Test Bank for Entrepreneurship, 11th Edition, Robert Hisrich, Michael Peters Dean Shepherd

Test Bank for Entrepreneurship, 11th Edition, Robert

Hisrich, Michael Peters Dean Shepherd

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Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Intellectual property is any patents, trademarks, copyrights, or trade secrets held by an
entrepreneur.

⊚ true
⊚ false

2) Entrepreneurs, because of their lack of understanding of intellectual property, ignore

important steps that they should have taken to protect these assets.

⊚ true
⊚ false

3) A lawyer may work on a retainer basis by which he or she provides office and consulting
time, which includes court time and other legal fees related to the action.

⊚ true
⊚ false

4) When resources are limited, the entrepreneur can offer a lawyer stock in exchange for
legal services.

⊚ true
⊚ false

5) A patent is a contract between the government and an inventor.

⊚ true
⊚ false

6) A design patent has a term of 14 years, beginning on the date of filing with the Patent and
Trademark Office (PTO).

⊚ true
⊚ false

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7) Any invention requiring FDA approval has the term of its patent extended by the amount
of time it takes the FDA to review the invention.

⊚ true
⊚ false

8) The most commonly issued type of patent is the plant patent.

⊚ true
⊚ false

9) A utility patent grants the owner protection from anyone else making, using, and/or
selling the identified invention and generally reflects protection of new, useful, and unobvious
processes.

⊚ true
⊚ false

10) The three main categories of patents are design, utility and provisional patents.

⊚ true
⊚ false

11) The Patent and Trademark Office has established the Office of International Patent
Cooperation in order to decrease the uncertainty of intellectual property rights in global markets.

⊚ true
⊚ false

12) A provisional patent application can be used to establish the date of conception of the
invention.

⊚ true
⊚ false

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13) To prevent others from copying his or her ideas, the entrepreneur should not send
drawings with the patent application.

⊚ true
⊚ false

14) The three major parts of a patent application are the introduction, description and
warranty sections.

⊚ true
⊚ false

15) The claims section of a patent application is probably the most difficult section of the
application to prepare since this area sets the criteria by which any infringements will be
determined.

⊚ true
⊚ false

16) Copying a product and improving it may not be patent infringement.

⊚ true
⊚ false

17) An example of a business method patent is Amazon.com's one-click feature used by a

buyer to order products.

⊚ true
⊚ false

18) To minimize patent risk, an entrepreneur should seek a patent attorney who has
experience in their product line.

⊚ true
⊚ false

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19) A trademark is a distinguishing word, name, or symbol used to identify a product.

⊚ true
⊚ false

20) A trademark is given a 50-year registration with no renewal.

⊚ true
⊚ false

21) To file for trademark protection only intent to use is necessary.

⊚ true
⊚ false

22) Once accepted, the trademark is published in the Trademark Official Gazette to allow
any party 90 days to oppose or request an extension to oppose.

⊚ true
⊚ false

23) Getting a trademark typically takes 2 years.

⊚ true
⊚ false

24) One benefit of having a registered trademark is that it provides a basis for filing
trademark application in foreign countries.

⊚ true
⊚ false

25) A copyright protects original works of authorship.

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 ⊚ true
⊚ false

26) A copyright can be used to protect sculptures or blueprints.

⊚ true
⊚ false

27) Copyright law does not apply to music, especially when downloaded from the Internet.

⊚ true
⊚ false

28) A trade secret is protected by state law.

⊚ true
⊚ false

29) Protection against the leaking of trade secrets is difficult to enforce and noncompete
agreements are not often successful in courts.

⊚ true
⊚ false

30) While dealing with leaking of trade secrets, legal action can be taken only after the secret
has been revealed.

⊚ true
⊚ false

31) Licensing requires the licensee to pay a royalty to the licensor in return for permission to
copy the patent, trademark, or copyright.

⊚ true
⊚ false

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32) Licensing a trademark generally involves a franchising agreement.

⊚ true
⊚ false

33) Licensing agreements generate revenue while minimizing risk and start-up investment
costs.

⊚ true
⊚ false

34) Licensing can be a way to start a new venture when the idea may infringe on someone
else's patent, trademark, or copyright.

⊚ true
⊚ false

35) Casualty insurance may include fire, burglary and theft, and business interruption
coverage.

⊚ true
⊚ false

36) Life insurance of key employees is mandatory in some states.

⊚ true
⊚ false

37) Private companies are not included in the Sarbanes-Oxley Act.

⊚ true
⊚ false

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38) Under the Sarbanes-Oxley Act CEOs are not required to vouch for the firm's financial
statements because they are not involved with the day to day operations of the firm.

⊚ true
⊚ false

39) An oral agreement is enforceable indefinitely.

⊚ true
⊚ false

40) Contracts for the sale of real estate must be in writing to be valid.

⊚ true
⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
41) Which of the following is not part of intellectual property?

