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Chapter 08
Intellectual Property and Unfair Competition
True / False Questions
1. The United States is a first–to–file nation.
True False
2. Even though no one else had developed an invention like that of the patent
applicant, the application will be denied if, at the time of the invention, the invention
would have been obvious to a person having ordinary skill in the area.
True False
3. A patent granted on September 2, 1997 will be valid for 17 years from that date
unless the patent was for an ornamental design.
True False
4. Patent infringement may occur even if the defendant’s use did not involve a literal
reproduction of the patented item.
True False
5. One may also challenge a patent’s validity without first being sued for infringement
by filing a declaratory judgment action that seeks a court ruling of invalidity.
True False
6. Unlike the inventions protected by patent law, copyrightable works need not be
novel.
True False
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
7. The general rule on the duration of a copyright is that it lasts for 50 years from the
time the copyrighted work was created and fixed in tangible form.
True False
8. The basic recovery for copyright infringement is only the owner’s actual damages.
True False
9. In a copyright infringement case, the successful plaintiff may recover either the
damages sustained by the plaintiff or the profits realized by the defendant, but not
both.
True False
10. There is no international copyright that automatically protects a copyrighted work

everywhere in the world.
True False
11. The World Intellectual Property Organization is a leading provider of conciliation for
bad faith action.
True False
12. Customer lists are not patentable but may be subject to trade secret protection.
True False
13. Under the Restatement’s fault requirement for injurious falsehood cases, the plaintiff
must prove that the defendant possessed ill will or spite motives toward the plaintiff.
True False
14. There is usually no liability of injurious falsehood for false statements that are made
negligently and in good faith.
True False
15. Although the Lanham Act is the federal trademark statute, Section 43(A) of the
statute may be invoked in various situations that do not involve trademark rights.
True False
Multiple Choice Questions
16. Which of the following is true of patents?
A. Patents fall under the jurisdiction of state laws.

B. Naturally occurring things are patentable.
C. Abstract ideas are patentable.
D. U.S. patent laws have changed since the mid-1990s.
17. The patent application must include a(n) _____ describing the invention with
sufficient detail and clarity to enable a person skilled in the relevant field to make
and use the invention.
A. specification
B. drawing
C. proposal
D. idea
18. How can a patentee transfer ownership of the patent to another party?
A. Specification
B. Assignment
C. Delegation
D. Infringement
19. How long is the legal temporary monopoly that present patent laws provide to the
inventor after the filing of the patent application?
A. Ten years.
B. Seventeen years.
C. Twenty years.
D. The lifetime of the inventor.
20. Patent _____ occurs when a defendant, without authorization from the patentee,
usurps the patentee’s rights by making, using, or selling the patented invention.
A. assignment
B. licensing
C. infringement
D. violation
21. What allows a defendant to be held liable for infringement even though the subject
matter he used contained elements that were not identical to those described in the
patentee’s claims of invention, but nonetheless, may be seen as equivalent to those
of the patented invention?
A. Literal infringement
B. Double jeopardy clause
C. Strict liability
D. Doctrine of equivalents
22. The damages recoverable in a patent infringement case cannot be less than:
A. court costs and interests.

B. reasonable royalty for the invention by the creator.
C. reasonable royalty for the use of the invention by the infringer.
D. three times the damages actually suffered, and to be decided by the court.
23. Which of the following distinguishes a copyright from a patent?
A. Copyrightable works need not be novel.

B. Copyright law gives exclusive rights to the creator of a work.
C. Copyright laws prevent others from using the work originally created by someone.
D. There are proper copyright laws in the U.S.
24. Which of the following is least likely to fall within the scope of what is protected by
the copyright on the work in which it appears?
A. The physical arrangement and ordering of pieces of factual information on pages

in a reference book.
B. The melody of a song.
C. The dialogue spoken by actors in a TV commercial.
D. The theme of a short story.
25. Which of the following is protected by copyright laws in computer programs?
A. Organization
B. Structure
C. Source code
D. Presentation of information
26. A copyright comes into existence upon the:
A. creation and fixing of a protected work.

B. creation of an idea.
C. creation of a protected work.
D. creation of a message.
27. Carlos has written a novel. He wants to protect his intellectual property with a
copyright. What must he do first?
A. He must apply to the U.S. Copyright Office for a copyright.

B. He must produce a certificate that he is the original author.
C. He must put the novel in some tangible form, like a hard copy or a compact disc.
D. He must certify that his story is original and novel.
28. Which of the following statements is true of copyright?
A. Copyrights and patents last forever.

