Dynamic Business Law The Essentials 4th Edition Kubasek Test Bank

Dynamic Business Law The Essentials
4th Edition Kubasek Test Bank

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Dynamic Business Law: The Essentials, 4e (Kubasek)
Chapter 8 Real, Personal, and Intellectual Property
1) Real property is commonly referred to as fealty.
Answer: FALSE
Explanation: Real property is commonly referred to as realty. It includes land and everything
permanently attached to it.
Difficulty: 1 Easy
Topic: The Nature of Real, Personal, and Intellectual Property
Learning Objective: 08-01 How are the topics of real, personal, and intellectual property related?
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) The laws of intellectual property protect property that is primarily the result of mental creativity
rather than physical effort.
Answer: TRUE
Explanation: Intellectual property consists of the fruits of one's mind. The laws of intellectual
property protect intangible property that is primarily the result of mental creativity rather than
physical effort.
Difficulty: 2 Medium
Bloom's: Understand
3) Ownership of real property includes the mineral rights below the land but not the airspace above
the land.
Answer: FALSE
Explanation: When a person owns land, she or he owns more than just the surface. The airspace
above the land, extending to the atmosphere, is part of the legal concept of real property.
Ownership of real property also extends to mineral rights; these rights involve the land below the
surface. The landowner has the legal ability to dig or mine minerals from the earth, and he may sell
or give these rights to another person.
Topic: Real Property
Learning Objective: 08-02 How does real property law balance private and public rights?
Bloom's: Understand
1
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4) A landowner cannot be required to involuntarily transfer his or her property to the government,
because compelling the landowner to do so would violate the Due Process Clause of the United
States Constitution.
Answer: FALSE
Explanation: Most transfers of property are voluntary. However, for the benefit of the public, and
to protect public health, safety, and welfare, the government may require involuntary transfers of
property.
Bloom's: Understand
5) A license is an irrevocable right to use some part of another's land for a specific purpose without
taking anything from it.
Answer: FALSE
Explanation: An easement is an irrevocable right to use some part of another's land for a specific
purpose without taking anything from it.
Learning Objective: 08-03 What are the interests in real property that one can hold?
Bloom's: Understand
6) If a tenant subleases property to another party, the initial tenant is no longer liable for payment
of the rent for the remainder of the lease term.
Answer: FALSE
Explanation: Subleasing of the property by the tenant to another party is permissible unless
specifically prohibited by the lease. However, the initial tenant is liable throughout the entire term
of the lease for payment of the rent to the landlord.
Bloom's: Understand
2
7) A license is a right to use another's property that is both permanent and irrevocable.
Answer: FALSE
Explanation: A license is a right to use another's property that is both temporary and revocable.
For example, when a person purchases a theater ticket, he or she has the right to a specific use of
the property for a limited time, subject to good behavior. No property interest goes to the license
holder.
Bloom's: Understand
8) Condemnation is a legal process that is protected by the federal constitution and allows the
government to take private property for the use of the public without paying the owner
compensation for the property.
Answer: FALSE
Explanation: Condemnation is a legal process by which a transfer of property is made against the
protest of the property owner. Pursuant to the Takings Clause of the Fifth Amendment to the
United States Constitution, the government has a constitutional right to take private property for
the use of the public provided that it pays the owner fair compensation. This right may be exercised
at any government level, and sometimes it is exercised on behalf of a private company operating to
benefit the public.
Bloom's: Understand
9) All property that is not land or permanently affixed to land is real property.
Answer: FALSE
Explanation: All property that is not land or permanently affixed to land is personal property.
Difficulty: 1 Easy
Topic: Personal Property
Learning Objective: 08-04 What are the types of personal property?
Bloom's: Remember
3
10) Tangible property includes items such as furniture, cars, and other goods.
Answer: TRUE
Explanation: Tangible property is property that can be identified by the senses. It is property that
you can see or touch. Tangible property includes items such as furniture, cars, and other goods.
Bloom's: Understand
11) A bank account is an example of intangible property.
Answer: TRUE
Explanation: Intangible property includes such items as bank accounts, stocks, and insurance
policies.
Bloom's: Understand
12) A donor makes a gift causa mortis based on the realization that, at some point in the distant
future, he or she will ultimately die.
Answer: FALSE
Explanation: A donor makes a gift causa mortis in contemplation of his or her immediate death.
Learning Objective: 08-05 How do you transfer personal property?
Bloom's: Understand
4
13) To register a domain name on the Internet, an application must be filed with the United States
Patent and Trademark Office.
Answer: FALSE
Explanation: To register a domain name on the Internet, an application must be filed with
Network Solutions, Inc.
Topic: Intellectual Property
Learning Objective: 08-07 What are the similarities and differences among the methods for
protecting various types of intellectual property?
Bloom's: Remember
AACSB: Technology
14) A party may lose registration of a domain name by not using it for more than 30 days.
Answer: FALSE
Explanation: A party may lose registration of a domain name by not using it for more than 90
days.
Bloom's: Understand
AACSB: Technology
15) Trade dress is entitled to the same protection as a trademark.
Answer: TRUE
Explanation: Trade dress refers to the overall appearance and image of a product, and it is entitled
to the same protection as a trademark. An example of trade dress is the shape and design of Apple's
iPhone.
Bloom's: Understand
5
16) Copyrights protect ideas themselves.
Answer: FALSE
Explanation: Copyrights protect the expression of creative ideas. Copyrights do not protect the
ideas themselves; instead, they protect only the fixed form that expresses the ideas.
Bloom's: Understand
17) In order for a work to be copyrightable, it must be fixed, original, and creative.
Answer: TRUE
Explanation: There are three criteria for a work to be copyrightable. First, it must be fixed, which
means set out in a tangible medium of expression. Second, it must be original. Third, it must be
creative.
Bloom's: Remember
18) A copyrighted work that is reproduced with the appropriate notice affixed is protected for ten
years and is subject to indefinite renewal by the copyright holder.
Answer: FALSE
Explanation: A copyrighted work that is reproduced with the appropriate notice affixed is
protected for the life of its creator plus 70 years.
Bloom's: Understand
6
19) The fair-use doctrine gives teachers unlimited protection from copyright liability, provided
that they use copyrighted work exclusively for educational purposes.
Answer: FALSE
Explanation: In determining whether the fair-use doctrine provides a valid defense to a claim of
copyright infringement, Section 107 of the Copyright Act requires that the court weigh the
following four factors: the purpose and character of the use, the nature of the copyrighted work, the
amount and substantiality of the portion used in relation to the copyrighted work as a whole, and
the effect of the use on the potential market for or value of the copyrighted work.
Bloom's: Understand
AACSB: Reflective Thinking
20) Cross-licensing of patents is illegal.
Answer: TRUE
Explanation: Cross-licensing occurs when two patent holders license each other to use their
patents only on the condition that neither licenses anyone else to use his or her patent without the
other's consent. Cross-licensing is illegal because it tends to reduce competition.
Bloom's: Understand
21) When a patent is issued for an object, it gives the holder the exclusive right to produce, sell,
and use the object of the patent for the life of the holder plus 70 years.
Answer: FALSE
Explanation: When a patent is issued for an object, it gives the holder the exclusive right to
produce, sell, and use the object of the patent for 20 years from the date of the patent application.
Bloom's: Remember
7
22) A company's client list may be considered a trade secret.
Answer: TRUE
Explanation: A trade secret is a process, product, method of operation, or compilation of
information that gives a businessperson an advantage over his or her competition. A company's
client list may be considered a trade secret.
Bloom's: Understand
23) Reverse engineering is an unlawful way to discover a trade secret.
Answer: FALSE
Explanation: Competitors may discover a trade secret by any lawful means, such as by doing
reverse engineering. Lawful discovery of a trade secret means there is no longer a trade secret to be
protected.
Bloom's: Understand
24) Unlike United States eminent domain law, the German federal government may expropriate
land for the public good without paying the landowner compensation.
Answer: FALSE
Explanation: Similar to eminent domain law in the United States, the German federal
government may expropriate land for the public good, but only if it provides the landowner
compensation.
Bloom's: Understand
8
25) In Kelo v. City of New London, the United States Supreme Court ruled that as a matter of law,
the government violates the Fifth Amendment to the U.S. Constitution by taking private property
and selling it for private development.
Answer: FALSE
Explanation: In Kelo v. City of New London, the United States Supreme Court ruled that a
government's taking of private property to sell for private development may qualify as a "public
use" within the Takings Clause of the U.S. Constitution.
Bloom's: Understand
26) Lost property and mislaid property are the same legal theories.
Answer: FALSE
Explanation: Lost property is property that the true owner has unknowingly or accidentally
dropped or left somewhere. Mislaid property differs from lost property in that the owner has
intentionally placed the property somewhere but has forgotten its location.
Bloom's: Understand
27) What are the three basic types of property?

