Chapter 6: Intellectual Property

TRUE/FALSE

1. The Fair Use Doctrine is a defense often employed by the defendant in trademark infringement cases.

ANS: F PTS: 1 REF: 261

2. Formulas, inventions, and processes are not considered forms of intellectual property.

ANS: F PTS: 1 REF: 237

3. Industrial espionage and competitive intelligence are essentially the same.

ANS: F PTS: 1 REF: 258

4. Copyright infringement is the act of stealing someone’s ideas or words and passing them off as one’s
own.

ANS: F PTS: 1 REF: 253 or 238

5. The Lanham Act (also known as the Trademark Act) defines the use of a trademark, the process for
obtaining a trademark, and the penalties associated with trademark infringement.

ANS: T PTS: 1 REF: 261

6. Software, video games, multimedia works, and Web pages can all be copyrighted.

ANS: T PTS: 1 REF: 239

7. Protecting computer software has proven to be difficult because it is has not been well categorized
under the law.

ANS: T PTS: 1 REF: 237

8. The fair use doctrine allows portions of patented materials to be used with permission under certain
circumstances.

ANS: F PTS: 1 REF: 239

9. Two software manufacturers could conceivably develop separate programs that perform the same
functions in a nearly identical manner without infringing the other’s copyright.

ANS: T PTS: 1 REF: 239-240

10. The PRO-IP Act of 2008 increased trademark and copyright enforcement, and substantially increased
penalties for infringement.

ANS: T PTS: 1 REF: 240

11. Copyright law protects authored works such as art, books, and film.
 ANS: T PTS: 1 REF: 238-239

12. The World Trade Organization developed the Agreement on Trade-Related Aspects of Intellectual
Property Rights to establish the minimum levels of protection that each government must provide to
the intellectual property of all WTO members.

ANS: T PTS: 1 REF: 241

13. The Digital Millennium Copyright Act made it an offense to circumvent a technical protection of
copyrighted material.

ANS: T PTS: 1 REF: 242

14. A trademark permits its owner to exclude the public from making, using, or selling a protected
invention, and allows for legal action against violators.

ANS: F PTS: 1 REF: 261

15. A few of the larger software companies have cross-licensing agreements in which each party agrees
not to sue the other over trademark infringements.

ANS: F PTS: 1 REF: 248

16. Over 100,000 patents have been applied for and granted within the United States each year since 2002.

ANS: T PTS: 1 REF: 245

17. Copyright law guarantees developers the rights to their works for a certain amount of time. Over the
years, the term of copyright has been extended several times from its original limit of 25 years to 35
years.

ANS: F PTS: 1 REF: 238

18. A trademark is business information that represents something of economic value, has required effort
or cost to develop, has some degree of uniqueness or novelty, is generally unknown to the public, and
is kept confidential.

ANS: F PTS: 1 REF: 249 or 261

19. The WIPO Copyright Treaty of 1996 eliminated many of the original copyright protections for
electronic media.

ANS: F PTS: 1 REF: 242

20. A copyright is the exclusive right to distribute, display, perform, or reproduce an original work in
copies or to prepare derivative works based on the work. The author may not grant this exclusive right
to others.

ANS: F PTS: 1 REF: 238

21. Because organizations can risk losing trade secrets when key employees leave, they often try to
prohibit employees from revealing secrets by adding nondisclosure clauses to employment contracts.

ANS: T PTS: 1 REF: 251

 22. Reverse engineering can only be applied to computer hardware, not computer software.

ANS: F PTS: 1 REF: 255

23. Software cannot be patented.

ANS: F PTS: 1 REF: 247

24. Open source code is any program whose source code is made available for use or modification, as
users or other developers see fit.

ANS: T PTS: 1 REF: 256

25. Art, architecture, graphics, and sculptures cannot be copyrighted.

ANS: F PTS: 1 REF: 238-239

26. Competitive intelligence involves the gathering and analysis of the trade secrets of your competitors.

ANS: F PTS: 1 REF: 258

27. Competitive intelligence analysts must be authorized to take unethical or illegal actions in the normal
course of their job.

ANS: F PTS: 1 REF: 259

28. A patent demon is a firm that acquires patents with no intention of manufacturing anything, instead
licensing the patents to others.

