentation mark
D) collective mark
E) service mark
Answer: C
Rationale:
A documentation mark is not a recognized type of trademark. The other options—trademark,
certification mark, collective mark, and service mark—are all types of marks used to identify and
distinguish goods or services in commerce.
24) Apple for computers, Zeo for sleep aids, and Proactiv for acne medication are examples of:
A) certifications
B) copyrights
C) patents
D) trade secrets
E) trademarks
Answer: E
Rationale:
Apple, Zeo, and Proactiv are all examples of trademarks. Trademarks are used to identify and
distinguish the source of goods or services, and they can take the form of words, logos, symbols,
or a combination thereof.
25) ________ are similar to ordinary trademarks, but they are used to identify the services or
intangible activities of a business rather than a business's physical product.
A) Creative marks
B) Intangible marks
C) Examination marks
D) Service marks
E) Subtle marks
Answer: D
Rationale:
Service marks are used to identify and distinguish the services or intangible activities of a
business, rather than its physical products. They serve the same purpose as trademarks but apply
specifically to services.
26) ________ are trademarks or service marks used by the members of a cooperative,
association, or other collective group, including marks indicating membership in a union or
similar organization.
A) Collective marks
B) Share marks
C) Examination marks
D) Joint marks
E) Certification marks
Answer: A
Rationale:
Collective marks are trademarks or service marks used by members of a collective group to
identify their membership in the group. These marks indicate that the goods or services bearing
the mark meet certain standards or qualifications set by the group.
27) The Good Housekeeping Seal of Approval is an example of a(n):
A) collective mark
B) shared mark
C) service mark
D) certification mark
E) assessment mark
Answer: D
Rationale:
The Good Housekeeping Seal of Approval is a certification mark. It is used to indicate that
products have been tested and approved by the Good Housekeeping Institute, meeting their
standards of quality and performance.
28) Which of the following is an example of a certification mark?
A) ModCloth
B) International Franchise Association
C) Underwriter's Laboratories
D) Rotary International
E) 1-800-FREE-411
Answer: C
Rationale:
Underwriter's Laboratories (UL) is an example of a certification mark. UL certifies products,
particularly electrical devices and components, to ensure they meet safety and quality standards.
29) A trademark is renewable:
A) every 10 years, as long as the mark remains in use
B) indefinitely, regardless of whether the mark remains in use
C) every 20 years from the date of application for the trademark
D) every 3 years
E) every 33 years
Answer: A
Rationale:
A trademark is renewable every 10 years as long as the mark remains in use and the renewal
requirements are met. This renewal process allows trademark owners to maintain their exclusive
rights to use the mark in commerce.
30) Which of the following is not generally eligible for trademark protection?
A) trade dress
B) shapes
C) words
D) surnames
E) designs or logos
Answer: D
Rationale:
Surnames are generally not eligible for trademark protection unless they have acquired
distinctiveness through extensive use in commerce. Trade dress, shapes, words, and designs or
logos are all eligible for trademark protection if they meet the requirements for registration.
31) A trademark is registered with the:
A) U.S. Commerce Department
B) Federal Trade Commission
C) Securities and Exchange Commission
D) Federal Patent, Copyright, and Trademark Office
E) U.S. Patent and Trademark Office
Answer: E
Rationale:
Trademarks are registered with the U.S. Patent and Trademark Office (USPTO). The USPTO is
responsible for granting trademarks for goods and services based on specific criteria, including
distinctiveness and proper use in commerce.
32) A form of intellectual property protection that grants to the owner of a work of authorship
the legal right to determine how the work is used and to obtain the economic benefits from the
work is referred to as a(n):
A) assurance document
B) patent
C) trade secret
D) brand
E) copyright
Answer: E
Rationale:
Copyright is the form of intellectual property protection that grants the owner of a work of
authorship the exclusive legal right to control how the work is used and to obtain the economic
benefits from the work. Copyright protects original works of authorship fixed in a tangible
medium of expression, such as literary, musical, and artistic works.
33) Which of the following statements about copyrights is incorrect?
A) Businesses typically possess a treasure trove of copyrightable material.
B) A musical composition that is written down is copyrightable.