A) Real, tangible, and personal
B) Real, intellectual, and community
C) Intellectual, real, and tangible
D) Real, personal, and intellectual
E) Tangible, intangible, and personal
Answer: D
Explanation: The three basis types of property are real, personal, and intellectual.
Difficulty: 1 Easy
Bloom's: Remember
9
28) Land and everything permanently attached to it are known as ________ property.
A) real
B) personal
C) absolute
D) fee simple
E) fee simple absolute
Answer: A
Explanation: Real property, commonly referred to as realty, is land and everything permanently
attached to it.
Difficulty: 1 Easy
Bloom's: Remember
29) The right to enter onto property to remove underground materials is included in the ownership
of ________ rights.
A) subsurface
B) personal property
C) easement by necessity
D) adverse possession
E) prescriptive easement
Answer: A
Explanation: A landowner has the legal ability to dig or mine the materials from the earth, and he
or she may sell or give these rights to another person. Ownership of these subsurface rights
includes the right to enter onto the property to remove the underground materials.
Difficulty: 1 Easy
Bloom's: Remember
10
30) The duration of one's ownership interest and the power one has over using the land depends on
the type of ________ one is said to hold.
A) possessory interest
B) estate
C) class
D) personal property right
E) attainder
Answer: B
Explanation: There are a number of types of interests in land, ranging from temporary to
permanent to future. The duration of one's ownership interest and the power one has over using the
land depend on the type of estate one is said to hold.
Bloom's: Understand
31) Real property ownership includes airspace above the land, water rights flowing across or
beneath the land, and ________.
A) trees growing next to the land
B) the right to divert the water to deprive landowners downstream from use of the water
C) walkways leading to the land
D) mineral rights under the land
E) roadways providing access to the land
Answer: D
Explanation: Real property ownership extends to mineral rights; these rights involve the land
below the surface. The landowner has the legal ability to dig or mine the materials from the earth,
and he or she may sell or give these rights to another person. Ownership of these subsurface rights
includes the right to enter onto the property to remove the underground materials.
Bloom's: Understand
11
32) A ________ is the most complete estate a person may have.
A) conditional estate
B) life estate
C) leasehold estate
D) future interest
Answer: E
Explanation: With regard to estates in land, a fee simple absolute is the most complete estate a
person may have. Exclusive rights to ownership and possession of the land belong to the person
who has a fee simple absolute. It is this type of estate to which most people refer when they speak
of buying a house or piece of land.
Difficulty: 1 Easy
Bloom's: Remember
33) The owner of a ________ possesses the same interest as the owner of a fee simple absolute,
except that this interest is subject to a condition that may result in termination of the interest.
A) conditional estate
B) life estate
C) leasehold estate
D) future interest
Answer: A
Explanation: The owner of a conditional estate possesses the same interest as the owner of a fee
simple absolute, except that this interest is subject to a condition: If a certain required event fails to
occur or a specific prohibited event occurs, the interest will be terminated.
Bloom's: Understand
12
34) On the death of the holder of a life estate, the property will:
A) Revert to the government, pursuant to the law of eminent domain.
B) Go to another party as designated by the original grantor.
C) Go to another party as designated by the original grantee.
D) Be distributed according to the laws of testate succession.
E) Be distributed according to the laws of intestate succession.
Answer: B
Explanation: A life estate is granted for the lifetime of an individual; the right to possess the
property terminates at the individual's death. On the death of the holder of the life estate, the
property will go to another party as designated by the original grantor.
Bloom's: Understand
35) With a life estate, the future owner has an interest in seeing that the life tenant does not
________ the property.
A) possess
B) utilize
C) improve
D) waste
E) repair
Answer: D
Explanation: With a life estate, the future owner has an interest in seeing that the life tenant does
not waste the property; in other words, the life holder is not allowed to neglect or abuse the
property in a way that diminishes the property value. If the life tenant fails to make necessary
repairs or uses the property in ways damaging to its future value, the future holder could bring
legal action against the holder of the life estate to recover damages for waste.
Difficulty: 1 Easy
Bloom's: Remember
13
36) A future interest usually exists in conjunction with a(n) ________ or a(n) ________.
A) fee simple; fee simple absolute
B) easement; license
C) life estate; conditional estate
D) life estate; fee simple absolute
E) conditional estate; easement
Answer: C
Explanation: A future interest is a person's present right to property ownership and possession in
the future. Such an interest usually exists in conjunction with a life estate or a conditional estate.
Bloom's: Understand
37) Which of the following is an incorrect statement regarding property interests in Vietnam?
A) Vietnam's new constitution asserts that the state owns all the land.
B) If an individual wants to use land, he or she must pay tax on it as a form of rent.
C) Transfer of property can occur only with the approval of a state official.
D) A new owner can never be given a longer term of right or more extensive rights over the land
than the original owner had.
E) The transferring owner determines the price for which property will be transferred.
Answer: E
Explanation: In Vietnam, a state official determines the price at which the property will be
transferred. The Vietnamese government has specified certain prices depending on how the land is
used.
Bloom's: Understand
AACSB: Diversity
14
38) Which of the following are estates that do not include the right to possess the property?
A) Easements
B) Profits
C) Licenses
D) Easements, profits, and licenses
E) Easements and profits, but not licenses
Answer: D
Explanation: Although most people think of interests in land as being possessory in nature, some
estates do not include the right to possess the property. Such interests include easements, profits,
and licenses.
Bloom's: Understand
39) A(n) ________ is an irrevocable right to use some part of another's land for a specific purpose
without taking anything from it.
A) lease
B) profit
C) easement
D) fee simple absolute
E) license
Answer: C
Bloom's: Understand
15
40) A(n) ________ is the right to go onto someone's land and take part of the land or a product of
it away from the land.
A) lease
B) profit
C) easement
D) fee simple absolute
E) license
Answer: B
Explanation: A profit is the right to go onto someone's land and take part of the land or a product
of it away from the land.
Bloom's: Understand
41) A license is a right to use another's property that is both ________ and ________.
A) a life estate; a fee simple absolute
B) an easement; a profit
C) unconditional; irrevocable
D) temporary; revocable
E) permanent; irrevocable
Answer: D
Explanation: A license is a right to use another's property that is both temporary and revocable.
For example, when a person purchases a theater ticket, he or she has the right to a specific use of
the property for a limited time, subject to good behavior. No property interest goes to the license
holder.
Bloom's: Understand
16
42) Which of the following is the legal process by which a transfer of property is made by a
governmental entity against the protest of the property owner pursuant to the Takings Clause of the
Fifth Amendment to the United States Constitution?
A) Allocation
B) Appropriation
C) Condemnation
D) Substitution
E) Adverse possession
Answer: C
Explanation: Condemnation is the legal process by which a transfer of property is made against
the protest of the property owner pursuant to the Takings Clause of the Fifth Amendment to the
United States Constitution.
Bloom's: Remember
43) ________ property consists of the fruits of one's mind.