ANS: F PTS: 1 REF: 248

29. Cybersquatters are individuals who registered domain names for famous trademarks or company
names to which they had no connection.

ANS: T PTS: 1 REF: 262

30. Only a small amount of open source code is available for use and few organizations use open source
code.

ANS: F PTS: 1 REF: 257

MULTIPLE CHOICE

1. In 1995, the term for a U.S. patent was modified from 17 years from issuance to ____ years from
filing.
a. 15 c. 25
b. 20 d. 30
ANS: B PTS: 1 REF: 249

2. These objects are protected under patent law: ____.

a. art and film
 b. information critical to an organization’s success
c. books and movies
d. inventions
ANS: D PTS: 1 REF: 245

3. Some software experts think that too many software patents are being granted, inhibiting new software
development. For example, ____ obtained a patent for “one-click shopping,” based on the use of a
shopping cart purchase system for electronic commerce.
a. eBay c. Amazon.com
b. Dell d. Microsoft
ANS: C PTS: 1 REF: 247

4. The process of taking something apart in order to understand it, build a copy of it, or improve it is
called ____.
a. plagiarism c. reverse engineering
b. patent infringement d. decompiling
ANS: C PTS: 1 REF: 255

5. ____ refers to the existing body of knowledge available to a person of ordinary skill in the art.
a. Prior experience c. Body of practice
b. Known facts d. Prior art
ANS: D PTS: 1 REF: 245

6. The U.S. Supreme Court has ruled that there are ____ classes of items that cannot be patented.
a. two c. four
b. three d. five
ANS: B PTS: 1 REF: 246

7. Copyright and patent protection was established through ____.

a. the Bill of Rights c. the U.S. Constitution
b. the U.S. Federal Codes and Statutes d. various state laws
ANS: C PTS: 1 REF: 238

8. Patents are issued by the ____.

a. USPS c. FTC
b. USPTO d. SEC
ANS: B PTS: 1 REF: 245

9. The concept that an idea cannot be copyrighted but the ____ of an idea can be is key to understanding
copyright protection.
a. expression c. variation
b. summary d. illustration
ANS: A PTS: 1 REF: 239

10. The ____ enables a DVD player to decrypt, unscramble, and play back motion pictures on DVDs, but
not copy them.
a. Time Warner Cable system c. DeCSS
b. RIAA d. Content Scramble System
 ANS: D PTS: 1 REF: 243

11. The PRO-IP Act sends the message to intellectual property criminals everywhere that the U.S. will
____ to protect American innovation.
a. do very little c. negotiate with violators
b. use copyrights and patents d. go the extra mile
ANS: D PTS: 1 REF: 240

12. The Agreement on Trade-Related Aspects of Intellectual Property Rights, also know as the ____ ,
established the minimum levels of protection that each country must provide to all WTO members.
a. WTO c. WIPO
b. DMCA d. TRIPS
ANS: D PTS: 1 REF: 241

13. A(n) ____ can read the machine language of a software program and produce the source code.
a. compiler c. re-engineering device
b. open source decoder d. decompiler
ANS: D PTS: 1 REF: 255

14. A(n) ____ prohibits a departing employee from working for any competitors for a period of time.
a. noncompete agreement c. nondisclosure agreement
b. employee contract d. nonemployment agreement
ANS: D PTS: 1 REF: 251

15. Unlike traditional copyright law, the ____ does not govern copying; instead, it focuses on the
distribution of tools and software that can be used for copyright infringement as well as for legitimate
non-infringing use.
a. TRIPS Act c. WIPO Copyright Act
b. Digital Millennium Copyright Act d. PRO-IP Act
ANS: B PTS: 1 REF: 242-243

16. ____ allows portions of copyrighted materials to be used without permission under certain
circumstances.
a. Plagiarism c. Fair use doctrine
b. Copyright infringement d. Use of prior art
ANS: C PTS: 1 REF: 239

17. One of the tests that an invention must pass to be eligible for a patent is ____.
a. it must be a machine
b. it must be economical to produce
c. it must be capable of providing economic benefit
d. it must not be obvious to a person having ordinary skill in the same field
ANS: D PTS: 1 REF: 245-246