C) Copyrightable material may be in tangible or intangible form.
D) The 1976 Copyright Act governs copyright law in the United States.
E) A copyright is a form of intellectual property protection.
Answer: C
Rationale:
The incorrect statement is C. Copyrightable material must be in tangible form to be protected by
copyright law. Ideas, concepts, principles, or methods are not protected by copyright until they
are expressed in a tangible form.
34) Copyright law is governed by the:
A) U.S. Constitution
B) the 1946 Intellectual Property Act
C) the 1966 Trademark and Copyright Act
D) the 1955 Inventors and Writer's Protection Act
E) Copyright Revision Act of 1976
Answer: E
Rationale:
Copyright law in the United States is primarily governed by the Copyright Revision Act of 1976,
which has been amended several times to address changes in technology and international
treaties.
35) If a local band wrote their own rendition of a Celine Dion song, the band could try to
copyright their rendition of the song as a(n):
A) imitative work
B) offshoot work
C) derivative work
D) subsequent work
E) supplemental work
Answer: C
Rationale:
A derivative work is a work based on or derived from one or more already existing works. In this
case, the band's rendition of the Celine Dion song would be considered a derivative work and
could be protected by copyright if it meets the originality and creativity requirements.
36) Copyright law protects any work of authorship:
A) 90 days after it is approved by the U.S. Copyright Office
B) one year after it assumes a tangible form
C) the moment it assumes a tangible form
D) as soon as it is approved by the U.S. Copyright Office
E) 30 days after it assumes a tangible form
Answer: C
Rationale:
Copyright protection exists automatically from the moment a work is created and fixed in a
tangible form that is perceptible either directly or with the aid of a machine or device.
Registration with the U.S. Copyright Office is not required for copyright protection, but it does
provide certain legal benefits.
37) Which of the following symbols is the copyright bug?
A) ç
B) €
C) ¢
D) ©
E) ™
Answer: D
Rationale:
The symbol © is the copyright symbol, commonly known as the "copyright bug." It is used to
indicate that a work is protected by copyright.
38) According to current regulations, any copyrightable work created on or after January 1,
1978, is protected by copyright law for the life of the author plus:
A) 28.5 years
B) 101 years
C) 40 years
D) 55 years
E) 70 years
Answer: E
Rationale:
Copyright protection for works created on or after January 1, 1978, lasts for the life of the author
plus 70 years. This extended term was established by the Copyright Term Extension Act of 1998.
39) The main exclusion from copyright laws is that copyright laws cannot protect:
A) ideas
B) dramatic works
C) computer software
D) musical compositions
E) literary works
Answer: A
Rationale:
Copyright protects the expression of ideas, not the ideas themselves. Copyright law does not
protect facts, ideas, systems, or methods of operation, but rather the way these things are
expressed in a tangible form.
40) ________ occurs when one work derives from another or is an exact copy or shows
substantial similarity to the original work.
A) Copyright infringement
B) Copyright violation
C) Copyright intrusion
D) Copyright breach
E) Copyright duplication
Answer: A
Rationale:
Copyright infringement occurs when one work derives from another or is an exact copy or shows
substantial similarity to the original work without the authorization or permission of the
copyright owner.
41) A company's customer list is most commonly protected under ________ regulations.
A) patent
B) copyright
C) trade secret
D) trademark
E) collective mark
Answer: C
Rationale:
A customer list is typically protected as a trade secret. Trade secret regulations protect any
formula, pattern, physical device, idea, process, or other information that provides the owner
with a competitive advantage in the marketplace and is kept confidential.
42) A ________ is any formula, pattern, physical device, idea, process, or other information that
provides the owner of the information with a competitive advantage in the marketplace.
A) patent
B) copyright
C) trademark
D) trade secret
E) certification mark
Answer: D
Rationale:
A trade secret is any formula, pattern, physical device, idea, process, or other information that
provides the owner with a competitive advantage in the marketplace and is kept confidential.
Trade secrets are protected under trade secret laws.
43) ________ include marketing plans, product formulas, financial forecasts, employee rosters,
logs of sales calls, and laboratory notebooks.