A) Tangible
B) Real
C) Intellectual
D) Personal
E) Subliminal
Answer: C
Explanation: Intellectual property consists of the fruits of one's mind. The laws of intellectual
property protect property that is primarily the result of mental creativity rather than physical effort.
Difficulty: 1 Easy
Bloom's: Remember
17
44) Tangible property includes:
A) Furniture and cars
B) Furniture and copyrights
C) Bank accounts and patents
D) Bank accounts and stocks
E) Stocks and insurance policies
Answer: A
Explanation: Tangible property is property that can be identified by the senses. It is property that
you can see or touch. Tangible property includes items such as furniture, cars, and other goods.
Bloom's: Understand
45) What type of gift is made by a person during his or her lifetime?
A) A testate distribution
B) An intestate distribution
C) A will codicil
D) A gift inter mortis
E) An inter vivos gift
Answer: E
Explanation: An inter vivos gift is a gift that is made by a person during his or her lifetime.
Difficulty: 1 Easy
Bloom's: Remember
46) What is the term for a gift that is made in contemplation of one's immediate death?
A) A testate distribution
B) An intestate distribution
C) A will codicil
D) A gift causa mortis
E) An inter vivos gift
Answer: D
Explanation: A gift causa mortis is a gift that is made in contemplation of one's immediate death.
Difficulty: 1 Easy
Bloom's: Remember
18
47) What is a distinctive mark, word, design, picture, or arrangement that is used by a producer in
conjunction with a product and tends to cause consumers to identify the product with the producer?
A) Copyright
B) Patent
C) Trade secret
D) Trademark
E) Patent pending
Answer: D
Explanation: A trademark is a distinctive mark, word, design, picture, or arrangement that is used
by a producer in conjunction with a product and tends to cause consumers to identify the product
with the producer.
Difficulty: 1 Easy
Bloom's: Remember
48) Which of the following is a correct statement regarding whether the shape of a product or
package may be a trademark?
A) The shape of a product may be a trademark if it is nonfunctional, but the shape of a package
may not be the subject of a trademark.
B) The shape of a product may be a trademark if it is functional, but the shape of a package may
not be the subject of a trademark.
C) The shape of a product or package may be a trademark if it is functional.
D) The shape of a product or package may be a trademark if it is nonfunctional.
E) The shape of a package may be a trademark if it is nonfunctional, but the shape of a product may
not be the subject of a trademark.
Answer: D
Explanation: The shape of a product or package may be a trademark if it is nonfunctional.
Bloom's: Understand
19
49) Under which of the following conditions is a trademark protected under state common law?
A) If it is used interstate
B) If it is used intrastate
C) If it is used commercially
D) If it is used interstate and commercially
E) If it is used interstate and internationally
Answer: B
Explanation: A trademark used intrastate is protected under state common law.
Bloom's: Understand
50) To be protected in ________ use, a trademark must be registered with the United States Patent
Office under the Lanham Act of 1947.
A) interstate
B) intrastate
C) interstate and intrastate
D) intrastate and international
E) interstate, intrastate, and international
Answer: A
Explanation: To be protected in interstate use, the trademark must be registered with the United
States Patent Office under the Lanham Act of 1947.
Difficulty: 1 Easy
Bloom's: Remember
20
51) What was the holding of the United States Supreme Court in the Qualltex Co. v. Jacobson
Products Co. case?
A) A sound cannot constitute a trademark
B) A sound can constitute a trademark
C) A shape can constitute a trademark
D) A color cannot constitute a trademark
E) A color can constitute a trademark
Answer: E
Explanation: In writing for the majority in the United States Supreme Court case Qualltex Co. v.
Jacobson, Justice Stephen Breyer opined that a color can constitute a trademark, stating that both
the language of the Lanham Act and the basic underlying principles of trademark law would seem
to include color within the universe of things that could qualify as a trademark.
Bloom's: Remember
52) To properly register a trademark with the United States Patent and Trademark Office, one
must:
A) Submit a drawing of the mark, indicate when it was first used in intrastate commerce, and
indicate how it is used.
B) Submit a drawing of the mark, indicate when it was first used in interstate commerce, and
C) Submit a drawing of the mark, indicate when it was first used in international commerce, and
D) Submit a drawing of the mark and indicate when it was first used in intrastate commerce, but
one need not indicate how it is used.
E) Submit a drawing of the mark and indicate when it was first used in interstate commerce, but
one need not indicate how it is used.
Answer: B
Explanation: To properly register a trademark with the United States Patent and Trademark
Office, one must submit a drawing of the mark, indicate when it was first used in interstate
commerce, and indicate how it is used.
Bloom's: Understand
21
53) Once a trademark is registered, when must it be initially renewed?
A) Between the first and second years
B) Between the second and third years
C) Between the third and fourth years
D) Between the fourth and fifth years
E) Between the fifth and sixth years
Answer: E
Explanation: Once the mark is registered, the registration must be renewed between the fifth and
sixth years.
Bloom's: Remember
54) Assuming it was initially registered with the United States Patent and Trademark Office after
1990, how often must a trademark be renewed after its initial renewal?
A) Every seven years
B) Every ten years
C) Every eleven years
D) Every twelve years
E) Every twenty years
Answer: B
Explanation: Assuming a trademark was initially registered with the United States Patent and
Trademark Office after 1990, the holder must renew a trademark's registration every ten years after
its initial renewal.
Difficulty: 1 Easy
Bloom's: Remember
22
55) Which of the following was not a factor the court considered in the Toys "R" Us, Inc. v.
Canarsie Kidde Shop, Inc. case in determining whether "Kids 'r' Us" infringed on the "Toys 'R' Us"
mark?
A) The strength of the senior user's mark
B) The degree of similarity between the two marks
C) Evidence of actual confusion
D) The revenue of the defendant corporation
E) The junior user's good faith
Answer: D
Explanation: In the Toys "R" Us, Inc. v. Canarsie Kidde Shop, Inc. case, the District Court of the
Eastern District of New York considered a number of factors in determining whether Kids 'r' Us
infringed on the Toys "R" Us trademark, including: a) the strength of the senior user's mark; b) the
degree of similarity between the two marks; c) evidence of actual mark confusion; and d) the
junior user's good faith (or lack thereof).
Bloom's: Understand
56) Most websites have ________ domain(s).