18. The ____ Act enacted in 1999, allows trademark owners to challenge foreign cybersquatters who
might otherwise be beyond the jurisdiction of U.S. courts.
a. Anticybersquatting Consumer Protection c. Economic Espionage
b. PRO-IP d. CAN-SPAM
 ANS: A PTS: 1 REF: 262

19. A legislator and former singer and entertainer who co-sponsored the Copyright Term Extension Act.
a. Frank Sinatra c. Dean Martin
b. Sonny Bono d. Sammy Davis Jr.
ANS: B PTS: 1 REF: 238

20. The ____ requires member governments to ensure that intellectual property rights can be enforced
under their laws and that penalties for infringement are tough enough to deter further violations.
a. TRIPS agreement c. PRO-IP Act
b. Digital Millennium Copyright Act d. WIPO Copyright Agreement
ANS: A PTS: 1 REF: 241

21. A patented process or invention that is surreptitiously included within a standard without being made
public until after the standard is broadly adopted is called a(n) ____.
a. patent troll c. patent standard
b. submarine patent d. patent farm
ANS: B PTS: 1 REF: 249

22. ____ can qualify for trade secret protection under the Uniform Trade Secrets Act.
a. Only computer hardware c. Both computer hardware and software
b. Only computer software d. Neither computer hardware and software
ANS: C PTS: 1 REF: 250

23. Firefox and OpenOffice are all examples of ____.

a. Web browsers
b. utility software
c. products developed through re-engineering
d. open source software
ANS: D PTS: 1 REF: 257

24. One key advantage that trade secret law has over the use of patents and copyrights in protecting
companies from losing control of their intellectual property is ____.
a. the time limitation for a trade secret is longer than for patents and copyrights
b. no royalties must be paid on trade secrets
c. trade secrets can become part of the prior art and be used to protect patents and copyrights
d. there is no need to file an application or disclose the trade secret to gain protection
ANS: D PTS: 1 REF: 249

25. A(n) ____ is a logo, package design, phrase, sound, or word that enables a consumer to differentiate
one company’s products from another’s.
a. trade secret c. trademark
b. watermark d. earmark
ANS: C PTS: 1 REF: 261

26. Cybersquatters ____.

a. frequently launch denial-of-service attacks against popular Web sites
b. register domain names for famous trademarks or company names to which they have no
connection
 c. remain connected to popular Web sites for extremely long periods of time making it
difficult for others to obtain service
d. employ phishing tactics using the domain names of popular Web sites
ANS: B PTS: 1 REF: 262

27. The courts have ruled in favor of using reverse engineering to enable ____.
a. avoid domination of a particular software market by a single manufacturer
b. creation of open source code
c. to circumvent restrictive trade secrets
d. interoperability
ANS: D PTS: 1 REF: 256

28. The basic premise behind open source code is that when many programmers can read, redistribute, and
modify a program’s code, the software ____.
a. becomes easier to use c. is more fun to maintain
b. costs less d. improves
ANS: D PTS: 1 REF: 256

29. Legally obtained information that is gathered to help a company gain an advantage over its rivals is
called ____.
a. prior art c. competitive intelligence
b. industrial espionage d. trade secrets
ANS: C PTS: 1 REF: 258

30. ____ occurs when someone copies a substantial and material part of another’s copyrighted work
without permission.
a. Plagiarism c. Reverse engineering
b. Copyright infringement d. Patent trolling
ANS: B PTS: 1 REF: 238

COMPLETION

1. The concept that an idea cannot be copyrighted but the ____________________ of an idea can be is
key to understanding copyright protection.

ANS: expression

PTS: 1 REF: 239

2. ____________________ is business information that represents something of economic value, has

required effort or cost to develop, has some degree of uniqueness or novelty, is generally unknown to
the public, and is kept confidential.

ANS: Trade secret

PTS: 1 REF: 249

3. ____________________ employs illegal means to obtain business information not available to the
general public.
 ANS: Industrial espionage

PTS: 1 REF: 258

4. A(n) ____________________ prohibits an employee from working for any competitors for a period of
time.

ANS: noncompete agreement

PTS: 1 REF: 252

5. According to the Copyright Term Extension Act signed into law in 1998, for works created after
January 1, 1978, copyright protection endures for the life of the author plus ____________________.