B. There are different copyright rules for pre and post 1978 works.
C. Congress enacts copyright rules under the WIPO.
D. Copyrights for a work-for-hire last for 50 years.
29. According to the CTEA, the protection period for pre-1978 works is:
A. 50 years.
B. 65 years.
C. 75years.
D. 95 years.
30. Eleanor Rigby is an employee of Strawberry Fields Music, Inc., a firm that
specializes in the preparation of original music for possible use by advertisers in TV
and radio commercials. In January 2000, Rigby wrote a song that is protected by
copyright. She wrote the song as part of her regular duties as a Strawberry Fields
employee. Rigby and Strawberry Fields did not have a written agreement
concerning ownership of the copyright on the song. In February 2000, Rigby and
Strawberry Fields published the song by making large numbers of copies available
to the public. Statements A through D deal with ownership of the copyright on the
song and with the duration of the copyright. Which statement is legally accurate?
A. Rigby owns the copyright, which will expire 50 years after her death.
B. Rigby owns the copyright, which will expire in 2100.
C. Strawberry Fields owns the copyright, which will expire in 2070.
D. Strawberry Fields owns the copyright, which will expire 50 years after Rigby’s
death.
31. Which of the following characterizes copyright transfer?
A. Oral transfers are valid and recognized.

B. Ownership can be retained while licensing part of the work.
C. It leads to a transfer of ownership for that period of time.
D. It allows everything except the performance of the work.
32. What is the basic recovery for copyright infringement?
A. Only the owner’s actual damages

B. Only the attributable profits by the infringer
C. Owner’s actual damages and the attributable profits of the infringer
D. Punitive damages
33. What can the plaintiff usually elect to receive in lieu of the basic remedy in a case of
copyright infringement?
A. Punitive damages
B. Liquidated damages
C. Special damages
D. Statutory damages
34. Any word, name, symbol, device, or combination thereof used by a manufacturer or
seller to identify its products and distinguish them from the products of competitors is
called a:
A. copyright.
B. trademark.
C. signature.
D. patent.
35. Which type of marks is most likely to be registered for trademark protection?
A. Suggestive
B. Arbitrary
C. Descriptive
D. Generic
36. Which of the following characterizes a trademark?
A. It includes generic terms.

B. It is easier to transfer trademark rights compared to patent rights.
C. Federal registration of a trademark lasts for 10 years.
D. Descriptive marks are protected on the basis of their primary meaning.
37. Which of the following kinds of marks are denied placement on the Principal
Register?
A. Those which are geographically descriptive

B. Those containing fanciful names
C. Those consisting of surnames
D. Those consisting of government insignia
38. Which of the following characterizes the transfer of trademark rights?
A. It is much easier than transferring patent interests.

B. They may only be assigned to another person.
C. They cannot be sold unless it involves a sale of goods.
D. An uncontrolled license is generally not advised.
39. Goods lawfully bearing trademarks or using patents and copyrighted material but
entering the American markets without authorization are called _____.
A. counterfeit goods
B. Shanzai goods
C. black market goods
D. gray market goods
40. Most of the court’s attention in trademark infringement cases is concerned with the:
A. dispute over profits made by the defendants.

B. likelihood of confusion over the trademark.
C. time period of the trademark rights.
D. generic nature of the disputed trademark.
41. A trademark is considered to be abandoned when:
A. the owner fails to use it.

B. it acquires a generic meaning.
C. it has been obtained by fraud.
D. it is suggestive or arbitrary.
42. A trademark owner who wins an infringement suit may obtain a(n) _____ against
uses of the mark that are likely to cause confusion.
A. license
B. assignment
C. injunction
D. writ
43. Which of the following sometimes serves as an alternative to claims of trademark

infringement?
A. Trademark abandonment
B. Trademark dilution
C. Trademark protection
D. Trademark disparagement
44. Which of the following permits a firm to register a trademark in all its signatory
nations simultaneously by filing an application for registration in any signatory nation
and was joined by the United States in 2003?
A. The Berne Convention

B. The Paris Convention for the Protection of Industrial Property
C. The Madrid Protocol
D. The Kyoto Protocol
45. A trade secret differs from a patent, in that, a trade secret:
A. grants a monopoly to the creator.

B. stimulates creative activity.
C. is guarded by the creator.
D. is nonpublic by definition.
46. In order to qualify as a trade secret, it must:
A. be developed through research.

B. be known to the general public.
C. be the work of a company.
D. possess sufficient value or originality.
47. A firm claiming a trade secret must show that it:
A. took reasonable measures to ensure secrecy.

B. gave adequate compensation for the work.
C. has a license to produce the product.
D. has enough research to back the product.
48. Susan was hired by Teddy & Co. as a sales woman. However, the management on
seeing her intelligence and capabilities allowed her to use the office library and
research facility to create an inventive product. Susan now wants to patent the
product in her own name. This is not permissible under the:
A. doctrine of equivalents.
B. respondeat superior doctrine.
C. shop right doctrine.
D. doctrine of assignment.
49. What is the main aim of commercial torts?
A. To enable product creation for commercial purposes

B. To provide immunity in cases of fraud
C. To maintain standards of commercial morality
D. To ensure smoother commercial negotiations
50. In case of conflict of ownership between employee and employer over a trade
secret, the employer is normally held to be the owner when:
A. the employee agreed to divulge or use trade secrets.