A) Trade secrets
B) Trademarks
C) Collective marks
D) Patents
E) Copyrights
Answer: A
Rationale:
Trade secrets include any information that is not generally known and provides a competitive
advantage to the owner. This can include a wide range of information such as marketing plans,
product formulas, financial forecasts, and more.
44) Which of the following items would typically be protected by a form of intellectual property
protection other than trade secret statutes?
A) financial forecast
B) product formula
C) a company's tagline
D) logs of sales calls
E) employee roster
Answer: C
Rationale:
A company's tagline would typically be protected by trademark law, not trade secret law.
Trademarks protect words, phrases, symbols, or designs that identify and distinguish the source
of goods or services.
45) The federal Economic Espionage Act, passed in 1996, criminalizes:
A) copyright infringement
B) utility patent violations
C) trademark violations
D) design patent violations
E) the theft of trade secrets
Answer: E
Rationale:
The Economic Espionage Act criminalizes the theft of trade secrets, including both industrial
espionage by foreign governments and economic espionage by commercial entities.
46) The ________, which was drafted in 1979 by a special commission, attempted to set
nationwide standards for trade secret legislation.
A) Intangible Assets Protection Act
B) Fairness in Intellectual Property Act
C) Uniform Trade Secrets Act
D) Trademark & Copyright Act
E) Economic Espionage Act
Answer: C
Rationale:
The Uniform Trade Secrets Act (UTSA), drafted in 1979 by a special commission, attempted to
set nationwide standards for trade secret legislation. Many states have adopted some form of the
UTSA to govern trade secret law within their jurisdiction.
47) According to the textbook, trade secret disputes arise most frequently when:
A) one firm alleges that it can legally use another firm's trade secrets because they were
"voluntarily" disclosed
B) an employee leaves a firm to join a competitor and is accused of taking confidential
information with him or her
C) one firm claims that another firm outright stole its trade secrets
D) one firm claims that what another firm is claiming as a trade secret is common knowledge
E) one firm claims that it obtained another firm's trade secrets through legal means
Answer: B
Rationale:
Trade secret disputes often arise when an employee leaves a firm to join a competitor and is
accused of taking confidential information, such as customer lists, product formulas, or
marketing strategies, with them.
48) An ________ is conducted to determine the intellectual property a company owns.
A) intellectual property audit
B) intangible materials audit
C) academic property inventory
D) intellectual materials inventory
E) intangible property inventory
Answer: A
Rationale:
An intellectual property audit is conducted to identify, catalog, and evaluate the intellectual
property owned by a company. This includes patents, trademarks, copyrights, and trade secrets.
49) Consider the following questions: Are products under development that require patent
protection? Are we in compliance with the copyright license agreements into which we have
entered? Is anyone infringing on our trademarks? Are company trade secrets leaking out to
competitors? These are the types of questions that would be asked when conducting a(n):
A) intangible material examination
B) intellectual property inventory
C) intangible material inspection
D) patent, trademark, copyright, and trade secret review
E) intellectual property audit
Answer: E
Rationale:
An intellectual property audit involves asking questions about the company's intellectual
property assets, including patents, trademarks, copyrights, and trade secrets, to assess their value,
protection, and compliance with relevant laws and agreements.
50) There are two primary reasons to conduct an intellectual property audit. First, it is prudent
for a company to periodically determine whether its intellectual property is being properly
protected. The second reason for a company to conduct an intellectual property audit is to:
A) remain prepared for a Security & Exchange Commission spot inspection
B) remain prepared to justify its value in the event of a merger or acquisition
C) remain prepared for an initial public offering
D) update the value of its intellectual property on its balance sheet
E) make sure no intellectual property has been stolen
Answer: B
Rationale:
One of the primary reasons for a company to conduct an intellectual property audit is to remain
prepared to justify the value of its intellectual property in the event of a merger or acquisition.
Understanding the value and protection of intellectual property can be crucial in negotiations and
due diligence processes.
51) Intellectual property is any product of human intellect that is intangible but has value in the
marketplace.
Answer: True
Rationale:
Intellectual property refers to creations of the mind, such as inventions, literary and artistic
works, designs, and symbols, that have value and are protected by laws like patents, copyrights,
and trademarks.