ANS:
70 years
seventy years

PTS: 1 REF: 238

6. The goal of the Uniform Trade Secrets Act is to bring ____________________ to all the states in the
area of trade secret law.

ANS: uniformity

PTS: 1 REF: 251

7. ____________________ law protects inventions.

ANS: Patent

PTS: 1 REF: 245

8. The WTO developed the ____________________ to establish minimum levels of protection that each
government must provide to the intellectual property of all WTO members.

ANS:
Agreement on Trade-Related Aspects of Intellectual Property Rights
TRIPS Agreement

PTS: 1 REF: 241

9. The ____________________ created the World Trade Organization.

ANS:
GATT
General Agreement on Tariffs and Trade
GATT (General Agreement on Tariffs and Trade)
General Agreement on Tariffs and Trade (GATT)

PTS: 1 REF: 240

10. Works that have not been fixed in a tangible form of expression and those that consist entirely of
common information that contains no original authorship are ____________________ for copyright
protection.

ANS: not eligible

PTS: 1 REF: 239

11. The ____________________ prohibits circumvention of any technical measures put in place to protect
copyrighted works.

ANS:
DMCA
Digital Millennium Copyright Act
DMCA (Digital Millennium Copyright Act)
Digital Millennium Copyright Act (DMCA)

PTS: 1 REF: 242

12. A devious patent holder might influence a standards organization to make use of its patented item
without revealing the existence of the patent. Later, the patent holder might demand royalties from all
parties that use the standard. This strategy is known as ____________________.

ANS: patent farming

PTS: 1 REF: 249

13. Unlike a copyright, a patent prevents ____________________ as well as copying.

ANS: independent creation

PTS: 1 REF: 245

14. Because organizations can risk losing trade secrets when key employees leave, they often try to
prohibit employees from revealing secrets by adding ____________________ to employment
contracts.

ANS: nondisclosure clauses

PTS: 1 REF: 251

15. The existing body of knowledge that is available to a person of ordinary skill in the art is called
____________________.

ANS: prior art

PTS: 1 REF: 245

16. Copyright and patent protection was established through the

__________________________________________________, which specifies that Congress shall
have the power “to promote the Progress of Science and useful Arts by securing for limited Times to
Authors and Inventors the exclusive Rights to their respective Writings and Discoveries.”

ANS:
 U.S. Constitution, Article I, section 8, clause 8
U.S. Constitution
Constitution

PTS: 1 REF: 238

17. Publishing a description of its innovation to establish an idea’s legal existence as prior art is called
____________________.

ANS: defensive publishing

PTS: 1 REF: 248

18. The Prioritizing Resources and Organization for Intellectual Property Act increased
____________________ and copyright enforcement.

ANS: trademark

PTS: 1 REF: 240

19. _________________________ is a violation of the rights secured by the owner of a copyright.

ANS: Copyright infringement

PTS: 1 REF: 238

20. The strategy of obtaining the rights to technologies that it might use in its products provides a
tremendous amount of development freedom to a large organization without the risk of
____________________.

ANS:
expensive litigation
litigation
lawsuits

PTS: 1 REF: 248

21. ____________________ law guarantees developers of works of music and books the rights to their
works for a certain amount of time.

ANS: Copyright

PTS: 1 REF: 238

22. A standard is a(n) ____________________ that has been approved by a recognized standards
organization or accepted as a de facto standard with a particular industry.

ANS: definition

PTS: 1 REF: 249

23. The ____________________ allows portions of copyrighted materials to be used without permission
under certain circumstances.
 ANS: fair use doctrine

PTS: 1 REF: 239

24. A(n) ____________________ can read the machine language of a software program and produce the
source code.

ANS: decompiler

PTS: 1 REF: 255

25. ____________________ is a term used to describe works of the mind such as—art, books, inventions,
music, and processes—that are distinct and owned or created by a single person or group.