A) unprotected
B) one
C) two
D) three
E) real property
Answer: C
Explanation: Most websites have two domains. The first-level domain, the one the address ends
with, generally identifies the type of site. The second-level domain is usually the name of whoever
maintains the site.
Bloom's: Understand
AACSB: Technology
23
57) What is the first-level domain of a government site?
A) .gov
B) .net
C) .org
D) .com
E) United States
Answer: A
Explanation: If it is a government site, the domain name will end in .gov.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Technology
58) Which of the following companies is responsible for registering domain names for Internet
use?
A) Internet Solutions, Inc.
B) Domain Names Corporation
C) Internet Domains, Inc.
D) Network Solutions, Inc.
E) Internet Networks Corporation
Answer: D
Explanation: Network Solutions, Inc. (NSI), which is funded by the National Science
Foundation, is responsible for registering domain names. This entity acts on behalf of the Internet
Network Information Center, which handles the daily administration of the domain name system
in the United States.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Technology
24
59) A registrant may lose registration of a domain name for Internet usage by not using it for more
than ________ days.
A) 30
B) 60
C) 90
D) 120
E) 180
Answer: C
Explanation: A party may lose registration of a name by not using it for more than 90 days.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Technology
60) Which of the following provides that a portion of a copyrighted work may be reproduced for
purposes of criticism, comment, news reporting, teaching, scholarships, and research?
A) The limited-use doctrine
B) The copyright-use doctrine
C) The fair-use doctrine
D) The trade-use doctrine
E) The trade-dress doctrine
Answer: C
Explanation: The fair-use doctrine provides that a portion of a copyrighted work may be
reproduced for purposes of "criticism, comment, news reporting, teaching (including multiple
copies for classroom use), scholarships, and research."
Difficulty: 1 Easy
Bloom's: Remember
25
61) A patent protects a product, process, invention, machine, or a(n) ________.
A) trademark
B) copyright
C) plant produced by asexual reproduction
D) book that has not yet been submitted for copyright protection
E) idea
Answer: C
Explanation: A patent protects a product, process, invention, machine, or a plant produced by
asexual reproduction.
Bloom's: Understand
62) Which of the following must be satisfied in order for a patent, other than a design patent, to be
granted?
A) The object of the patent must be antiquated.
B) The object of the patent must be non-utilitarian.
C) The object of the patent must be obvious.
D) The object of the patent must be non-obvious.
E) The object of the patent must be novel, useful, and nonobvious.
Answer: E
Explanation: For a patent to be granted, the following three criteria must be satisfied: the object
of the patent must be novel, or new; the object must be useful, unless it is a design; and the object
must be nonobvious.
Bloom's: Understand
26
63) When a patent is issued for an object, it gives its holder the exclusive right to produce, sell, and
use the object of the patent for ________ years from the date of application.
A) ten
B) twenty
C) thirty
D) forty
E) fifty
Answer: B
Explanation: When a patent is issued for an object, it gives its holder the exclusive right to
produce, sell, and use the object of the patent for twenty years from the date of application.
Difficulty: 1 Easy
Bloom's: Remember
64) Which of the following is a correct statement regarding trade-secret protection under common
law?
A) A trade secret is protected from unlawful appropriation by competitors as long as it is kept
secret and consists of elements not generally known in the trade.
B) A trade secret is protected from unlawful appropriation by competitors for ten years so long as
no competitor gains access to the secret through lawful means.
C) A trade secret is protected from unlawful appropriation by competitors for twenty years so long
as no competitor gains access to the secret through lawful or unlawful means.
D) A trade secret is protected from unlawful appropriation by competitors for thirty years.
E) A trade secret is protected from unlawful appropriation by competitors for seventy years.
Answer: A
Explanation: Under common law, a trade secret is protected from unlawful appropriation by
competitors as long as it is kept secret and consists of elements not generally known in the trade.
Bloom's: Understand
27
65) Which of the following is an incorrect statement regarding trade-secret protection?
A) Competitors may not legally discover a trade secret by doing reverse engineering.
B) Competitors may legally discover a trade secret by going on public tours of plants and
observing the use of the trade secret.
C) Lawful discovery of a trade secret means there is no longer a trade secret to be protected.
D) An invention may be considered a trade secret.
E) A design may be considered a trade secret.
Answer: A
Explanation: Competitors may discover a trade secret by any lawful means, such as by doing
reverse engineering or by going on public tours of plants and observing the use of trade secrets.
Bloom's: Understand
66) To stop a competitor from using a trade secret, the plaintiff must prove that a trade secret
actually existed, the defendant acquired the trade secret unlawfully, and ________.
A) the trade secret is the plaintiff's sole intellectual property right
B) the inventor successfully patented the trade secret
C) the defendant published the trade secret
D) the defendant used the trade secret without the plaintiff's permission
E) the plaintiff had the trade secret for less than 20 years
Answer: D
Explanation: To stop a competitor from using a trade secret, the plaintiff must prove that a trade
secret actually existed, the defendant acquired the trade secret unlawfully, and the defendant used
the trade secret without the plaintiff's permission.
Bloom's: Understand
28
67) The term ________ refers to the overall appearance and image of a product.
A) product placement
B) trade dress
C) product gravitas
D) trade baiting
E) product baiting
Answer: B
Explanation: The term trade dress refers to the overall appearance and image of a product. For
example, the shape and design of Apple's iPhone is an example of trade dress.
Difficulty: 1 Easy
Bloom's: Remember
68) Which of the following is a correct statement regarding trade dress?

