Deck 13: Legal and Tax Issues, Including Intellectual Property

Question 1

Some corporations give their boards of directors the authority to bind the companies into contracts.

Answer 1

False

Question 2

When choosing an official name, every company has to receive an approval from its respective state regulatory board.

Answer 2

False

Question 3

There are conditions under which a corporation can be taxed as a partnership.

Answer 3

True

Question 4

Business angels prefer to invest in sole proprietorships.

Question 5

The corporate opportunity doctrine basically claims that a director cannot use his position to decide which acquisition deals the company should enter to.

Question 6

Legally, an employee may not compete with his or her employer.

Question 7

You can use any information you gathered at your previous job as long as it is not patented or copyright protected.

Question 8

Persuading your co-workers to leave your employer is not very risky, as long as their defections do not impact the company's ability to function and the conversations are occurring after working hours.

Question 9

Corporations do not necessarily operate in the same state where they were formed.

Question 10

Certain states do not enforce non-compete agreements.

Question 11

Double taxation is not necessarily a problem for a company.

Question 12

National statutes prohibit employment discrimination on the basis of sex, race, nationality, religion, sexual orientation, age, and disability.

Question 13

The number of workers you draw from your former employer to your new company does not matter from the viewpoint of liability.

Question 14

S corporations have the same restrictions as the LLCs, while allocating profit, loss and control more creatively.

Question 15

Although formally there is only one owner in the sole proprietorship, two or more people control the company.

Question 16

It is illegal to sue a former employee's startup for using trade secrets if such a lawsuit can ruin the new venture.

Question 17

Every start-up should concentrate on hiring a litigation attorney from the very beginning.

Question 18

The law protects companies from their employees disclosing trade secrets even if those employees did not sign confidentiality contracts.

Question 19

If a business is not able to pay its debts, under a general partnership, the debt is transferred to the owners.

Question 20

The employer is responsible for any damage done by the employees occurring within the scope of their employment.

Question 21

The owner of the patent has the right to exclude others from making, using, selling, offering for sale or importing the patented invention during the term of the patent.

Question 22

The patent application must contain a complete and understandable explanation of the invention.

Question 23

Even when a patent application is successfully completed, protecting Intellectual Property is not the end game; a patent doesn't generate revenue.

Question 24

A sale more than a year before the application will generally bar a patent even if the invention is embedded so deeply within a larger system that it could never be discovered.

Question 25

From the date the application is filed, there is a "patent pending;" and from the date of a "patent pending," there are real legal rights associated with that designation.

Question 26

In the United States, the patent application must be filed within one year of the first public disclosure, public use, sale, or even offer for sale of the product, or the opportunity to obtain a patent will be lost forever.

Question 27

People like provisional patents because of the future protection that they ensure.

Question 28

Trademark protection cannot be obtained for just some word, symbol, or combination thereof that is used on goods to indicate their source.

Question 29

Once granted, a patent's scope is limited to the content that companies disclose in the drawings and specification portion of the filing.

Question 30

Trademarks can be more valuable to some companies than patents and trade secrets combined.

Question 31

Trade secrets cover proprietary information, but only if they are in the form of an engineering schematic.

Question 32

Trademark law cannot be invoked in Internet search engines, pop-up ads, and websites.

Question 33

Patents today cover non-engineering subject matter ranging from holders for floral bouquets to business methods.

Question 34

Trademarks can differentiate a business's products and services from those of others businesses.

Question 35

Since each patent application is unique, the form of each individual patent does not necessarily contain the same sections.

Question 36

Users of another company's products can be sued for patent infringement.

Question 37

One benefit of trade secrets is they can cover everything patents cover, and much more.

Question 38

To qualify the invention for a patent, the applicant must describe all things novel about the invention.

Question 39

A trade secret is defined as knowledge, which is kept secret for the purpose of gaining an advantage in business.

Question 40

Although there are actually three different kinds of patents, the kind people usually obtain to protect an invention is a design patent.

Question 41

Under what condition will the law consider the company to have taken reasonable protection of its information?

A) If the company made its employees sign non-disclosure agreements
B) If the company successfully kept the information confidential
C) If the company protected the information through copyright laws
D) If the company protected the information by registering patents
E) All of the above

Question 42

Which state is famous for its management-friendly corporate laws?

A) Ohio
B) Massachusetts
C) New Mexico
D) California
E) Delaware

Question 43

In the context of this chapter, IRC stands for: (the acronym is never used)

A) Investment Recovery Center
B) International Residential Code
C) International Relations Center
D) Initial Ready Company
E) Internal Revenue Code

Question 44

What concept requires that an employee does not knowingly take action designed to harm the employer's business?

A) Reasonable protection
B) Employee's obligation
C) Duty of loyalty
D) Corporate tact
E) Generally accepted protection principle

Question 45

Provisionals have found favor because they are typically less expensive than full patent applications and allow companies to advertise "patent pending."

Question 46

The doctrine of vicarious liability states that:

A) The employer's liability for the employee's actions is limited to a specific amount of money (the amount differs from state to state)
B) The employer is responsible for any contract signed by the employee.
C) The employer is responsible for any actions of the employee occurring within the scope of his/her employment
D) The employee always answers for the consequences of his/her criminal actions without transferring the responsibility to the employer
E) Employees can be held criminally liable if they contribute to the unlawful actions of an employer and should have reasonably understood the consequences.

Question 47

What, if possible, must the employer do to make its employees not compete with the company for a year after they quit the job?

A) Issue an internal order
B) Does not have to do anything - the obligation is imposed on any employee by statutes
C) Obtain a court order
D) Have the employees sign a non-competition agreement
E) It cannot be done

Question 48

What is the main attraction of an employment agreement for the employee?