B. other employees had no contribution in the work.
C. the employee was hired to do work related to it.
D. the employee was not given adequate compensation for the work.
51. Which of the following is also termed slander of title or a trade libel?
A. Defamation
B. Injurious falsehood
C. Copyright violation
D. Plagiarism
52. The _____ that the plaintiff is required to prove are his usual—and typically his
only—remedy in injurious falsehood cases.
A. special damages
B. statutory damages
C. compensatory damages
D. punitive damages
53. Which of the following is true of an injurious falsehood case?
A. It is the same as a tort of defamation.

B. The degree of fault required for liability is unclear.
C. Damages for emotional distress are not recoverable.
D. There is liability for false statements made in good faith.
54. In a lawsuit for intentional interference with contractual relations, the existing
contract includes:
A. void bargains
B. illegal contracts
C. contracts to marry
D. unenforceable contracts
55. In a case of intentional interference, a defendant generally escapes liability when his
contract interference:
A. was guided by public interest.

B. was defamatory in nature.
C. was regarding prospective competitive advantage.
D. was guided by a void bargain.
56. Which of the following characterizes section 43 (a) of the Lanham Act?
A. It is a consumer remedy.
B. It addresses everything except advertisements.
C. It is available only to commercial parties.
D. It creates a state law of unfair practices.
Essay Questions
57. What is the first-to-invent rule?
58. What is patent infringement?
59. Discuss one criticism of the first-to-file policy.
60. Why are noncompetition agreements disfavored by the law?
61. CW, Inc. publishes Consumer Watchdog, a magazine whose articles consist of the
writers’ personal experiences with and reactions to a variety of products. In the June
1997 issue of Consumer Watchdog, a review included this statement: “Fungus Co.’s
“Fungo” brand athlete’s foot powder doesn’t cut the mustard in comparison to most
athlete’s foot powders on the market--and I’ve tried them all, sports fans. Fungo fails
to attack athlete’s foot with enough force because the product doesn’t contain AF88,
the active ingredient in any decent athlete’s foot powder.” In fact, Fungo contains as
much AF88 as any other athlete’s foot powder on the market. Fungus Co. has filed
suit against the writer and CW on the theory that the above statements violated
section 43(a) of the Lanham Act. On these facts, should Fungus win the section
43(a) case? Why or why not?
Chapter 08 Intellectual Property and Unfair Competition Answer Key
True / False Questions
1. The United States is a first–to–file nation.
FALSE
The U.S. is a first-to-invent nation though proposals for first–to–file rule have been
introduced in Congress.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-01 List the categories of potentially patentable subject matter; and explain what is contemplated by each of
the requirements of patentability (novelty; nonobviousness; and utility).
Topic: Introduction
2. Even though no one else had developed an invention like that of the patent
applicant, the application will be denied if, at the time of the invention, the
invention would have been obvious to a person having ordinary skill in the area.
TRUE
The novelty requirement of patents contemplates that an invention be new and

truly different from what has gone before in the relevant field of inventive activity.
One subaspect of this is that there can be no patent if the invention would have
been obvious to a person having ordinary skill in the area.
AACSB: Ethics
Blooms: Remember
Difficulty: 2 Medium
Topic: Protection of Intellectual Property
3. A patent granted on September 2, 1997 will be valid for 17 years from that date
unless the patent was for an ornamental design.
FALSE
The Congress amended the patent law in the mid 1990s to extend the validity
from 17 to 20 years.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-02 Explain the rights a patent owner holds and the length of time those rights exist.
4. Patent infringement may occur even if the defendant’s use did not involve a literal
reproduction of the patented item.
TRUE
Infringement established under the doctrine of equivalents makes a defendant

liable for infringement even if the subject matter he used is not identical to the one
described in the patentee’s claims of invention.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-03 Explain what a patent owner must prove in order to establish that patent infringement occurred and list
the defenses to a patent infringement claim.
5. One may also challenge a patent’s validity without first being sued for
infringement by filing a declaratory judgment action that seeks a court ruling of
invalidity.
TRUE
One defense to a patent infringement is that a patent’s validity can be challenged

by filing a declaratory judgment action that seeks a court ruling of invalidity.
AACSB: Ethics
Blooms: Remember
6. Unlike the inventions protected by patent law, copyrightable works need not be
novel.
TRUE
Copyright laws try to balance the protection of original works against the
important factor of free movement of ideas, information, and commerce. Unlike
the inventions protected by patent law, copyrightable works need not be novel.
AACSB: Ethics
Blooms: Understand
Learning Objective: 08-04 List types of works that may carry copyright protection.
7. The general rule on the duration of a copyright is that it lasts for 50 years from the
time the copyrighted work was created and fixed in tangible form.
FALSE
The duration of the copyright lasts for the life of the creator plus 70 years.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-05 Explain how long copyrights last.
8. The basic recovery for copyright infringement is only the owner’s actual
damages.
FALSE
The basic recovery for copyright infringement is only the owner’s actual damages
plus the attributable profits received by the infringer.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-06 Explain the rights copyright owners hold and the relationship of those rights to claims for copyright
infringement.
9. In a copyright infringement case, the successful plaintiff may recover either the
damages sustained by the plaintiff or the profits realized by the defendant, but not
both.
FALSE
The basic recovery for copyright infringement is only the owner’s actual damages
plus the attributable profits received by the infringer.
AACSB: Ethics
Blooms: Remember
infringement.
10. There is no international copyright that automatically protects a copyrighted work
everywhere in the world.
TRUE
There is no provision for an international copyright.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-11 Identify and apply the elements of trademark dilution.
11. The World Intellectual Property Organization is a leading provider of conciliation

for bad faith action.
FALSE
Conciliation for “bad faith intent to profit” actions is provided by the