A) Trademarks
B) Copyrights
C) Trade secrets
D) Insurance

42) A ________ is a contract between the government and an inventor.

A) patent
B) franchise
C) trademark
D) trade secret

43) Which of the following is a contract that grants the owner protection, based on the
appearance of an object?

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 A) Utility patent
B) Design patent
C) Plant patent
D) Disclosure document

44) The ________ patent is granted for a 14-year term.

A) utility
B) design
C) plant
D) procedure

45) Which of the following statements concerning patents is not true?

A) A patent gives the owner a negative right, preventing anyone from making, using, or
selling the defined invention.
B) A utility patent has a term of 20 years.
C) Plant patents are issues under the same provisions as utility patents.
D) Traditionally, utility patents were thought to be useless because it is easy to design
around a patent.

46) The ________ is filed to establish a date of conception of an invention and replaces what
used to be known as a disclosure document.

A) provisional patent
B) defensive document
C) trademark
D) copyright

47) The section of the patent application which provides the criteria by which any
infringement will be determined is the:

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 A) background and advantages section.
B) description of the invention.
C) claims section.
D) executive summary.

48) The section of the patent application that includes engineering specifications, materials
and components is the:

A) background and advantage section.

B) description of invention.
C) claims section.
D) executive summary.

49) Priceline.com's service where a buyer can submit a price bid for a particular service is an
example of a:

A) utility patent.
B) design patent.
C) business method patent.
D) license.

50) The initial registration for a trademark lasts:

A) 10 years.
B) 14 years.
C) 17 years.
D) 20 years.

51) Which of the following statements concerning trademarks is not true?

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 A) A trademark may be a word, slogan, symbol, design or particular sound.
B) Unlike a patent, trademarks last indefinitely.
C) It is possible to file for a trademark if you intend to use this mark in the future.
D) The PTO is responsible for the federal registration of trademarks.

52) To apply for a trademark:

A) intent to use the mark is required.

B) the mark must actually have been used on goods.
C) the mark must be copyrighted.
D) the mark must have been used on goods that are already traded.

53) It takes approximately ________ to obtain a trademark.

A) 12 months
B) 13 months
C) 14 months
D) 18 months

54) Which government office is responsible for the federal registration of trademarks?

A) U.S. Trademark Services

B) Local Chambers of Commerce
C) Patent and Trademark Office
D) Internal Revenue Service

55) Which of the following is not one of the four requirements needed when filing a
trademark registration?

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 A) A drawing of the mark
B) A claims section
C) Five specimens showing actual use of the mark
D) A completed registration form and appropriate fee

56) Once accepted, the trademark is published in the Trademark Official Gazette to allow
any party ________ days to oppose or request an extension to oppose the use of the mark.

A) 10
B) 30
C) 90
D) 180

57) Authors or publishers of software are protected under:

A) copyrights.
B) trademarks.
C) utility patents.
D) trade secrets.

58) Copyrights are registered with:

A) the U.S. Justice Department.

B) the Internet Commission.
C) the Patent and Trademark Office.
D) the Library of Congress.

59) Copyrights can protect all of the following except:

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 A) music.
B) molded plastic parts.
C) sculptures.
D) models.

60) The term of a copyright is the author's life plus:

A) 20 years.
B) 30 years.
C) 50 years.
D) 70 years.

61) Trade secrets are protected:

A) by the General Agreement on Tariffs and Trade.

B) by federal law.
C) by state law.
D) by the Library of Congress.

62) Trade secrets can be protected for:

A) an unlimited period of time.

B) 20 years according to federal law.
C) 14 years according to state law.
D) 50 years if renewed to the maximum allowed, five 10-year renewable terms.

63) Licensing can be used by the entrepreneur to:

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 A) protect the Board of Directors from liability.
B) insulate management from liability.
C) protect confidentiality of a trade secret.
D) copy a competitor's patent.

64) Which of the following statements concerning the Sarbanes-Oxley Act is not true?

A) The Act requires CEOs to vouch for financial statements.

B) The Act provides that any attempt to influence the internal auditing process is
considered a criminal act.
C) The Act applies to both private and public companies.
D) The Act requires independent audit committees which may conflict with some
foreign countries’ rules and customs.

65) The ________ created the commission that prescribes safety standards for products.

A) Consumer Product Safety Act

B) Patent and Trademark Office
C) Sarbanes-Oxley Act
D) U.S. Labor Department

66) What type of insurance is mandatory in some states?

A) Property
B) Bonding
C) Life
D) Workers' Compensation

67) What type of insurance would cover fire or burglary damage?

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 A) Property
B) Bonding
C) Life
D) Workers' Compensation

68) Which of the following is true regarding the Sarbanes-Oxley Act?

A) It only applies to companies that make over $10 million in gross revenue.
B) Private companies are not included in this act.
C) The act does not cover fraud via TV or radio.
D) The act only covers a narrow range of corporate governance activity.

