The Legal Environment of Business, 8e (Kubasek)
Chapter 14 Intellectual Property
1) Which of the following is the best description of intellectual property?
A) physical property, such as land and housing
B) anything that a person thinks
C) property that is the result of mental creativity
D) property that is considered to be very fruitful
2) Which of the following is an incorrect statement regarding trademarks?
A) There has been substantial litigation over precisely what features can and cannot serve as a
trademark.
B) Phrases cannot be trademarked.
C) A sound has been found to constitute a trademark.
D) A scent has been found to constitute a trademark.
3) Which of the following is an incorrect statement regarding trademarks?
A) A color has been found to constitute a trademark.
B) A phrase can be trademarked.
C) A trademark used intrastate is protected under international intellectual property law.
D) To be protected in interstate use, a trademark must be registered with the U.S. Patent Office
under the Lanham Act of 1947.
4) A ________ is a distinctive mark used by a seller in conjunction with a product that tends to
cause the consumer to identify the product with the producer.
A) copyright
B) trademark
C) trade secret
D) patent
5) Which of the following can be protected by using trademark law?
A) a short story written on a word processor
B) a logo used to identify a business
C) the product formula used to manufacture a famous soft drink
D) the bottling machine used to fill bottles in a beverage company
6) ________ identify the producers as belonging to a larger group.
A) Product trademarks
B) Service marks
C) Collective marks
D) Certification marks
7) ________ are marks licensed by a group that has established certain criteria for use of the
mark.
A) Product trademarks
B) Service marks
C) Collective marks
D) Certification marks
8) Which of the following statements is true about trademarks?
A) The owner of an unregistered mark may recover damages from an infringer.
B) An injunction prohibiting an infringer from using a trademark is provided only if the mark is
registered.
C) A trademark that uses the name of a person cannot be registered with the Patent Office.
D) The Patent Office will not register a trademark that is generic, descriptive, or deceptive.
9) The U.S. Patent Office registers trademarks under the ________.
A) Baker Act of 1971
B) Lanham Act of 1947
C) Glass-Steagall Act of 1933
D) Public Information Act of 1966
10) Which of the following statements is true of registering a trademark with the Patent Office?
A) The Patent Office registers trademarks that are descriptive.
B) The Patent Office does not register trademarks that use the name of a person.
C) To register a trademark with the Patent Office, one must indicate when the final drawing of
the trademark was created and provide a list of competitors.
D) To register a trademark with the Patent Office, one must indicate when it was first used in
interstate commerce and how it is used.
11) Audiophile is a record store. It specializes in a particular genre of music. It includes a
distinctive sound in its advertisement campaigns. It wishes to protect this sound from being
copied. Under which of the following intellectual properties should Audiophile register its
distinctive sound?
A) patent
B) copyright
C) trade dress
D) trademark
12) BBQ Grills, Inc. produces barbecue grills. One of its grills is a copy of the physical
appearance of a grill sold by a rival company. Which of the following intellectual property
infringement has BBQ Grills committed?
A) trademark
B) trade dress
C) copyright
D) service mark
13) The purpose of trademark dilution laws is to ________.
A) prohibit the use of distinctive trademarks only when there is a possibility of consumer
confusion
B) prohibit the use of distinctive trademarks even without a showing of consumer confusion
C) allow the use of famous trademarks on completely unrelated goods
D) allow the use of famous trademarks on completely unrelated goods only if there is no
possibility of consumer confusion
14) Which of the following statements is true about trade dress?
A) The main focus of a case of trade-dress infringement is usually on whether the trade dress is
primarily functional.
B) One of the elements that a party must prove to succeed on a claim of trade-dress infringement
is that the alleged infringement creates a likelihood of confusion.
C) Trade dress is entitled to lesser protection than a trademark.
D) Trade dress must be registered to receive protection from the law.
15) Which of the following is not a required element for a successful trade dress claim?
A) The trade dress is primarily nonfunctional.
B) The trade dress adheres to industry standards.
C) The trade dress is inherently distinctive or has acquired a secondary meaning.
D) The alleged infringement creates a likelihood of confusion.
16) Which of the following is an incorrect statement regarding trade-dress infringement?
A) The main focus of a case of trade-dress infringement is usually whether there is the likelihood
of consumer confusion.
B) trade-dress violations occur over a narrow range of products.
C) A claim of trade-dress infringement is often accompanied by a claim of trademark
infringement.
D) Trade dress is entitled to the same protection as a trademark.
17) To succeed on a claim of trade-dress infringement, a plaintiff must prove that the ________.
A) trade dress is primarily nonfunctional
B) trade dress has not acquired a secondary meaning
C) alleged infringement does not create confusion
D) value of the trade dress has been diminished
18) Sparkle, Inc., a beverage company, uses a distinctly-shaped bottle to sell its beverages.