Anticybersquatting Consumer Protection Act, ACPA.
AACSB: Ethics
Blooms: Remember
12. Customer lists are not patentable but may be subject to trade secret protection.
TRUE
Customer lists are a part of trade secrets, which is defined as any secret formula,
pattern, process, program, device, method, technique, or compilation of
information used in the owner’s business, if it gives its owner an advantage over
competitors who do not know it or use it.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-12 Explain what a trade secret is and what the trade secret owner must prove in order to win a
misappropriation case.
Topic: Trade Secrets
13. Under the Restatement’s fault requirement for injurious falsehood cases, the
plaintiff must prove that the defendant possessed ill will or spite motives toward
the plaintiff.
FALSE
The plaintiff needs to prove that the defendant’s false statements caused him to
suffer special damages.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-13 List the elements that a plaintiff must prove in order to win an injurious falsehood case.
Topic: Commercial Torts
14. There is usually no liability of injurious falsehood for false statements that are
made negligently and in good faith.
TRUE
Defendants are protected from defamation laws in certain cases, such as, false
statements made in good faith.
AACSB: Ethics
Blooms: Remember
15. Although the Lanham Act is the federal trademark statute, Section 43(A) of the
statute may be invoked in various situations that do not involve trademark rights.
TRUE
Section 43 (a) of the Lanham Act creates civil liability for a wide range of false,
misleading, confusing, or deceptive representations made in connection with
goods or services, apart from problems related to trademark rights.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-15 Identify key issues on which courts focus on false advertising cases brought under Lanham Act § 43(a).
Topic: Lanham Act 43(a)
Multiple Choice Questions
16. Which of the following is true of patents?
A. Patents fall under the jurisdiction of state laws.

B. Naturally occurring things are patentable.
C. Abstract ideas are patentable.
D. U.S. patent laws have changed since the mid-1990s.
Until a change in federal law during the mid-1990s, a patent normally gave the
patentee exclusive rights regarding the patented invention for 17 years from the
date the patent was granted. Since the mid-1990s, there have been several
changes to the patent laws by Congress which has resulted in exclusive rights of
patentees to exclude others from making, using, or selling the patented invention.
The patented invention generally exists until the expiration of 20 years from the
date the patent application was filed.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
17. The patent application must include a(n) _____ describing the invention with
A. specification
B. drawing
C. proposal
D. idea
The application must include a specification describing the invention with

AACSB: Ethics
Blooms: Remember
18. How can a patentee transfer ownership of the patent to another party?
A. Specification
B. Assignment
C. Delegation
D. Infringement
The patentee may transfer ownership of the patent by making a written

assignment of it to another party.
AACSB: Ethics
Blooms: Remember
19. How long is the legal temporary monopoly that present patent laws provide to the
inventor after the filing of the patent application?
A. Ten years.
B. Seventeen years.
C. Twenty years.
D. The lifetime of the inventor.
Since the mid-1990s, Congress has amended the patent laws to increase the
patentee’s exclusive rights from 17 to 20 years.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
20. Patent _____ occurs when a defendant, without authorization from the patentee,
usurps the patentee’s rights by making, using, or selling the patented invention.
A. assignment
B. licensing
C. infringement
D. violation
Patent infringement occurs when a defendant, without authorization from the

patentee, usurps the patentee’s rights by making, using, or selling the patented
invention.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
21. What allows a defendant to be held liable for infringement even though the
subject matter he used contained elements that were not identical to those
described in the patentee’s claims of invention, but nonetheless, may be seen as
equivalent to those of the patented invention?
A. Literal infringement
B. Double jeopardy clause
C. Strict liability
D. Doctrine of equivalents
Under the doctrine of equivalents, a defendant may be held liable for infringement
even though the subject matter he made, used, or sold contained elements that
were not identical to those described in the patentee’s claims of invention, if the
elements of the defendant’s subject matter nonetheless may be seen as
equivalent to those of the patented invention.
AACSB: Ethics
Blooms: Remember
22. The damages recoverable in a patent infringement case cannot be less than:
A. court costs and interests.

B. reasonable royalty for the invention by the creator.
C. reasonable royalty for the use of the invention by the infringer.
D. three times the damages actually suffered, and to be decided by the court.
The basic recovery for patent infringement is damages adequate to compensate

for the infringement, plus court costs and interest. The damages cannot be less
than a reasonable royalty for the use made of the invention by the infringer.
AACSB: Ethics
Blooms: Remember
23. Which of the following distinguishes a copyright from a patent?
A. Copyrightable works need not be novel.