52) Patents, trademarks, copyrights, and licenses are the four key forms of intellectual property.
Answer: False
Rationale:
While patents, trademarks, and copyrights are key forms of intellectual property, licenses are not
a form of intellectual property but rather a legal agreement granting permission to use intellectual
property owned by someone else.
53) A patent is a grant from the federal government conferring the rights to exclude others from
making, selling, or using an invention for the term of the trademark.
Answer: True
Rationale:
A patent is indeed a grant from the government conferring the rights to exclude others from
making, selling, or using an invention for a specific period, typically 20 years from the filing
date of the patent application.
54) The average time for the approval of a patent is 19 months.
Answer: False
Rationale:
The average time for the approval of a patent can vary significantly depending on the complexity
of the invention, the backlog at the patent office, and other factors. It can often take several years
for a patent to be approved.
55) The owner of a patent is granted a legal monopoly for an unlimited period of time.
Answer: False
Rationale:
While a patent grants the owner exclusive rights to the invention for a limited period (typically
20 years from the filing date), it does not provide a legal monopoly for an unlimited period of
time.
56) A utility patent can be obtained for a new product or process or the "idea" for a new product
or process.
Answer: False
Rationale:
A utility patent can be obtained for a new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof. It does not protect ideas or
concepts without a practical application.
57) Utility patents are the most common type of patent and cover what we generally think of as
new inventions.
Answer: True
Rationale:
Utility patents are indeed the most common type of patent and cover new and useful inventions,
processes, machines, or compositions of matter.
58) A trademark is a word, name, symbol, or device used to identify the source or origin of
products or services and to distinguish those products or services from others.
Answer: True
Rationale:
A trademark is a distinctive sign or indicator used to identify and distinguish the goods or
services of one company from those of others. It can be a word, name, symbol, device, or
combination thereof.
59) Certification marks are similar to ordinary trademarks, but they are used to identify the
services or intangible activities of a business rather than a business's physical product.
Answer: False
Rationale:
Certification marks are used to indicate that goods or services meet certain standards or
qualifications set by the certifying organization. They are not used to identify the services or
intangible activities of a business.
60) Combinations of numbers and letters, such as 3M and 1-800-FREE-411, cannot be
trademarked.
Answer: False
Rationale:
Combinations of numbers and letters can be trademarked if they are used to identify and
distinguish the source of goods or services. Examples include brands like 3M and 1-800-FREE411, which have been successfully trademarked.
61) Trademark law falls under the Lanham Act, which passed in 1946.
Answer: True
Rationale:
The Lanham Act, also known as the Trademark Act of 1946, is the primary federal statute that
governs trademarks, service marks, and unfair competition in the United States.
62) A trademark consisting primarily of a surname, such as Jones or Smith, is typically not
protectable.
Answer: True
Rationale:
In general, a trademark consisting primarily of a surname is not considered inherently distinctive
and may not be protectable unless it has acquired secondary meaning through use in commerce.
63) A copyright is a form of intellectual property protection that grants to the owner of a work of
authorship the legal right to determine how the work is used and to obtain the economic benefits
from the work.
Answer: True
Rationale:
Copyright protection grants the owner of a work the exclusive rights to reproduce, distribute,
perform, display, and create derivative works based on the original work.
64) The 1976 Copyright Revision Act governs copyright law in the United States.
Answer: True
Rationale:
The Copyright Act of 1976, which was a comprehensive revision of the U.S. copyright law,
governs copyright protection in the United States.
65) Computer software is not covered by copyright law.
Answer: False
Rationale:
Computer software is eligible for copyright protection as a form of literary work. Copyright
protects the expression of ideas in software code, but not the underlying ideas, systems, or
algorithms.
66) Copyright infringement occurs when one work derives from another or is an exact copy.
Answer: True
Rationale:
Copyright infringement occurs when someone violates the exclusive rights of the copyright
owner, such as by reproducing, distributing, performing, or displaying the copyrighted work
without permission.
67) A trade secret is any formula, pattern, physical device, idea, process, or other information
that provides the owner of the information with a competitive advantage in the marketplace.
