August-TIF Ch09

Chapter 9: Intellectual Property
True or False Questions
1. Inventions and trademarks are types of artistic property.
Answer: False
Diff: 2
Topic: Introduction
Skill: Legal Concepts
2. A copyright gives its owner the right to prevent others from using the idea or the
knowledge contained in the copyrighted work.
Answer: False
Diff: 2
Topic: The Creation of Intellectual Property Rights
3. A pecuniary right is the right of an author to exploit a copyrighted work for economic
gain.
Answer: True
Diff: 1
4. The right of an author to prohibit others from tampering with a copyrighted work is
called the right of performance.
Answer: False
Diff: 2
5. A patent is an incorporeal statutory right that gives an inventor, for a limited period, the
exclusive right to use or sell a patented product or to use a patented method or process.
Answer: True
Diff: 1
6. The patent granted for the invention of a new and useful process, machine, article of
manufacture, or composition of matter is called a petty patent.
Answer: False
Diff: 2
7. When the TRIPS Agreement came into effect, the minimum term of protection for
patents was set at 20 years for WTO member states.
Answer: True
Diff: 1
8. A certification mark is a mark or symbol used to identify a person who provides

services.
Answer: False
Diff: 2
9. A collective mark is a mark used exclusively by a licensee or franchisee to indicate that

a product meets certain standards.
Answer: False
Diff: 2
10. The World Intellectual Property Organization is responsible for administering the
Paris and Berne Conventions.
Answer: True
Diff: 1
Topic: International Intellectual Property Organizations
11. Parties to multilateral agreements are prevented from entering into bilateral
arrangements.
Answer: False
Diff: 2
Topic: Intellectual Property Treaties
12. The nonconditional protection principle states that common minimum standards for
granting copyrights must be observed by all member states.
Answer: False
Diff: 1
13. The Patent Cooperation Treaty establishes an international mechanism that allows
inventors to make a single application for patent protection that is equivalent to making a
filing in all member states.
Answer: True
Diff: 1
14. KFC and Pizza Hut are examples of distributorship.
Answer: False
Diff: 2
Topic: The International Transfer of Intellectual Property
15. A franchise in which the franchisee sells products it manufactures from a formula or
from ingredients provided by the franchisor is called chain-style business.
Answer: False
Diff: 2
16. The exhaustion-of-rights doctrine states that once a good made or sold under license
is in circulation, the licensor has no further right to control its distribution.
Answer: True
Diff: 1
Topic: Licensing Regulations
17. The domestic sale of products manufactured under a license that only grants a foreign
licensee the right to sell the goods overseas is called gray marketing.
Answer: True
Diff: 1
18. Agreements between competitors that have the effect of diminishing competition are
called vertical competition agreements.
Answer: False
Diff: 1
19. An agreement between a buyer and a seller is called a cartel.
Answer: False
Diff: 1
20. A patent pool is an agreement to exchange licenses.
Answer: False
Diff: 2
21. A multiple licensing agreement is a contract for the licensing of industrial property
rights to two or more licensees.
Answer: True
Diff: 1
22. Cross-licensing agreements that involve any territorial restraint with respect to the
manufacture, use, or marketing of goods are invalid.
Answer: True
Diff: 2
23. Sole rights prevent everyone except the licensor from competing.
Answer: False
Diff: 1
24. An exclusive license is a license that restricts who may compete with the licensee.
Answer: True
Diff: 1
25. A tying clause is a provision forbidding a licensee from competing with the licensor.
Answer: False
Diff: 2
26. A compulsory copyright license compels a copyright owner to grant a license, but it
allows the owner to negotiate the terms of the license.
Answer: True
Diff: 1
Topic: Compulsory Licenses
Multiple Choice Questions
27. Industrial property is itself divided into two categories: inventions and ________.
A. trademarks
B. pecuniary rights
C. service marks
D. artistic property
Answer: A
Diff: 2
Topic: Introduction
28. A ________ is an incorporeal statutory right that gives the author of an artistic work,
for a limited period, the exclusive privilege of making copies of the work and publishing
and selling the copies.
A. moral right
B. patent
C. copyright
D. neighboring right
Answer: C
Diff: 1
29. Which of the following terms refers to the right of an author to exploit a copyrighted
work for economic gain?
A. pecuniary right
B. right of priority
C. neighboring right
D. moral right
Answer: A
Diff: 1
30. Which of the following is a type of pecuniary right?
A. right of exhibition
B. right of reproduction
C. moral right
D. neighboring right
Answer: B
Diff: 2
31. The ________ is the exclusive right of an author to make multiple copies of a
copyrighted work.
A. right of reproduction
B. right of exhibition
C. neighboring right
D. moral right
Answer: A
Diff: 1
32. ________ is the right of an author to place a copy of a copyrighted work into
circulation for the first time.
A. Right of reproduction
B. Right of distribution
C. Property right
D. Neighboring right
Answer: B
Diff: 1
33. The ________ states that once a copy of a copyrighted work is in circulation, the
author has no further right to control its distribution.
A. common origin doctrine