B. Copyright law gives exclusive rights to the creator of a work.
C. Copyright laws prevent others from using the work originally created by
someone.
D. There are proper copyright laws in the U.S.
Copyrights are similar to patent laws, except that, unlike inventions protected by
patent law, copyrightable works need not be original.
AACSB: Ethics
Blooms: Understand
24. Which of the following is least likely to fall within the scope of what is protected by
the copyright on the work in which it appears?
A. The physical arrangement and ordering of pieces of factual information on

pages in a reference book.
B. The melody of a song.
C. The dialogue spoken by actors in a TV commercial.
D. The theme of a short story.
Copyright protection does not extend to ideas, facts, procedures, processes,

systems, methods of operation, concepts, themes, principles, or discoveries.
AACSB: Ethics
Blooms: Remember
25. Which of the following is protected by copyright laws in computer programs?
A. Organization
B. Structure
C. Source code
D. Presentation of information
Copyright law protects a program’s object code (program instructions that are
machine (readable but not intelligible to humans) and source code (instructions
intelligible to humans) of a computer program.
AACSB: Ethics
Blooms: Remember
26. A copyright comes into existence upon the:
A. creation and fixing of a protected work.

B. creation of an idea.
C. creation of a protected work.
D. creation of a message.
A copyright comes into existence upon the creation and fixing of a protected work.
Although a copyright owner may register the copyright with the U.S. Copyright
Office, registration is not necessary for the copyright to exist.
AACSB: Ethics
Blooms: Remember
27. Carlos has written a novel. He wants to protect his intellectual property with a
copyright. What must he do first?
A. He must apply to the U.S. Copyright Office for a copyright.

B. He must produce a certificate that he is the original author.
C. He must put the novel in some tangible form, like a hard copy or a compact
disc.
D. He must certify that his story is original and novel.
For a copyright to come into existence, it is necessary to first create and fix the
protected work.
AACSB: Ethics
Blooms: Understand
28. Which of the following statements is true of copyright?
A. Copyrights and patents last forever.

B. There are different copyright rules for pre and post 1978 works.
C. Congress enacts copyright rules under the WIPO.
D. Copyrights for a work-for-hire last for 50 years.
According to the U.S Constitution’s Patents and Copyrights Clause, copyrights

and patents are enacted for a limited time period.
AACSB: Ethics
Blooms: Remember
Topic: Protection of Intellectual Rights
29. According to the CTEA, the protection period for pre-1978 works is:
A. 50 years.
B. 65 years.
C. 75years.
D. 95 years.
According to the new rules of the CTEA, a pre-1978 work that was still under valid
copyright protection as of 1998 (when the CTEA took effect) now has a total
protection period of 95 years from first publication—a 28-year initial term plus a
renewal term that has been lengthened from 47 to 67 year.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
30. Eleanor Rigby is an employee of Strawberry Fields Music, Inc., a firm that
specializes in the preparation of original music for possible use by advertisers in
TV and radio commercials. In January 2000, Rigby wrote a song that is protected
by copyright. She wrote the song as part of her regular duties as a Strawberry
Fields employee. Rigby and Strawberry Fields did not have a written agreement
concerning ownership of the copyright on the song. In February 2000, Rigby and
Strawberry Fields published the song by making large numbers of copies
available to the public. Statements A through D deal with ownership of the
copyright on the song and with the duration of the copyright. Which statement is
legally accurate?
A. Rigby owns the copyright, which will expire 50 years after her death.
B. Rigby owns the copyright, which will expire in 2100.
C. Strawberry Fields owns the copyright, which will expire in 2070.
D. Strawberry Fields owns the copyright, which will expire 50 years after Rigby’s
death.
With the enactment of the CTEA, the basic duration rule for works created in 1978
or thereafter is now life of the author/creator plus 70 years.
AACSB: Ethics
Blooms: Apply
31. Which of the following characterizes copyright transfer?
A. Oral transfers are valid and recognized.

B. Ownership can be retained while licensing part of the work.
C. It leads to a transfer of ownership for that period of time.
D. It allows everything except the performance of the work.
Copyright ownership initially resides in the creator of the copyrighted work, but the
copyright may be transferred to another party. the owner may individually transfer
any of her ownership rights, or a portion of each, without losing ownership of the
remaining rights.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
infringement.
32. What is the basic recovery for copyright infringement?
A. Only the owner’s actual damages