A) Trade dress is entitled to the same protection as a trademark.
B) Trade dress is entitled to less protection than a trademark.
C) Trade dress is entitled to more protection than a trademark.
D) Trade dress is entitled to the same protection as a patent.
E) Trade dress is entitled to less protection than a patent.
Answer: A
Explanation: The terms trade dress refers to the overall appearance and image of a product. Trade
dress is entitled to the same protection as a trademark.
Difficulty: 1 Easy
Bloom's: Remember
29
69) Bank accounts, stocks, and insurance policies are examples of which of the following types of
property?
A) Tangible
B) Intangible
C) Substantive
D) Real
E) Illusory
Answer: B
Explanation: Intangible property includes such items as bank accounts, stocks, and insurance
policies.
Bloom's: Understand
70) Which of the following is a way in which a gift differs from a purchase as a way of transferring
ownership?
A) Once delivered, a gift may be taken back by the person who gave the gift, whereas that is not
true when an item is purchased.
B) No consideration is needed for a gift.
C) No written contract is needed for a gift, whereas it is needed for a purchase.
D) No certificate of title is needed for a gift, whereas it is needed for a purchase.
E) A mere possessory right accompanies a gift, whereas an ownership right accompanies
acquisition of property by purchase.
Answer: B
Explanation: When transfer of the property is by purchase, the acquiring party gives some
consideration to the seller in exchange for title to the property; that is not the case, however, when
gifts are involved.
Bloom's: Understand
30
71) Which of the following is/are needed for a valid gift?
A) Delivery
B) Donative intent
C) Acceptance
D) Delivery, donative intent, and acceptance
E) Delivery and donative intent, but not acceptance
Answer: D
Explanation: Three elements are necessary for a valid gift. First, there must be delivery of the
gift. Second, the delivery must be made with donative intent to make an immediate gift. Third,
there must be acceptance, a willingness of the donee to take the gift from the donor.
Bloom's: Understand
72) Property that the original owner has discarded is ________ property.
A) mislaid
B) lost
C) eminent domain
D) abandoned
E) adversely possessed
Answer: D
Explanation: Property that the original owner has discarded is abandoned property.
Difficulty: 1 Easy
Bloom's: Remember
31
73) Which of the following describes property that the true owner has unknowingly or accidentally
dropped or left somewhere?
A) Lost
B) Eminent domain
C) Discarded
D) Abandoned
E) Adversely possessed
Answer: A
Explanation: Lost property is property that the true owner has unknowingly or accidentally
dropped or left somewhere.
Difficulty: 1 Easy
Bloom's: Remember
74) Which of the following describes property that the true owner has intentionally placed
somewhere but has forgotten its location?
A) Lost
B) Mislaid
C) Discarded
D) Abandoned
E) Adversely possessed
Answer: B
Explanation: Mislaid property differs from lost property in that the owner has intentionally
placed the property somewhere but has forgotten its location.
Difficulty: 1 Easy
Bloom's: Remember
32
75) Which of the following is a correct statement regarding lost property?
A) In most states, the finder of lost property has title to the lost good against all, including the
person who lost the property.
B) In most states, the finder of lost property has title to the lost good against all except the true
owner.
C) In most states, the finder of lost property has no title to the lost good since the good must be
turned over to the local police department for later sale if the true owner cannot be located.
D) In all states, the finder of lost property has an obligation to put a notice in the local newspaper
looking for the true owner before the finder of the property can claim ownership.
E) In most states, the finder of lost property has title to the lost good against all except the person
who lost the property, but that right only arises after the finder of the property proves that he or she
spent at least one-third of the fair market value of the property in an attempt to locate the true
owner.
Answer: B
Explanation: In most states, the finder of lost property has title to the lost good against all except
the true owner.
Difficulty: 1 Easy
Bloom's: Remember
33
76) Disputed Ring. While working in the yard, Tina found a beat-up ring. Becca, an eighteen-year
old neighbor, came over to visit and liked the ring. Tina said, "You can have this old thing if you
would like." Becca replied, "I really like it - Maybe it's a real diamond!" Tina laughingly told her
that there was a one in a billion chance of that and that Tina was more likely to win the lottery. A
few months later Becca ran over to Tina's house and told Tina that the ring was actually a diamond
worth thousands of dollars! Becca gave Tina the ring to examine. Tina put it in her pocket and told
Becca that she would never have given it to her if she had realized its value and that possession was
back where it had always belonged. Tina also told Becca that Becca failed to legally accept the gift
because she did not know its true value and because Tina did not sign any document turning over
title. Becca sues. Which of the following describes the type of gift at issue?
A) A gift causa mortis
B) An inter vivos gift
C) A gift inter mortis
D) A gift causa vivos
E) A non-donative gift
Answer: B
Explanation: Inter vivos gifts are gifts made by a person during his or her lifetime. Three
elements are necessary for a valid inter vivos gift. First, there must be delivery of the gift. Second,
the delivery must be made with donative intent to make an immediate gift. Third, there must be
acceptance, a willingness of the donee to take the gift from the donor.
Difficulty: 3 Hard
Bloom's: Apply
34
because she did not know its true value and also because Tina did not sign any document turning
over title. Becca sues. Which of the following is true regarding Tina's statement that she was
entitled to the ring because she would not have given it to Becca if she had known the true value?
A) Tina is entitled to ownership of the ring, but only if she can prove that she did not realize its true
value.
B) Tina is entitled to ownership of the ring, but only if she can prove that she did not realize its true
value and that there was a difference of at least $1,000 between what she believed the value to be
and its true value.
C) Tina is entitled to ownership of the ring, but only if she can prove that she did not realize its true
value and that there was a difference of at least $10,000 between what she believed the value to be
and its true value.
D) Tina is entitled to ownership of the ring, but only because neither she nor Becca realized its true
value.
E) Being ignorant of the value of the ring does not entitle Tina to ownership of it.
Answer: E
Explanation: Inter vivos gifts are gifts made by a person during his or her lifetime. Three
elements are necessary for a valid inter vivos gift. First, there must be delivery of the gift. Second,
the delivery must be made with donative intent to make an immediate gift. Third, there must be
acceptance, a willingness of the donee to take the gift from the donor.
Difficulty: 3 Hard
Bloom's: Evaluate
35
because she did not know its true value and also because Tina did not sign any document turning
over title. Becca sues. Which of the following is true regarding Tina's statement that Becca could
not have validly accepted the ring?
A) If the ring is valued at $500 or more, then Tina is correct that Becca did not validly accept the
ring because a writing would have been needed to validate acceptance.