A) Social benefits
B) Protection against firing without cause
C) Guaranteed promotion on a regular basis
D) Fewer responsibilities
E) Higher wages

Question 49

An S corporation can be distinguished from other types of corporations in:

A) Tax status
B) Number of employees
C) Areas of expertise
D) Geographic location
E) Annual income

Question 50

The minimum number of owners in a general partnership is equal to:

A) 1
B) 2
C) 4
D) 5
E) 6

Question 51

Because of the potential value of a patent, the cost of filing a patent is always worth it.

Question 52

An employer may not discriminate against anyone for any of the following characteristics, except for:

A) Religion
B) Age
C) National origin
D) Sexual orientation
E) Disability

Question 53

Since there is no formal protection procedure, the necessary steps for establishing a trade secret are often not taken seriously until a lawsuit is brought by the owner against someone who has misappropriated them.

Question 54

All of the following forms of legal entities must file an annual report with the state government in addition to their tax return except:

A) General partnerships
B) Limited liability companies
C) Limited partnerships
D) Corporations
E) Limited liability partnerships

Question 55

Which of the following cannot be considered non-profit entities?

A) Social welfare organizations
B) Educational institutions
C) Churches
D) Limited liability corporations
E) Industry associations

Question 56

What is the advantage of hiring a specialized attorney for a startup?

A) Usually good at suing multinationals
B) Will gladly accept equity as the fee
C) May agree upon installment payments
D) May substitute expensive software at the early stage
E) Good at representing your national interests

Question 57

How long does an organization have to file for and secure non-profit status?

A) 14 weeks
B) 1 year
C) 18 months
D) 2 years
E) 26 months

Question 58

As can be learned from the chapter, a redemption agreement is the covenant, in which:

A) The business owns insurance policies on the owners and is obligated to use the proceeds to purchase each stockholder's equity upon his or her death.
B) Each owner is required to take out insurance on the others and to buy a proportional amount of the deceased's equity.
C) Business assets, such as inventory or marketable securities, equal to the value of owner's share of the equity in the company will be transferred to relatives upon his or her death.
D) Internal Revenue Service allows installment tax payments to be received within 2 years after an owner's death.
E) None of the above.

Question 59

The business is not recognized as a legal entity separate from its owners under which form?

A) Professional corporation
B) Limited Liability Company
C) Partnership
D) S corporation
E) Non-profit

Question 60

If you decided to leave your current employer and establish your own venture, what actions will decrease the likelihood of being sued for convincing other employees from the company to leave with you?

A) Working in the Human Resources department of the employer
B) Talking to them after the business hours
C) Talking to them over e-mail or/phone
D) Offering them better working conditions in the new company
E) None of the above

Question 61

Which of the following is not referred to as intellectual property creations of the mind?

A) inventions
B) literary and artistic works
C) symbols, names, and images
D) designs used in commerce
E) budget for a certain project

Question 62

Copyrights cover many forms of writing; however, they will not cover which of the following?

A) Brochures
B) Photographs
C) Video presentations
D) Architectural designs
E) Biological materials

Question 63

People can establish which of the following without any formal governmental procedure?

A) Utility patent
B) Technique patent
C) Design patent
D) Trademark
E) Copyright

Question 64

The design patent covers only______.

A) the appearance of the product
B) the idea of the product
C) the underlying concept of the product
D) the functionality of the product
E) the rarity of the product

Question 65

After the U.S. Patent and Trademark Office examines the application and determines that the mark could be registered, the applicant must show actual use within how many months?

A) 1 month.
B) 3 months.
C) 6 months.
D) 12 months.
E) 24 months.

Question 66

______can be considered a public use of an invention, sufficient to activate the one-year period.

A) Market testing
B) Exhibitions
C) Use by the inventor himself
D) All of the above
E) None of the above

Question 67

The basic requirement for a utility patent is that the ______ be different in some way from what came before.

A) idea
B) appearance
C) value
D) design
E) product branding

Question 68

The form of all patents contains the same basic sections, including: ____________.

A) drawings showing an embodiment of the invention
B) a written description of the invention referring to the drawings akin to an engineering specification
C) one or more claims-hybrid legal and technical language that "captures" the invention in words
D) all of the above
E) none of the above

Question 69

Which one of the following is within the range of Intellectual Property protection?

A) patents
B) trade secrets
C) trademarks
D) copyrights
E) all of the above

Question 70

Different countries have different conditions that entrepreneurs must meet to obtain any patent protection; the first and most important restriction is______.

A) the time limit
B) the cost limit
C) the term of protection limit
D) the subject matter limit
E) the value limit

Question 71

Which of the following could NOT be protected as a common form of trademarks?

A) Geometric shapes
B) Natural shapes
C) Combinations of shapes and colors
D) Words used descriptively
E) Colors

Question 72

What is the maximum dollar amount of a securities offering for it to still qualify for private placement exemption?

A) $100,000
B) $500,000
C) $1,000,000
D) $2,000,000
E) $5,000,000

Question 73

The benefit of a copyright registration is _______.

A) the registration is easy to obtain
B) protection lasts a long time
C) the cost is low
D) all of the above
E) none of the above

Question 74

By filing a special PCT patent application in a specially designated PCT office within one year of U.S. filing, and by designating certain countries, companies can preserve their right to file in those countries without further expense for ___ after the U.S. filing date; that will provide ______for test marketing the product.

A) 1 or 10 months and an additional 8 or 18 months
B) 20 or 30 months and an additional 8 or 18 months
C) 24 or 36 months and an additional 8 or 18 months
D) 40 or 50 months and an additional 28 or 38 months
E) 50 or 60 months and an additional 48 or 58 months