ANS: Intellectual property

PTS: 1 REF: 237

ESSAY

1. What conditions must be met for a defendant to successfully use the nominative fair use defense?

ANS:
Nominative fair use is a defense often employed by the defendant in a trademark infringement case
where a defendant uses a plaintiff’s mark to identify the plaintiff’s products or services in conjunction
with its own products or services. To successfully use this defense, the defendant must show three
things:
1) that the plaintiff’s product or service cannot be readily identifiable without using the plaintiff’s
mark,
2) that it uses only as much of plaintiff’s mark as necessary to identify defendant’s product or service,
and
3) that the defendant does nothing with the plaintiff’s mark that suggests endorsement or sponsorship
by the plaintiff.

PTS: 1 REF: 261

2. State the background and purpose of the TRIPS Agreement.

ANS:
Many nations recognize that intellectual property has become increasingly important in world trade,
yet the extent of protection and enforcement of intellectual property rights vary around the world. As a
result, the WTO developed the Agreement on Trade-Related Aspects of Intellectual Property Rights,
also known as the TRIPS Agreement, to establish minimum levels of protection that each government
must provide to the intellectual property of all WTO members. This binding agreement requires
member governments to ensure that intellectual property rights can be enforced under their laws and
that penalties for infringement are tough enough to deter further violations.

PTS: 1 REF: 201

3. What is the Digital Millennium Copyright Act?

ANS:
 The Digital Millennium Copyright Act (DMCA) was signed into law in November 1998 and was
written in compliance with the global copyright protection treaty from WIPO. The DMCA added new
provisions, making it an offense to do the following:

1) Circumvent a technical protection

2) Develop and provide tools that allow others to access a technologically protected work

3) Manufacture, import, provide, or traffic in tools that enable others to circumvent protection and
copy a protected work

Violations of these provisions carry both civil and criminal penalties, including up to five years in
prison, a fine of up to $500,000 for each offense, or both. Unlike traditional copyright law, the statute
does not govern copying; instead, it focuses on the distribution of tools and software that can be used
for copyright infringement, as well as for legitimate non-infringing use. Although the DMCA explicitly
outlaws technologies that can defeat copyright protection devices, it does permit reverse engineering
for encryption, interoperability, and computer security research.

Several cases brought under the DMCA have dealt with the use of software to enable the copying of
DVD movies. For example, motion picture companies supported the development and worldwide
licensing of the Content Scramble System (CSS), which enables a DVD player or a computer drive to
decrypt, unscramble, and play back, but not copy, motion pictures on DVDs. However, a software
program called DeCSS can break the encryption code and enable users to copy DVDs.

PTS: 1 REF: 242-243

4. Identify what types of work are eligible to be copyrighted.

ANS:
The types of work that can be copyrighted include architecture, art, audiovisual works, choreography,
drama, graphics, literature, motion pictures, music, pantomimes, pictures, sculptures, sound
recordings, and other intellectual works, as described in Title 17 of the U.S. Code. To be eligible for a
copyright, a work must fall within one of the preceding categories, and it must be original. Copyright
law has proven to be extremely flexible in covering new technologies—software, video games,
multimedia works, and Web pages can all be protected. However, evaluating the originality of a work
is not always a straightforward process, and disagreements over whether or not a work is original
sometimes lead to litigation.

PTS: 1 REF: 198-199

5. Discuss the use of cross-licensing agreements by large software manufacturers and how their use can
place smaller companies at a disadvantage.

ANS:
Many large software companies have cross-licensing agreements in which each agrees not to sue the
other over patent infringements. For example, Microsoft has put into place over 600 agreements with
firms such as IBM, SAP, SAP, Hewlett-Packard, Cisco, and Apple. This strategy to obtain the rights to
technologies that it might use in its products provides a tremendous amount of development freedom
to Microsoft without risk of expensive litigation.
Major IT firms usually have little interest in cross-licensing with smaller firms, so small businesses
have no choice but to license patents if they use them. As a result, small businesses must pay an
additional cost from which many larger companies are exempt. Furthermore, small businesses are
generally unsuccessful in enforcing their patents against larger companies. Should a small business
bring a patent infringement suit against a large firm, it can overwhelm the small business with multiple
patent suits, whether they have merit or not. Considering that the average patent lawsuit costs $3 to
$10 million and takes two to three years to litigate, a small firm often simply cannot afford to fight;
instead, it usually settles and licenses its patents to the large company.

PTS: 1 REF: 248