69) Which of the following is not a condition that makes a contract legally enforceable?

A) Consideration is given by both parties

B) All parties involved are competent
C) Money is exchanged for products/services
D) Acceptance of the offer must be voluntary

70) What type of agreement must always be in writing in order to be a legally binding
contract?

A) Client
B) Distributor
C) Supplier
D) Real estate

71) The courts consider oral agreements under $500 binding if:

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 A) the agreement is for less than one year.
B) the parties have previously done business together.
C) the transaction is for services rendered.
D) the new venture is incorporated.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
72) Define a trade secret and briefly discuss a noncompetition agreement.

73) Identify and describe the three different types of patents.

74) Licensing has significant value as a marketing strategy to holders of patents, trademarks,
or copyrights. Describe licensing agreements in each of the three intellectual property facets:
patents, trademarks, and copyright.

75) What are the main benefits of a registered trademark?

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76) Explain what makes a contract legally enforceable.

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Answer Key

Test name: Entrepreneurship 6

1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) TRUE
6) TRUE
7) TRUE
8) FALSE
9) TRUE
10) FALSE
11) TRUE
12) TRUE
13) FALSE
14) FALSE
15) TRUE
16) TRUE
17) TRUE
18) TRUE
19) TRUE
20) FALSE
21) TRUE
22) FALSE
23) FALSE
24) TRUE
25) TRUE
26) TRUE

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27) FALSE
28) TRUE
29) TRUE
30) TRUE
31) TRUE
32) TRUE
33) TRUE
34) TRUE
35) FALSE
36) FALSE
37) TRUE
38) FALSE
39) FALSE
40) TRUE
41) D
42) A
43) B
44) B
45) D
46) A
47) C
48) B
49) C
50) A
51) B
52) A
53) B
54) C
55) B
56) B

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57) A
58) D
59) B
60) D
61) C
62) A
63) D
64) C
65) A
66) D
67) A
68) B
69) C
70) D
71) A
72) Answer will vary.
Trade secret means protection against others revealing or disclosing
information that could be damaging to business. In certain instances, the
entrepreneur may prefer to maintain an idea or process as confidential
and to sell or license it as a trade secret. The trade secret will have a life
as long as the idea or process remains a secret.
Noncompete agreements are documents that are prepared by an
employer and signed by an employee in order for the company to protect
valuable assets ranging from product information, to marketing ideas,
and unique strategies. Historically, noncompete agreements have not
been very successful in courts. Well-written agreements will hold up in
court if they are fair to all parties and have a reasonable duration and
geographic coverage.

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73) Utility patent—Most popular type, 20-year term. A utility patent
basically grants the owner protection from anyone else making, using,
and/or selling the identified invention and generally reflects protection
of new, useful, and unobvious processes.
Design patent—Covering new, original, ornamental, and unobvious
designs for articles of manufacture, a design patent reflects the
appearance of an object. These patents are granted for a 14-year term
and, like the utility patent, provide the inventor with a negative right
excluding others from making, using, or selling an article having the
ornamental appearance given in the drawings included in the patent.
Plant Patents—These are issued under the same provisions as utility
patents and are for new varieties of plants. These patents represent a
limited area of interest, and thus very few of these types of patents are
issued.
74) A patent license agreement specifies how the licensee would have
access to the patent. For example, the licensor may still manufacture the
product but give the licensee the rights to market it under their label in a
competitive market. This agreement must be carefully worded and
should involve a lawyer, to ensure the protection of all parties.
Licensing a trademark generally involves a franchising agreement. The
entrepreneur operates a business using the trademark and agrees to pay a
fixed sum for use of the trademark, pay a royalty based on sales volume,
buy supplies from the franchisor, or some combination of these.
Copyrights are another popular licensed property. Computer games
have been designed using licenses from arcade games, movies and
television shows. Celebrities will often license the right to use their
name, likeness, image, or name in a product.

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Test Bank for Entrepreneurship, 11th Edition, Robert Hisrich, Michael Peters Dean Shepherd

75) ● It provides notice to everyone that you have exclusive rights to

the use of the mark throughout the territorial limits of the United States.
● It entitles you to sue in federal court for trademark infringement,
which can result in recovery of profits, damages, and costs.
● It establishes incontestable rights regarding the commercial use of
the mark.
● It establishes the right to deposit registration with customs to
prevent importation of goods with a similar mark.
● It entitles you to use the notice of registration (®).
● It provides a basis for filing trademark application in foreign
countries.

76) ● An offer is made. It can be oral or written but is not binding until
voluntary acceptance of offer is given.
● Voluntary acceptance of offer.
● Consideration (something of value) is given by both parties.
● Both parties are competent and/or have the right to negotiate for
their firms.
● Contract must be legal. Any illegal activities under a contract are
not binding. An example might be gambling.
● Any sales of $500 or more must be in writing (all real estate deals
need to be in writing).

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