B. Only the attributable profits by the infringer
C. Owner’s actual damages and the attributable profits of the infringer
D. Punitive damages
The basic recovery for copyright infringement is the owner’s actual damages plus
the attributable profits received by the infringer.
AACSB: Ethics
Blooms: Remember
infringement.
33. What can the plaintiff usually elect to receive in lieu of the basic remedy in a case
of copyright infringement?
A. Punitive damages
B. Liquidated damages
C. Special damages
D. Statutory damages
In lieu of the basic remedy for copyright infringement, the plaintiff may usually
elect to receive statutory damages. The statutory damages set by the trial judge
or jury must fall within the range of $750 to $30,000 unless the infringement was
willful, in which event the maximum rises to $150,000.
AACSB: Ethics
Blooms: Remember
infringement.
34. Any word, name, symbol, device, or combination thereof used by a manufacturer
or seller to identify its products and distinguish them from the products of
competitors is called a:
A. copyright.
B. trademark.
C. signature.
D. patent.
A trademark is a symbol, name, device etc. used by a company to distinguish

their products from others in the market.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
35. Which type of marks is most likely to be registered for trademark protection?
A. Suggestive
B. Arbitrary
C. Descriptive
D. Generic
Arbitrary or fanciful marks are most likely to be registered for trademark protection
because they do not describe the qualities of a product or service; but they are
the most distinctive in nature.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-09 Identify the key requirement for registration of a mark on the Principal Register (distinctiveness) and
explain the role of secondary meaning when registration of a nondistinctive mark is sought.
36. Which of the following characterizes a trademark?
A. It includes generic terms.

B. It is easier to transfer trademark rights compared to patent rights.
C. Federal registration of a trademark lasts for 10 years.
D. Descriptive marks are protected on the basis of their primary meaning.
The federal registration of trademarks lasts for 10 years, with renewals for
additional 10-year periods possible.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
37. Which of the following kinds of marks are denied placement on the Principal
Register?
A. Those which are geographically descriptive

B. Those containing fanciful names
C. Those consisting of surnames
D. Those consisting of government insignia
Marks that contain flags or other insignia of governments are denied placement
on the Principal Register.
AACSB: Ethics
Blooms: Remember
38. Which of the following characterizes the transfer of trademark rights?
A. It is much easier than transferring patent interests.

B. They may only be assigned to another person.
C. They cannot be sold unless it involves a sale of goods.
D. An uncontrolled license is generally not advised.
A trademark owner may license the use of the mark, but only if the owner
reserves control over the nature and quality of the goods or services as to which
the licensee will use the mark. An uncontrolled “naked license” would allow the
sale of goods or services bearing the mark but lacking the qualities formerly
associated with it, and could confuse purchasers.
AACSB: Ethics
Blooms: Remember
39. Goods lawfully bearing trademarks or using patents and copyrighted material but
entering the American markets without authorization are called _____.
A. counterfeit goods
B. Shanzai goods
C. black market goods
D. gray market goods
Gray market goods are goods lawfully bearing trademarks or using patents and
copyrighted material but entering the American market without authorization.
AACSB: Ethics
Blooms: Remember
40. Most of the court’s attention in trademark infringement cases is concerned with
the:
A. dispute over profits made by the defendants.

B. likelihood of confusion over the trademark.
C. time period of the trademark rights.
D. generic nature of the disputed trademark.
Most of the court’s attention in a trademark infringement case tends to go toward

determining whether the requisite likelihood of confusion is present in the facts.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-10 Identify and apply the elements of trademark infringement.
41. A trademark is considered to be abandoned when:
A. the owner fails to use it.

B. it acquires a generic meaning.
C. it has been obtained by fraud.
D. it is suggestive or arbitrary.
A mark is considered to be abandoned in case of the owner’s failure to use it,

through an express statement or agreement to abandon it, or through the mark
losing its significance.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
42. A trademark owner who wins an infringement suit may obtain a(n) _____ against
uses of the mark that are likely to cause confusion.
A. license
B. assignment
C. injunction
D. writ
A trademark owner who wins an infringement suit may obtain an injunction

against uses of the mark that are likely to cause confusion.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-10 Identify and apply the elements of trademark infringement.
43. Which of the following sometimes serves as an alternative to claims of trademark
infringement?
A. Trademark abandonment
B. Trademark dilution
C. Trademark protection
D. Trademark disparagement
Trademark dilution is sometimes used as an alternative to claims of trademark

infringement, and almost half of the states have laws recognizing the dilution
doctrine.
AACSB: Ethics
Blooms: Remember
44. Which of the following permits a firm to register a trademark in all its signatory
nations simultaneously by filing an application for registration in any signatory
nation and was joined by the United States in 2003?
A. The Berne Convention

B. The Paris Convention for the Protection of Industrial Property
C. The Madrid Protocol
D. The Kyoto Protocol
An agreement known as the Madrid Protocol also permits a firm to register a

trademark in all its signatory nations simultaneously by f ling an application for
registration in any signatory nation and with the World Intellectual Property
Organization (WIPO) in Geneva. The United States joined the Madrid Protocol in
2003.
AACSB: Ethics
Blooms: Remember
45. A trade secret differs from a patent, in that, a trade secret:
A. grants a monopoly to the creator.

B. stimulates creative activity.
C. is guarded by the creator.
D. is nonpublic by definition.
Trade secrets are nonpublic by definition. Although protecting trade secrets may
stimulate creative activity, it also keeps the information from becoming public
knowledge.
AACSB: Ethics
Blooms: Remember
46. In order to qualify as a trade secret, it must:
A. be developed through research.