B. exhaustion of rights doctrine
C. rule of reason
D. first sale doctrine
Answer: D
Diff: 2
34. ________ is the right of an author to communicate a copyrighted work to the public.
A. Property right
B. Neighboring right
C. Right of performance
D. Right of reproduction
Answer: C
Diff: 1
35. The personal rights of authors to prohibit others from tampering with their works are
called ________.
A. moral rights
B. neighboring rights
C. property rights
D. rights of priority
Answer: A
Diff: 1
36. Which of the following terms refers to the creative effort invested by an author in raw
materials that gives them a new quality or character?
A. literary appropriation
B. plagiarism
C. originality
D. phishing
Answer: C
Diff: 1
37. Which of the following terms refers to the exact manner in which a particular work of
authorship is set down in a tangible way?
A. expression
B. distinctiveness
C. originality
D. know-how
Answer: A
Diff: 1
38. Patents differ from copyrights in that, patents ________.
A. are granted for an unlimited period of time

B. give its owner the exclusive right to use or sell a particular product
C. create perfect competition in the market
D. give its owner the pecuniary right to performance
Answer: B
Diff: 2
39. A(n) ________ is a patent granted to protect new and original blueprint of an article
of manufacture.
A. copyright
B. utility patent
C. plant patent
D. design patent
Answer: D
Diff: 1
40. In the year 1915, Coca Cola patented the shape of Coca Cola bottles. This is an
example of a(n) ________.
A. design patent
B. utility patent
C. plant patent
D. copyright
Answer: A
Diff: 3
Skill: Factual Application
41. A(n) ________ is the patent granted for the invention of a new and useful process,
machine, article of manufacture, or composition of matter.
A. design patent
B. utility patent
C. plant patent
D. copyright
Answer: B
Diff: 1
42. A ________ is a mark or symbol used to identify goods of a particular manufacturer

or merchant.
A. certification mark
B. true trademark
C. watermark
D. copyright
Answer: B
Diff: 1
43. A ________ is a mark or symbol used to identify a manufacturer or merchant.
A. trade name
B. copyright
C. certification mark
D. patent
Answer: A
Diff: 1
44. Gatorade is an example of a ________.
A. copyright
B. service mark
C. true trademark
D. certification mark
Answer: C
Diff: 3
45. Practical expertise acquired from study, training, and experience is called ________.
A. originality
B. expression
C. distinctiveness
D. know-how
Answer: D
Diff: 1
46. The ________ was created in 1967 with the adoption of the Stockholm Convention.
A. Council of Europe
B. International Monetary Fund
C. World Trade Organization
D. World Intellectual Property Organization
Answer: D
Diff: 1
47. Which of the following statements is true regarding the World Intellectual Property
Organization (WIPO)?
A. It was created with the adoption of the Vienna Convention.