B) If the ring is valued at $1,000 or more, then Tina is correct that Becca did not validly accept the
C) If the ring is valued at $10,000 or more, then Tina is correct that Becca did not validly accept the
D) Tina is correct that Becca could not have validly accepted the ring when she did not understand
its true value.
E) Tina is incorrect; Becca validly accepted the ring as a gift.
Answer: E
Explanation: A transfer of ownership of the ring required no formalities and acceptance is
satisfied by the willingness of the donee to take the gift from the donor.
Difficulty: 3 Hard
Bloom's: Apply
36
79) Easement Dispute. Sally buys a house from Bob that borders on a lake. Her deed gives her the
most complete estate a person may have. She is in her bathing suit sunning one day when her
neighbor, Fred, cuts through her yard. Sally tells him not to do that anymore. Fred informs her that
he had previously purchased and properly recorded a right to cut across her yard to get lake access.
Sally asks you what she should do to try to get rid of Fred because she doesn't like his cutting
through her yard when she is sunning. What type of estate did Sally purchase from Bob?
A) A life absolute estate
B) A conditional estate
C) A fee simple absolute estate
D) A limited estate
E) A subject estate
Answer: C
Explanation: With regard to estates in land, a fee simple absolute is the most complete estate a
person may have. Exclusive rights to ownership and possession of the land belong to the person
who has a fee simple absolute. It is this type of estate to which most people refer when they speak
of buying a house or piece of land.
Difficulty: 3 Hard
Bloom's: Apply
through her yard when she is sunning. What is the type of right that Fred is exercising by cutting
through the yard called?
A) A profit
B) A license
C) Adverse possession
D) An easement
E) Eminent domain
Answer: D
Difficulty: 3 Hard
Bloom's: Apply
37
through her yard when she is sunning. What is the best advice you can give Sally regarding getting
rid of Fred?
A) To call the police when he shows up, because any rights he had terminated when Sally bought
the property.
B) To sell her property and move to another house, because she has absolutely no hope in this case.
C) To tolerate Fred for one year, because his interest could only last that long after her purchase.
D) To tolerate Fred for three years, because his interest could only last that long after her purchase.
E) To reach some sort of agreement with him, possibly by paying him to give up the easement.
Answer: E
Explanation: Easements can be terminated in many ways, including by express agreement.
Difficulty: 3 Hard
Bloom's: Evaluate
38
82) Wedding Photos. Bobby took a number of wedding photos at Jill's wedding. He was paid as the
photographer. On all of the photographs, he appropriately noted in the bottom right corner the
necessary information showing that he was claiming copyright protection. Jill came to see Bobby
three years after the initial photographs were taken and requested that he grant her permission to
make as many copies as she wanted at the local photo shop from the pictures that she initially
purchased. The photo shop had refused to reproduce the photographs without his permission.
When he refused to give her permission to do so, Jill started a heated argument. She told Bobby
that photographs are not entitled to copyright protection. She also told him that even if he was
correct that there was some copyright protection, she was engaged in fair use, and in any event,
damages for copyright infringement are unavailable. Which of the following is correct regarding
Jill's claim that photographs are not subject to copyright protection?
A) She is correct. Photographs are not subject to copyright protection, even if taken by a
professional photographer.
B) She is correct, but only because family pictures are involved. Family pictures may not be the
subject of copyright protection, but landscape photographs may be the subject of copyright
protection.
C) She is partially correct. Bobby was entitled to copyright protection on the first picture. After Jill
purchased the first picture, however, she could make as many copies as she wanted.
D) She is correct, but only because Bobby had not registered the photographs for copyright
protection.
E) She is incorrect.
Answer: E
Explanation: There are three criteria for a work to be copyrightable. First, it must be fixed, which
means set out in a tangible medium of expression. Second, it must be original. Third, it must be
creative.
Difficulty: 3 Hard
Bloom's: Apply
39
damages for copyright infringement are unavailable. Which of the following is true regarding Jill's
claim that she was engaged in fair use?
A) It is likely that she would win on the claim, because she does not seek to use the photographs for
commercial purposes.
B) It is likely that she would win on the claim, because she only seeks to copy what she has already
purchased.
C) This issue is not relevant, because Bobby is not entitled to copyright protection on the
photographs.
D) She would lose, because the fair-use doctrine is only available to educators.
E) She would likely lose under the "weighing test" mandated by the Copyright Act.
Answer: E
Explanation: In determining whether the fair-use doctrine provides a valid defense to a claim of
copyright infringement, Section 107 of the Copyright Act requires that the court weigh the
following four factors: a) the purpose and character of the use; b) the nature of the copyrighted
work; c) the amount and substantiality of the portion used in relation to the copyrighted work as a
whole; and d) the effect of the use on the potential market for or value of the copyrighted work.
Difficulty: 3 Hard
Bloom's: Apply
40
damages for copyright infringement are unavailable. Which of the following is correct regarding
Jill's claim that damages for copyright infringement are unavailable?
A) Damages are available, but a copyrighted work must be registered in order for the creator to
recover damages from infringement.
B) It is not necessary that a copyrighted work be registered in order for the creator to obtain
damages from infringement.
C) Damages for copyright infringement are only available if two businesses are involved (i.e., a "B
to B" transaction), not in disputes involving an individual such as Jill.
D) Some material that is subject to copyright must be registered before its creator may recover
damages for infringement, but that is not true for photographs.
E) She is correct that damages are unavailable in copyright infringement actions, since only
injunctive relief is available.
Answer: A
Explanation: For the creator to be able not only to seek an injunction but also recover damages
arising from the infringement, the copyrighted work must be registered.
Difficulty: 3 Hard
Bloom's: Apply
41
damages for copyright infringement are unavailable. If Bobby decides to register the photographs
under copyright law, how would he go about doing so?
A) He would register by filing a form with the Register of Copyrights and providing two copies of
the copyrighted materials to the Library of Congress.
B) He would register simply by filing a form with the Register of Copyrights.
C) He would register simply by providing two copies of the copyrighted materials to the Library of
Congress.
D) He would register merely by affixing the appropriate symbol at the bottom of the photograph
followed by the first date of publication and his name.
E) There is nothing he can do since the photographs are not subject to copyright protection.
Answer: A
Explanation: One may register a work by filing a form with the Register of Copyrights and
providing two copies of the copyrighted material to the Library of Congress.