B. be known to the general public.
C. be the work of a company.
D. possess sufficient value or originality.
To be protectable, a trade secret must usually have sufficient value or originality

to provide an actual or potential competitive advantage.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
47. A firm claiming a trade secret must show that it:
A. took reasonable measures to ensure secrecy.

B. gave adequate compensation for the work.
C. has a license to produce the product.
D. has enough research to back the product.
Courts examine various factors when determining whether trade secrets exist or
not. For instance, a firm claiming a trade secret has to prove that it took
reasonable measures to protect trade secrecy.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
48. Susan was hired by Teddy & Co. as a sales woman. However, the management
on seeing her intelligence and capabilities allowed her to use the office library and
research facility to create an inventive product. Susan now wants to patent the
product in her own name. This is not permissible under the:
A. doctrine of equivalents.
B. respondeat superior doctrine.
C. shop right doctrine.
D. doctrine of assignment.
Under the shop right doctrine, the employer is the owner of the trade secret
because the employee was hired to do work related to the secret.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
49. What is the main aim of commercial torts?
A. To enable product creation for commercial purposes

B. To provide immunity in cases of fraud
C. To maintain standards of commercial morality
D. To ensure smoother commercial negotiations
The main aim of commercial torts is to uphold minimum standards of commercial

morality. They also promote innovation by protecting creative businesses against
certain competitive abuses.
AACSB: Ethics
Blooms: Remember
50. In case of conflict of ownership between employee and employer over a trade
secret, the employer is normally held to be the owner when:
A. the employee agreed to divulge or use trade secrets.

B. other employees had no contribution in the work.
C. the employee was hired to do work related to it.
D. the employee was not given adequate compensation for the work.
Courts usually hold the employer to be the owner of a trade secret under the
following circumstances-(a) the employee was hired to do work related to the
trade secret (b) the employee agreed not to divulge or use trade secrets (c) other
employees contributed to the development of the secret.
AACSB: Ethics
Blooms: Understand
51. Which of the following is also termed slander of title or a trade libel?
A. Defamation
B. Injurious falsehood
C. Copyright violation
D. Plagiarism
Injurious falsehood also goes by names such as product disparagement, slander

of title, and trade libel. This tort involves the publication of false statements that
disparage another’s business, property, or title to property, and thus harm her
economic interests.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
52. The _____ that the plaintiff is required to prove are his usual—and typically his
only—remedy in injurious falsehood cases.
A. special damages
B. statutory damages
C. compensatory damages
D. punitive damages
The special damages that the plaintiff is required to prove are his usual and
typically his only remedy in injurious falsehood cases. Damages for personal
injury or emotional distress, for instance, are generally not recoverable.
AACSB: Ethics
Blooms: Remember
53. Which of the following is true of an injurious falsehood case?
A. It is the same as a tort of defamation.

B. The degree of fault required for liability is unclear.
C. Damages for emotional distress are not recoverable.
D. There is liability for false statements made in good faith.
In injurious falsehood cases, the plaintiff must prove that the defendant made a
false statement of the sort just described, and that the statement was
communicated to a third party; but the degree of fault required for liability is
unclear.
AACSB: Ethics
Blooms: Remember
54. In a lawsuit for intentional interference with contractual relations, the existing
contract includes:
A. void bargains
B. illegal contracts
C. contracts to marry
D. unenforceable contracts
The agreement, whose performance is impeded in a case of intentional

interference with contractual relations, must be an existing contract. This includes
contracts that are voidable, unenforceable, or subject to contract defenses.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-14 Explain the elements of interference with contractual relations.
55. In a case of intentional interference, a defendant generally escapes liability when
his contract interference:
A. was guided by public interest.

B. was defamatory in nature.
C. was regarding prospective competitive advantage.
D. was guided by a void bargain.
A defendant in a case of intentional interference generally escapes liability when

his/her contract interference is in the public interest or when the defendant acts to
protect a person for whose welfare he/she is responsible.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-14 Explain the elements of interference with contractual relations.
56. Which of the following characterizes section 43 (a) of the Lanham Act?
A. It is a consumer remedy.
B. It addresses everything except advertisements.
C. It is available only to commercial parties.
D. It creates a state law of unfair practices.
Section 43 (a) of the Lanham Act is not a consumer remedy and normally
available only to commercial parties who usually are the defendant’s competitors.
AACSB: Ethics
Blooms: Remember
Learning Objective: 08-15 Identify key issues on which courts focus on false advertising cases brought under Lanham Act § 43(a).
Essay Questions
57. What is the first-to-invent rule?
Under the first-to-invent rule, a person who created an invention after the true
inventor had already done so would not be entitled to a patent even if she came
up with her invention independently (without knowledge of what the true inventor
had done) and filed a patent application before the true inventor did.
AACSB: Ethics
Blooms: Remember
58. What is patent infringement?
Patent infringement occurs when a defendant, without authorization from the

patentee, usurps the patentee’s rights by making, using, or selling the patented
invention.
AACSB: Ethics
Blooms: Remember
Difficulty: 3 Hard
59. Discuss one criticism of the first-to-file policy.
Those who would mount a constitutional challenge to the adoption of a first-to-file