Customers identify its beverages by the shape of its bottle. One of its competitors designs a
similarly-shaped bottle for its product. Which of the following types of intellectual property
infringement has Sparkle, Inc.’s competitor committed?
A) trademark
B) trade dress
C) patent
D) trade secret
19) Paul is the owner of a newly-opened theme park. A rival theme park named Sunny Universe
has accused Paul of copying its theme and filed a trade-dress infringement suit against Paul.
Which of the following should Sunny Universe prove in order to win the case?
A) Sunny Universe’s theme has been registered with the Patent Office under the Lanham Act of
1947.
B) Sunny Universe’s theme is primarily functional.
C) The theme adopted by Sunny Universe is inherently distinct and has acquired a secondary
meaning.
D) The theme adopted by Paul’s theme park is unlikely to create confusion among customers.
20) Which of the following statements is true about the Federal Trademark Dilution Act of
1995?
A) The Federal Trademark Dilution Act of 1995 protects trademarks from unauthorized use on
competing goods only.
B) It extends protection only to identical marks.
C) It prohibits the use of “distinctive” or “famous” trademarks even without a showing of
consumer confusion.
D) It does not consider a trademark’s value to be diminished if it is used on unrelated goods.
21) Which of the following is an incorrect statement regarding the Federal Trademark Dilution
Act of 1995?
A) Trademark dilution occurs through blurring.
B) Trademark dilution occurs through tarnishment.
C) Blurring occurs when someone uses a mark in a way that causes the famous mark to be linked
with an inferior quality product or an unwholesome category of products.
D) Blurring occurs when the distinctiveness of the famous mark is reduced by its association
with a similar mark.
22) Collective marks are marks identifying the producers as belonging to a larger group.
23) To be protected in intrastate use, a trademark must be registered with the U.S. Patent Office.
24) Trademark dilution laws prohibit the use of “distinctive” or “famous” trademarks even
without a showing of consumer confusion.
25) Discuss the types of marks protected under the Lanham Act.
26) Explain the process of registering a trademark with the U.S. Patent Office.
27) What must a plaintiff prove to succeed on a claim of trade-dress infringement?
28) What were the consequences of the Federal Trademark Dilution Act of 1995 (FTDA)?
29) Which of the following can be protected using trade secret law?
A) a short story written on a word processor
B) a logo used to identify a business
C) the product formula used to manufacture a famous soft drink
D) a computer program that calculates compound interest
30) A ________ is a compilation of information that is not known to the public and gives a
businessperson an advantage over his or her competitors.
A) patent
B) utility model
C) Madrid system
D) trade secret
31) Which of the following statements is true about trade secrets?
A) A trade secret is a distinctive mark, word, design, picture, or arrangement used by the
producer of a product that tends to cause consumers to identify the product with the producer.
B) Inventions and designs are not considered as trade secrets.
C) A trade secret is protected by the common law as long as it is kept secret and comprises
elements not generally known in the trade.
D) If a trade secret is discovered by a competitor through reverse engineering, the competitor
may not profit from the discovery without paying royalties to the party holding the trade secret.
32) To enjoin a competitor from continuing the use of a trade secret, a plaintiff must prove that
the ________.
A) trade secret bestows a competitive advantage upon the defendant
B) plaintiff’s business has suffered losses due to its use by the defendant
C) defendant used the trade secret without the plaintiff’s permission
D) defendant used reverse engineering to discover the trade secret
33) Which of the following is an incorrect statement regarding the Economic Espionage Act?
A) Trade secrets are protected under the Economic Espionage Act.
B) Under Section 1832 of the Economic Espionage Act, an individual who misappropriates a
trade secret related to a product produced for interstate commerce, with the knowledge or intent
that the misappropriation will harm the owner of the trade secret, may be subject to a prison term
of up to 10 years.
C) An organization convicted under Section 1832 of the Economic Espionage Act may be fined
up to $1 million.
D) Under Section 1831 of the Economic Espionage Act, the misappropriation of trade secrets
with the knowledge that the secret will benefit a foreign power may lead to individual prison
sentences of up to 15 years per offense and fines for organizations of up to $10 million.
34) SparkLight, Inc. is a company that manufactures electric lights. It develops a new type of
electric lamp called FullBright. One of its competitors releases the same product into the market.
SparkLight, Inc. files a lawsuit against the competitor. Which of the following statements is true
of this scenario?
A) If FullBright is registered as a trade secret, SparkLight, Inc. should prove that the competitor
used the trade secret without its permission.
B) If FullBright is registered as a trade secret, SparkLight, Inc. can recover damages even if the
competitor discovered the trade secret by lawful means.