Difficulty: 3 Hard
Bloom's: Evaluate
42
86) Scuba Diving. Marcy invented a new type of mask for scuba divers that was not subject to
fogging. She agrees to allow Jenny to manufacture and sell the mask. She receives a sum of money
for every mask that Jenny sells. Similarly, Marcy entered into an agreement with Frank to allow
him to sell the masks, but only if he also purchased non-patented diving suits from Marcy. All
parties proceeded to do very well with their sales. Marcy's agreement with Jenny allowing Jenny to
sell the mask is referred to as which of the following?
A) A license
B) A patent agreement
C) A trade agreement
D) An illegal agreement
E) A franchise agreement
Answer: A
Explanation: The holder of a patent may license, or allow others to manufacture and sell, the
patented object.
Difficulty: 3 Hard
Bloom's: Apply
parties proceeded to do very well with their sales. In the context of intellectual property law,
payments that Marcy receives from Jenny for the sale of the mask are referred to as which of the
following?
A) Profits
B) Receipts
C) Royalties
D) Payoffs
E) Graft
Answer: C
Explanation: In most cases, patents are licensed in exchange for the payment of royalties, a sum
of money paid for each use of the patented process.
Difficulty: 3 Hard
Bloom's: Apply
43
parties proceeded to do very well with their sales. Which of the following describes the agreement
between Marcy and Frank?
A) It is a legal tying arrangement.
B) It is a legal cross-licensing agreement.
C) It is an illegal tying arrangement.
D) It is an illegal cross-licensing agreement.
E) It is both a legal tying and a legal cross-licensing agreement.
Answer: C
Explanation: A patent holder may not use the patent for an illegal purpose. The two most
common illegal purposes are tying arrangements and cross-licensing. A tying arrangement occurs
when the holder issues a license to use the patented object only if the licensee agrees to buy some
non-patented product from the holder. Cross-licensing occurs when two patent holders license
each other to use their patents only on the condition that neither licenses anyone else to use his or
her patent without the other's consent. Both of these activities are unlawful because they tend to
reduce competition.
Difficulty: 3 Hard
Bloom's: Apply
44
89) Lottery Winnings. Frank, a hypochondriac who was also very compulsive, was having minor
surgery to repair a bone spur on his foot. He had just purchased a lottery ticket for a chance at the
grand prize of $30,000,000. Frank's girlfriend, Bubbles, went with him to the hospital. While in the
waiting room, Frank said to her, "Bubbles, I may not make it out of this bone spur surgery. Take
my lottery ticket. If I don't make it, I hope you win and live it up, but please don't get another
boyfriend." Bubbles replied, "I could never be happy without you." A nurse saw and heard the
whole exchange. Frank came out of the surgery just fine but with a sore foot. While he was
recuperating that evening, Bubbles watched the lottery drawing and discovered that Frank's ticket
was indeed the winning ticket. She immediately moved out and collected the winnings. Frank saw
her on television with her new boyfriend, George. She appeared to be very happy. He checked the
numbers and discovered that she won with his ticket. Frank says that the lottery money is his.
Which of the following describes the type of gift at issue?
A) A gift causa mortis
B) An inter vivos gift
C) A gift inter mortis
D) A causa vivos gift
E) A non-donative gift
Answer: A
Explanation: A gift causa mortis is a gift that is made in contemplation of one's immediate death.
A gift causa mortis is automatically revoked if the donor recovers.
Difficulty: 3 Hard
Bloom's: Evaluate
45
Which of the following is true regarding Frank's statement at the hospital regarding Bubbles's
taking the ticket?
A) At that point, he made a valid gift that could not be revoked.
B) He did not make a gift because he placed a condition on it.
C) He made an irrevocable gift at that time only if Bubbles never had another boyfriend; otherwise,
she had to give the ticket and any resulting cash to Frank.
D) He made an irrevocable gift at that time if Bubbles refrained from having another boyfriend
until she cashed the ticket; after the ticket was converted, the condition no longer applied.
E) None of these.
Answer: E
Explanation: A gift causa mortis can be revoked any time before the death of the donor and is
automatically revoked if the donor recovers.
Difficulty: 3 Hard
Bloom's: Evaluate
46
Which of the following is true regarding rightful ownership of the lottery money?
A) Frank's gift was automatically revoked when he recovered, and the lottery ticket and any
proceeds are validly his.
B) Although the gift was not automatically revoked on his recovery, Frank has the right to revoke
the gift and recover the lottery proceeds.
C) The gift was not automatically revoked on his recovery, and since Frank did not revoke the gift
prior to Bubbles's cashing the ticket, he has no rights to any funds.
D) Frank has the right to all funds, but only because Bubbles has a new boyfriend.
E) Frank has no rights because once he gave the ticket to Bubbles, he gave up all his rights to the
ticket and its proceeds.
Answer: A
Explanation: A gift causa mortis can be revoked any time before the death of the donor, and it is
automatically revoked if the donor recovers.
Difficulty: 3 Hard
Bloom's: Evaluate
92) Discuss the property rights of the owner of a fee simple absolute in land, including what
interests, if any, the owner has beyond the right to use the surface of the property.
Answer: With regard to estates in land, a fee simple absolute is the most complete estate a person
may have. Exclusive rights to ownership and possession of the land belong to the person who has a
fee simple absolute, including airspace, water, and mineral rights.
Bloom's: Understand
47
93) Describe the procedure for trademark registration, including what the applicant should do
when requesting registration and what the government should do in response to the registration
request. Additionally, identify the circumstances under which a trademark will not be accepted for
registration.
Answer: Trademarks are registered with the United States Patent Office. To register a trademark
with the Patent Office, one must submit a drawing of the mark and indicate when it was first used
in interstate commerce and how it was used. The Patent Office then conducts an investigation to
verify those facts and will register the trademark so long as it is not generic, descriptive, immoral,
deceptive, or substantially similar to another's trademark.
Bloom's: Understand
94) Ellen, who runs a successful nail salon, ran across a very interesting pamphlet on customer
relations. The pamphlet was fifty pages long and cost $70. Ellen thought the price was outrageous.
Accordingly, she bought one copy and photocopied the pages that she thought were pertinent and
gave them to her employees. She copied forty of the pages out of the pamphlet for each of her
twenty employees. A disgruntled employee informed the publisher of the pamphlet of what Ellen
had done and she was charged with copyright infringement. Ellen defended on the basis of the
fair-use doctrine. List the four factors a court would consider in determining whether a violation
occurred. Also, give your reasoned opinion as to whether Ellen is entitled to fair-use protection.
Answer: In determining whether the fair-use doctrine provides a valid defense to a claim of
copyright infringement, Section 107 of the Copyright Act requires the court to weigh the following
four factors:
a) The purpose and character of the use;