regime would argue that Article I, § 8’s (Copyright and Patents Clause) reference
to “[i]nventors” should be taken literally and read narrowly, so that only the original
inventor could become a patentee under any patent law Congress might enact.
Under this interpretation, it would be unconstitutional for Congress to allow the
awarding of a patent to a person who “invented” something after it had already
been invented by the true inventor.
AACSB: Ethics
Blooms: Remember
60. Why are noncompetition agreements disfavored by the law?
Employers often attempt to restrict otherwise allowable postemployment

relationship competition by having their employees enter into a written
noncompetition agreement in which the employees agree not to compete with the
employer (or accept employment with a competitor of the employer) for some
period of time after the employment relationship ends.
Such agreements are disfavored in the law because they may interfere unduly
with individuals’ important interests in working and making a living.
AACSB: Ethics
Blooms: Remember
Test Bank for Business Law, 15th Edition: Jane Mallor
61. CW, Inc. publishes Consumer Watchdog, a magazine whose articles consist of
the writers’ personal experiences with and reactions to a variety of products. In
the June 1997 issue of Consumer Watchdog, a review included this statement:
“Fungus Co.’s “Fungo” brand athlete’s foot powder doesn’t cut the mustard in
comparison to most athlete’s foot powders on the market--and I’ve tried them all,
sports fans. Fungo fails to attack athlete’s foot with enough force because the
product doesn’t contain AF88, the active ingredient in any decent athlete’s foot
powder.” In fact, Fungo contains as much AF88 as any other athlete’s foot
powder on the market. Fungus Co. has filed suit against the writer and CW on the
theory that the above statements violated section 43(a) of the Lanham Act. On
these facts, should Fungus win the section 43(a) case? Why or why not?
Fungus should lose the section 43(a) case because the statement about which
Fungus complains (the false statement about Fungo) was not made in a context
covered by section 43(a). The case should therefore be dismissed. Section 43(a)-
based claims may be brought by commercial plaintiffs in some instances in which
the defendant’s false statement was about the plaintiff’s product or service.
However, in order to be actionable under section 43(a), the defendant’s statement
must have been in the context of commercial advertising or some other
promotional setting. Here, the false statement is a story in a magazine (Consumer
Watchdog) rather than in the context of advertising or promotion. Section 43(a)
therefore does not apply. Instead of suing under section 43(a), Fungus should
have brought an injurious falsehood claim.
AACSB: Ethics
Blooms: Apply
Topic: Lanham Act § 43(a)
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Intellectual Property and Unfair Competition

True / False Questions

1. The United States is a first–to–file nation.

10. There is no international copyright that automatically protects a copyrighted work

Multiple Choice Questions

16. Which of the following is true of patents?

A. Patents fall under the jurisdiction of state laws.

A. court costs and interests.

A. Copyrightable works need not be novel.

A. The physical arrangement and ordering of pieces of factual information on pages

25. Which of the following is protected by copyright laws in computer programs?

26. A copyright comes into existence upon the:

A. creation and fixing of a protected work.

A. He must apply to the U.S. Copyright Office for a copyright.

28. Which of the following statements is true of copyright?

A. Copyrights and patents last forever.

31. Which of the following characterizes copyright transfer?

A. Oral transfers are valid and recognized.

32. What is the basic recovery for copyright infringement?

A. Only the owner’s actual damages

36. Which of the following characterizes a trademark?

A. It includes generic terms.

A. Those which are geographically descriptive

38. Which of the following characterizes the transfer of trademark rights?

A. It is much easier than transferring patent interests.

A. dispute over profits made by the defendants.

A. the owner fails to use it.

43. Which of the following sometimes serves as an alternative to claims of trademark

A. The Berne Convention

A. grants a monopoly to the creator.

46. In order to qualify as a trade secret, it must:

A. be developed through research.

47. A firm claiming a trade secret must show that it:

A. took reasonable measures to ensure secrecy.

A. To enable product creation for commercial purposes

A. the employee agreed to divulge or use trade secrets.

A. It is the same as a tort of defamation.

A. was guided by public interest.

58. What is patent infringement?

59. Discuss one criticism of the first-to-file policy.

True / False Questions

1. The United States is a first–to–file nation.

The novelty requirement of patents contemplates that an invention be new and

Infringement established under the doctrine of equivalents makes a defendant

One defense to a patent infringement is that a patent’s validity can be challenged

There is no provision for an international copyright.

11. The World Intellectual Property Organization is a leading provider of conciliation

Conciliation for “bad faith intent to profit” actions is provided by the

Multiple Choice Questions

16. Which of the following is true of patents?

A. Patents fall under the jurisdiction of state laws.

The application must include a specification describing the invention with

The patentee may transfer ownership of the patent by making a written

Patent infringement occurs when a defendant, without authorization from the

A. court costs and interests.

The basic recovery for patent infringement is damages adequate to compensate

A. Copyrightable works need not be novel.

A. The physical arrangement and ordering of pieces of factual information on

Copyright protection does not extend to ideas, facts, procedures, processes,