C) If a patent has been issued for FullBright, SparkLight, Inc.’s competitor is not guilty of
infringement if it reverse engineered FullBright.
D) If a patent has been issued for FullBright, SparkLight, Inc. can form a tying arrangement with
its competitor to receive royalties.
35) Going on public tours of plants and observing the use of trade secrets is considered an
unlawful method of discovering a trade secret.
36) A trade secret is a process, product, method of operation, or compilation of information that
gives a businessperson an advantage over his or her competitors.
37) Reverse engineering is a lawful means for discovering a trade secret.
38) Under common law, to enjoin a competitor from continuing the use of a trade secret, or to
recover damages caused by the use of the secret, a plaintiff must prove that the defendant
acquired it through unlawful means.
39) Under common law, to enjoin a competitor from continuing the use of a trade secret, or to
recover damages caused by the use of the secret, a plaintiff must prove that the defendant used
the trade secret without the plaintiff’s permission.
40) Trade secrets are not protected under the Economic Espionage Act.
41) What is a trade secret? What must a plaintiff prove under common law to enjoin a competitor
for continuing the use of a trade secret, or to recover damages caused by the use of the secret?
42) The holder of a(n) ________ has the exclusive right to produce, sell, and use a product,
process, invention, or machine for 20 years.
A) trade secret
B) industrial design right
C) patent
D) certification mark
43) A patent holder has a guarantee of an exclusive monopoly on the use of an invention for
________.
A) 50 years after the death of the original patent holder
B) 40 years after the death of the patent holder’s principal heir
C) 30 years
D) 20 years
44) Which of the following statements is true of patents?
A) The object of a patent can be one that a person of ordinary skill in the trade could have easily
discovered.
B) Courts generally grant patents for business methods.
C) A patent holder has the exclusive right to produce, sell, and use the patented object for the
duration of ten years.
D) No other party should have created or published the plans for the object of a patent.
45) A ________ arrangement occurs when the patent holder issues a license to use the patented
object only if the licensee agrees also to buy some non-patented product from the holder.
A) bonding
B) parallel
C) tying
D) congruent
46) ________ licensing occurs when two patent holders license each other to use their patents
only on the condition that neither licenses anyone else to use his or her patent without the other’s
consent.
A) Parallel
B) Congruent
C) Counter-
D) Cross-
47) Which of the following is an incorrect statement regarding a patent?
A) Once a patent is issued, it gives its holder the exclusive right to produce, sell, and use the
object of the patent in perpetuity.
B) The holder of a patent may license, or allow others to manufacture and sell, the patented
object.
C) In most cases, patents are licensed in exchange for the payment of royalties, a sum of money
paid for each use of the patented process.
D) The only restriction on the patent holder is that he or she may not use the patent for an illegal
purpose.
48) Which of the following is an incorrect statement regarding a patent?
A) Once a patent is issued, the holder may bring a patent-infringement suit in a federal court
against anyone who uses, sells, or manufactures the patented invention without the permission of
the patent holder.
B) Money damages are not recoverable in a patent-infringement suit, since an injunction
prohibits further use of the patented item by the infringer.
C) A successful patent-infringement suit may result in an injunction prohibiting further use of the
patented item by the infringer.
D) A common dilemma facing an inventor is whether to protect an invention through patent or
trade-secret law.
49) ________ is an illegal use of patents that occurs when a holder issues a license to another
individual to use a patented object only if the licensee agrees to buy some non-patented product
from the holder.
A) Cross-licensing
B) Full-line vending
C) Franchising
D) Tying arrangement
50) Which of the following best describes cross-licensing?
A) One patent holder licenses another individual to use a patented object, and in return, the
patent holder is given the right to hold any patents the licensee may have.
B) Two patent holders license each other to use their patents as long as both holders are allowed
to license to other parties.
C) Two different patent holders license a third individual to use a patented object, and that third
party uses the two patents in an authorized manner.
D) Two patent holders license each other to use their patents on the condition that neither
licenses anyone else to use his or her patent without the other’s consent.
51) Tying arrangements and cross-licensing are considered unlawful because both actions
________.
A) tend to reduce competition
B) inhibit licensees’ right to freedom of choice
C) limit patent holders’ freedom to license their patents
D) curb a consumer’s right to use the patented product
52) Bertha is willing to issue a license for her patented copy machine, but only if the licensee
agrees to buy all of the required copy paper from her office supply store during the term of the
license. Which of the following statements is true about Bertha’s plan?
A) This arrangement must be registered in court.
B) This arrangement constitutes an unlawful tying arrangement.
C) This arrangement constitutes unlawful cross-licensing.
D) This arrangement is legal and valid.