Chapter 11 Intellectual Property
1) The justification for intellectual property is the same as for the private property system.
Answer: TRUE
Explanation: The justification for intellectual property is the same as for the private property system generally. Property relationships are believed to be more productive in allocating scarce resources and producing new ones than legal relationships that merely divide resources equally.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-01 To recognize why intellectual property is important to our economic system and explain how it creates incentives for investment
Bloom’s: Remember
AACSB: Analytical Thinking
2) Intellectual property systems operate on a belief that the long-term benefits of increased information and investment do not outweigh the short-term costs.
Answer: FALSE
Explanation: Intellectual property systems operate on a belief that the long-term benefits of increased information and investment outweigh the short-term costs.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-01 To recognize why intellectual property is important to our economic system and explain how it creates incentives for investment
Bloom’s: Remember
AACSB: Analytical Thinking
3) The protections of property often do not apply automatically to ownership of intangible knowledge resources that are created.
Answer: TRUE
Explanation: The protections of property often do not apply automatically to ownership of intangible knowledge resources you or your business creates. Depending on the type of information, you may be required to undertake certain steps to protect the time, effort, and money spent in developing knowledge in order to transform it into valuable intangible assets.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-01 To recognize why intellectual property is important to our economic system and explain how it creates incentives for investment
Bloom’s: Remember
AACSB: Analytical Thinking
4) Intellectual property rights are still applicable once information is released into the public domain.
Answer: FALSE
Explanation: In general, intellectual property rights are not applicable once information is in the public domain and it cannot be recaptured. Firms that do not have an intellectual property strategy in place risk losing valuable assets.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-01 To recognize why intellectual property is important to our economic system and explain how it creates incentives for investment
Bloom’s: Remember
AACSB: Analytical Thinking
5) The Defend Trade Secrets Act (DTSA) contains the same basic elements of state trade secret law, but it is intended to provide some more consistent nationwide protection as a federal statute.
Answer: TRUE
Explanation: The Defend Trade Secrets Act (DTSA) became law in 2016 and acts as a supplement to the Economic Espionage Act. Although it has the basic elements of state trade secret law, it should provide more consistent nationwide protection as a federal statute.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Remember
AACSB: Analytical Thinking
6) To qualify as a trade secret, any form of knowledge protected must have economic value.
Answer: TRUE
Explanation: A trade secret is any form of knowledge or information that has economic value from not being generally known to others or readily ascertainable by proper means and has been the subject of reasonable efforts by the owner to maintain secrecy.
Difficulty: 2 Medium
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Understand
AACSB: Analytical Thinking
7) To protect information as a trade secret, the information must actually be secret, and the business must take reasonable measures to keep it so.
Answer: TRUE
Explanation: To protect information as a trade secret, the information must actually be secret, and the business must take reasonable measures to keep it so.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Remember
AACSB: Analytical Thinking
8) Even if the original acquisition was proper, misappropriation can occur if information is disclosed by someone who was under a duty to keep it secret.
Answer: TRUE
Explanation: Misappropriation occurs when one improperly acquires secret information through burglary, espionage, or computer hacking. Even if the acquisition was proper, misappropriation also occurs if information is disclosed by someone who was under a duty to keep secret.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Remember
AACSB: Analytical Thinking
9) Trade secrets are required to be unique.
Answer: FALSE
Explanation: Note that trade secrets do not have to be unique; two businesses may have trade secret property in substantially the same knowledge.
Difficulty: 1 Easy
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Remember
AACSB: Analytical Thinking
10) If, through your own effort, you are able to recreate the same information that another considers to be a trade secret, a misappropriation has occurred.
Answer: FALSE
Explanation: Importantly, independent creation does not constitute misappropriation. If, through your own effort, you are able to recreate the same information that another considers to be a trade secret, no misappropriation has occurred.
Difficulty: 2 Medium
Topic: Trade Secrets
Learning Objective: 11-02 To identify the type of information that is protected by trade secret law and characterize circumstances that constitute misappropriation
Bloom’s: Understand
AACSB: Analytical Thinking
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