B. WIPO, like its predecessors, has very narrow authority.
C. One of the responsibilities of the WIPO is resolving Internet domain disputes.
D. The European Council is the governing body of the WIPO.
Answer: C
Diff: 3
48. The ________ states that for a period of one year, an application for a patent in a
second member country will be treated as though it had been filed on the same date as the
application made in the first member country.
A. common origin doctrine

B. rule of reason
C. Trademark Law Treaty
D. right of priority
Answer: D
Diff: 1
49. The ________ establishes an international mechanism that allows inventors to make a
single application for patent protection that is equivalent to making a filing in all member
states.
A. Patent Cooperation Treaty

B. Washington Treaty
C. rule of reason
D. common origin doctrine
Answer: A
Diff: 1
50. A ________ is an authority granted by the owner of an intellectual property to another

allowing the latter the right to use it in some limited way.
A. trademark
B. copyright
C. license
D. patent
Answer: C
Diff: 1
51. Mark owns a chain of hotels. Roby acquires a license that allows him to extend the
chain under the supervision and control of Mark. This type of license is an example of a
________.
A. franchise
B. patent
C. copyright
D. patent pool
Answer: A
Diff: 3
52. Which of the following terms refers to a franchise in which a manufacturer licenses a
dealer to sell its products?
A. gray marketing
B. processing plant franchise
C. chain-style business
D. distributorship
Answer: D
Diff: 1
53. Subway and Dunkin Donuts are examples of a ________.
A. manufacturing franchise
C. chain-style business
D. distributorship
Answer: C
Diff: 3
54. A ________ is a franchise in which a franchisee operates under the franchisors trade
name and is identified as part of the franchisors business.
A. chain-style business
C. manufacturing franchise
D. distributorship
Answer: A
Diff: 1
55. A franchise in which the franchisee sells products it manufactures from a formula or
from ingredients provided by the franchisor is called a ________.
A. distributorship
B. chain-style business
C. processing plant franchise
D. business format franchise
Answer: C
Diff: 1
56. Which of the following is an example of a distributorship franchise?
A. a Pepsi-Cola factory
B. a KFC outlet
C. Hilton Hotels and Resorts
D. Volkswagen dealership
Answer: D
Diff: 3
57. The ________ is a court-adopted rule that allows a reviewing court to consider the
overall impact of a particular agreement on competition within its relevant market.
A. choice of law rule

B. rule of reason
C. rule of origin
D. ultra vires rule
Answer: B
Diff: 2
58. The ________ states that once a good made or sold under license is in circulation, the
licensor has no further right to control its distribution.
A. first sale doctrine

B. common origin doctrine
C. exhaustion-of-rights doctrine
D. doctrine of exhaustion
Answer: C
Diff: 2
59. Which of the following terms refers to the domestic sale of products manufactured
under a license that only grants a foreign licensee the right to sell the goods overseas?
A. gray marketing
B. patenting
C. franchising
D. cross-licensing
Answer: A
Diff: 1
60. Agreements between competitors that have the effect of diminishing competition are
called ________.
A. vertical competition agreements

B. cross-licensing agreements
C. multiple licensing agreements
D. horizontal competition agreements
Answer: D
Diff: 1
61. Agreements between sellers and buyers are called ________.
A. vertical competition agreements

B. multiple licensing agreements
C. cross-licensing agreements
D. horizontal competition agreements
Answer: A
Diff: 1
62. Which of the following is true of a cartel?
A. It is a contract for the licensing of industrial property rights to two or more licensees.
B. It is a combination of independent business firms organized to regulate the production,
pricing, and marketing of goods by its members.
C. It is a provision according to which an industry-wide patent pool must grant
reasonable access to the pool to any firm wishing to compete so that no firm will be
disadvantaged.
D. It is a license that restricts who may compete with the licensee.
Answer: B
Diff: 3
63. A cross-licensing agreement is ________.
A. an agreement to exchange licenses

B. an agreement to share patents and other technology
C. an agreement between sellers and buyers
D. a contract for the licensing of industrial property rights to two or more licensees
Answer: A
Diff: 2
64. An agreement to share patents and other technology is called a ________.
A. cross-licensing agreement
B. vertical competition agreement
C. patent pool
D. multiple licensing agreement
Answer: C
Diff: 1
65. A ________ is a contract for the licensing of industrial property rights to two or more
licensees.
A. WIPO Copyright Treaty

B. cross-licensing agreement
C. patent pool
D. multiple licensing agreement
Answer: D
Diff: 1
66. The ________ states that participants in an industry-wide patent pool must grant
reasonable access to the pool to any firm wishing to compete so that no firm will be
disadvantaged.
A. indemnification clause
B. bottleneck principle
C. maintenance of value clause
D. country of origin principle
Answer: B
Diff: 2
67. Which of the following is true of the price-fixing clause?
A. It is a provision forbidding a licensee from competing with the licensor.