Answer: True
Rationale:
A trade secret is confidential information that provides a business with a competitive advantage.
Trade secrets are not disclosed to the public and are protected by law.
68) The federal Economic Espionage Act, passed in 1996, criminalizes the theft of trade secrets.
Answer: True
Rationale:
The Economic Espionage Act of 1996 criminalizes the theft or misappropriation of trade secrets
for the benefit of a foreign government, instrumentality, or agent.
69) Trade secret disputes arise most frequently when one firm alleges that a trade secret claimed
by another firm is common knowledge, and can therefore be used by anyone.
Answer: False
Rationale:
Trade secret disputes often arise when one firm accuses another of misappropriating or
improperly using its trade secrets, such as when an employee leaves a company and takes
confidential information to a competitor.
70) An intellectual property audit is conducted to determine the intellectual property a company
owns.
Answer: True
Rationale:
An intellectual property audit is a systematic review of a company's intellectual property assets,
including patents, trademarks, copyrights, and trade secrets, to determine their value and ensure
they are properly protected.
71) What is intellectual property? Why is it called "intellectual" property? Why is intellectual
property such an important issue for entrepreneurial firms?
Answer: Intellectual property is any product of human intellect that is intangible but has value in
the marketplace. It is called "intellectual" property because it is the product of human
imagination, creativity, and inventiveness. Traditionally, businesses have thought of their
physical assets, such as land, buildings, and equipment, as their most important assets.
Increasingly, however, a firm's intellectual assets, which include inventions, trademarks, brands,
and methods of doing business, are their most valuable assets. Intellectual property is particularly
important to entrepreneurial firms, because many firms begin with an idea (based on an
invention or a new method for doing business), and their idea represents their most valuable
assets (and source of competitive advantage). It is nearly impossible for an entrepreneurial firm
to beat an established firm based on physical assets. Entrepreneurial firms, however, can
"outthink" established firms, which involves intellectual assets.
72) What are the two primary rules of thumb for determining whether intellectual property
protection should be pursued for a particular intellectual asset?
Answer: First, a firm should determine whether the intellectual property in question is directly
related to its competitive advantage. Second, a firm should determine whether the item has
independent value in the marketplace. If either or both of these conditions exist, intellectual
property protection for an asset should be strongly considered.
73) Identify and briefly describe the three types of patents.
Answer: The three types of patents are utility patents, design patents, and plant patents.
Utility patents are the most common type of patent and cover what we generally think of as new
inventions. Patents in this category may be granted to anyone who "invents or discovers any new
and useful process, machine, manufacture, or composition of matter, or any new and useful
improvement thereof." Design patents are the second most common type of patent and cover the
invention of new, original, and ornamental designs for manufactured products. While a utility
patent protects the way an invention is used and works, a design patent protects the way it looks.
The third type of patent is plant patents. Plant patents protect new varieties of plants that can be
reproduced asexually. Such plants are reproduced by grafting or crossbreeding rather than by
planting seeds.
74) What is a trademark? Why are trademarks important?
Answer: A trademark is any word, name, symbol, or device used to identify the source or origin
of products or services and to distinguish those products or services from others. All businesses
want to be recognized by their potential clientele and use their names and logos to enhance their
visibility. Trademarks also provide consumers with information. For example, consumers know
what to expect when they see a Starbucks coffee shop. Think of how confusing it would be if any
coffee shop could use the name Starbucks.
75) What is a copyright? What is protected by a copyright?
Answer: A copyright is a form of intellectual property protection that grants to the owner of a
work of authorship the legal right to determine how the work is used and to obtain the economic
benefits from the work. The work must be in tangible form, such as a book, operating manual, or
magazine article. If something is not in a tangible form, such as a speech that has never been
recorded or saved on a computer disk, copyright law does not protect it.
The primary categories of material that can be copyrighted are as follows:
- Literary works
- Musical compositions
- Computer software
- Dramatic works
- Pantomimes and choreographic works
- Pictorial, graphic, and sculptural works
Test Bank for Entrepreneurship: Successfully Launching New Ventures
Bruce R. Barringer, R. Duane Ireland
9780132555524, 9780131393905, 9780134729534, 9780133797190