b) The nature of the copyrighted work;
c) The amount and substantiality of the portion used in relation to the copyrighted work as a whole;
and
d) The effect of the use on the potential market for or value of the copyrighted work.
Although Ellen did not copy the entire pamphlet, she copied a substantial amount and did so
because she did not want to pay the full price for the copyrighted material for all employees. Her
actions had a negative effect on the market for the work, and she was not copying the work for a
nonprofit educational purpose. In all likelihood, Ellen is not entitled to fair-use protection.
Difficulty: 3 Hard
Bloom's: Evaluate
48
95) What three criteria must be satisfied in order to obtain a patent that is not a design patent?
Answer: A patent protects a product, process, invention, machine, or a plant produced by asexual
reproduction. For this protection to be granted, three criteria must be satisfied. First, the object of
the patent must be novel, or new. No one else must have previously made or published the plans
for the object. Second, the object must be useful (unless it is a design); it must provide some utility
to society. Third, the object must be nonobvious. The invention must not be one that a person of
ordinary skill in the trade could have easily discovered.
Bloom's: Understand
96) Cindy sold her old used automobile to Bruce for $1,000. Cindy told Bruce to come and take the
car and that the transfer would be complete. Is Cindy correct, and why or why not?
Answer: Cindy is incorrect. In order to transfer a vehicle, a certificate of title must be signed by
the seller, taken to the appropriate government agency, and then reissued in the name of the new
owner.
Difficulty: 3 Hard
Bloom's: Evaluate
97) Bernice enjoys snooping, particularly through her neighbor Fernando's trash. She sneaks out
and grabs Fernando's trash while he is at work and his garbage can is at the curb, awaiting the trash
collector's pickup. Bernice goes through it to find out confidential information regarding
Fernando, but never tells anyone else or uses the information for any purpose other than to satisfy
her own curiosity. Discuss whether you believe it is legal and/or ethical for Bernice to go through
Fernando's trash.
Answer: Property that the original owner has discarded is abandoned property. Anyone finding
such property becomes its owner by possessing it. If Fernando's garbage can is at the curb awaiting
the trash collector's pickup, the trash inside the can is most likely abandoned property. Student
answers may vary on the ethical issue. Most students will likely believe that it is unethical to go
through a neighbor's trash, even if the information is not used for any improper purpose.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Ethics
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Dynamic Business Law The Essentials 4th Edition Kubasek Test Bank

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Dynamic Business Law The Essentials

4th Edition Kubasek Test Bank

1) Real property is commonly referred to as fealty.

11) A bank account is an example of intangible property.

15) Trade dress is entitled to the same protection as a trademark.

20) Cross-licensing of patents is illegal.

23) Reverse engineering is an unlawful way to discover a trade secret.

27) What are the three basic types of property?

43) ________ property consists of the fruits of one's mind.

56) Most websites have ________ domain(s).

68) Which of the following is a correct statement regarding trade dress?

E) Tina is incorrect; Becca validly accepted the ring as a gift.

a) The purpose and character of the use;

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