B. It specifies only the minimum prices.
C. It forbids a licensee from entering into agreements to acquire or distribute technologies
or products that compete with ones furnished or designated by the licensor.
D. It requires a licensee to sell products at a price specified by the licensor.
Answer: D
Diff: 3
68. A ________ is a provision requiring a licensee to acquire or use, apart from the
technology wanted, goods or personnel designated by the licensor.
A. noncompetition clause
B. price-fixing clause
C. tying clause
D. no-challenge clause
Answer: C
Diff: 2
69. A ________ is an agreement that a technology licensee will transfer to the licensor
any improvements, inventions, or know-how it acquires while using the technology.
A. noncompetition clause
B. grant-back provision
C. tying clause
D. cartel
Answer: B
Diff: 2
70. ________ is the transfer of multiple statutory rights under a single license.
A. Package licensing
B. Compulsory licensing
C. Exclusive licensing
D. Statutory copyright licensing
Answer: A
Diff: 1
71. A(n) ________ is the grant, by state decree, of a license to use a statutory right when
the owner has failed to work it.
A. package license
B. compulsory license
C. exclusive license
D. statutory copyright license
Answer: B
Diff: 1
72. A(n) ________ authorizes a third party to use a copyrighted work for a fee stipulated
in the statute.
A. compulsory copyright license

B. compulsory license
C. exclusive license
D. statutory copyright license
Answer: D
Diff: 1
Essay Questions
73. What are the two types of intellectual properties?
Answer: Intellectual properties can be divided into two principal branches: artistic
property and industrial property. Artistic property encompasses artistic, literary, and
musical works. These are protected, in most countries, by copyrights and neighboring
rights. Industrial property is itself divided into two categories: inventions and trademarks.
Inventions include both useful products and useful manufacturing processes. They are
protected in a variety of ways, the most common protection being in the form of patents,
petty patents, and inventors certificates. Trademarks include true trademarks, trade
names, service marks, collective marks, and certification marks. All of these are markings
that identify the ownership rights of manufacturers, merchants, and service
establishments. They are protected by trademark laws.
Diff: 2
Topic: Introduction
74. Explain the right of performance.
Answer: Copyright owners have a pecuniary right of performance. There are basically
two approaches to the granting of this right. One, set out in the British, French, and U.S.
laws, among others, is to grant a general right of performance (droit de reprsentation).
The French law, which was extensively amended in 1985, provides a good example of
this method. The right of performance is the right to communicate the work to the public
by any means whatsoever, including public recitation, lyrical performance, public
presentation, public projection, and telecommunication.
Diff: 2
75. According to the 1976 U.S. Copyright Act, what are the seven categories of works
that are eligible for copyright protection?
Answer: According to the 1976 U.S. Copyright Act, the seven categories of works that
are eligible for copyright protection are as follows:
1. Literary works
2. Musical works, including any accompanying words
3. Dramatic works, including any accompanying music
4. Pantomimes and choreographic works
5. Pictorial, graphic, and sculptural works
6. Motion pictures and other audiovisual works
7. Sound recordings
Diff: 2
76. What are the different types of patents?
Answer: The different types of patents are as follows:

Design patents: These are granted to protect new and original designs of an article
of manufacture.
Plant patents: These are granted for the creation or discovery of a new and distinct
variety of a plant.
Utility patents: These are granted for the invention of a new and useful process,
machine, article of manufacture, or composition of matter.
Diff: 2
77. What is an invention?
Answer: An invention is (1) new if no other inventor has obtained a patent for the same
invention; it (2) involves an inventive step if the subject matter of the invention was not
obvious at the time the invention was made to a person having ordinary skill in the art to
which said subject matter pertains; and it is (3) capable of industrial application if the
product or process is one that can be used in industry or commerce.
Diff: 2
78. What are the various marks used by merchants to identify themselves and their
products?
Answer: Following are the marks used by merchants to identify themselves and their
products:
True trademark: It is a mark or symbol used to identify goods of a particular
manufacturer or merchant.
Trade name: It is a mark or symbol used to identify a manufacturer or merchant.
Service mark: It is a mark or symbol used to identify a person who provides services.
Collective mark: It is a mark or symbol used by a group to identify itself to its members.
Certification mark: It is a mark or symbol used by a licensee or franchisee to indicate that
a particular product meets certain standards.
Diff: 3
79. Write a short note on the World Intellectual Property Organization.
Answer: The World Intellectual Property Organization (WIPO) was created in 1967 with
the adoption of the Stockholm Convention. WIPO succeeded the International Bureau of
Paris and the International Bureau of Berne, which had administered the International
Convention for the Protection of Industrial Property (Paris Convention) and the Berne
Convention for the Protection of Literary and Artistic Works (Berne Convention). These
two bureaus had been supervised by the Swiss Federal Council and, functionally, were
joined together as the United International Bureaus for the Protection of Intellectual
Property.
Diff: 2
80. What are the different types of franchise?
Answer: Three types of franchises have evolved since their initial establishment at the
beginning of the twentieth century:
A distributorship franchise: It exists when a manufacturer licenses a dealer to sell its
products. A common example is an automobile dealership.
A chain-style business franchise: It is an arrangement in which a franchisee operates
under a franchisors trade name and is identified as part of the franchisors business
chain. Examples include McDonalds, KFC, Pizza Hut, and other fast-food restaurants.
A manufacturing or processing plant franchise: It comes about when a franchisor
provides the franchisee with the formula or the essential ingredients to make a particular
product. The franchisee then wholesales or retails the product according to the standards
established by the franchisor. Examples of this kind of franchise are Coca-Cola, Pepsi-
Cola, and the other soft-drink firms.
Diff: 3
81. Distinguish between horizontal competition agreements and vertical competition
agreements.
Answer: Horizontal competition agreements are agreements between competitors that

have the effect of diminishing competition. Vertical competition agreements are
agreements between sellers and buyers.
Diff: 1
82. What are the different types of cartels?
Answer: The different types of cartels are as follows:

Cross-licensing agreement: It is an agreement to exchange licenses.
Patent pool: It is an agreement to share patents and other technology.
Multiple licensing agreement: It is a contract for the licensing of industrial property rights
to two or more licensees.
Diff: 2

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Chapter 9: Intellectual Property

True or False Questions

1. Inventions and trademarks are types of artistic property.

8. A certification mark is a mark or symbol used to identify a person who provides

9. A collective mark is a mark used exclusively by a licensee or franchisee to indicate that

14. KFC and Pizza Hut are examples of distributorship.

19. An agreement between a buyer and a seller is called a cartel.

20. A patent pool is an agreement to exchange licenses.

Multiple Choice Questions

30. Which of the following is a type of pecuniary right?

A. common origin doctrine

38. Patents differ from copyrights in that, patents ________.

A. are granted for an unlimited period of time

42. A ________ is a mark or symbol used to identify goods of a particular manufacturer

44. Gatorade is an example of a ________.

A. It was created with the adoption of the Vienna Convention.

A. common origin doctrine

A. Patent Cooperation Treaty

50. A ________ is an authority granted by the owner of an intellectual property to another

53. Subway and Dunkin Donuts are examples of a ________.

56. Which of the following is an example of a distributorship franchise?

A. choice of law rule

A. first sale doctrine

A. vertical competition agreements

61. Agreements between sellers and buyers are called ________.

A. vertical competition agreements

62. Which of the following is true of a cartel?

63. A cross-licensing agreement is ________.

A. an agreement to exchange licenses

64. An agreement to share patents and other technology is called a ________.

A. WIPO Copyright Treaty

67. Which of the following is true of the price-fixing clause?

A. It is a provision forbidding a licensee from competing with the licensor.

A. compulsory copyright license

73. What are the two types of intellectual properties?

74. Explain the right of performance.

76. What are the different types of patents?

Answer: The different types of patents are as follows:

77. What is an invention?

79. Write a short note on the World Intellectual Property Organization.

80. What are the different types of franchise?

Answer: Horizontal competition agreements are agreements between competitors that

82. What are the different types of cartels?

Answer: The different types of cartels are as follows:

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