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Chapter 5: Trade Secret Basics

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Chapter 5: Trade Secret Basics

26 problems · 0 figures

5-1 §5.AQ source ↗

Unlike patents and trademarks, the law requires that intellectual property consisting of trade secrets not be publicly disclosed. True or False?
  1. a.
    True
  2. b.
    False

Answer

A. True

5-2 §5.AQ source ↗

Which of the following best describes a trade secret?
  1. a.
    Information that many people do not know about how a product like a smartphone is made.
  2. b.
    Virtually any information that is of value as a result of not being generally known.
  3. c.
    Any information relating to the finances of a publicly held company.

Answer

B. Virtually any information that is of value as a result of not being generally known.

5-3 §5.AQ source ↗

Trade secret theft or misappropriation costs the world’s richest 40 nations approximately how much of their gross domestic product, or GDP, each year?
  1. a.
    1 to 3 percent.
  2. b.
    4 to 6 percent.
  3. c.
    7 to 10 percent.

Answer

A. 1 to 3 percent.

5-4 §5.AQ source ↗

What are the two main requirements for information to be protectable as a trade secret?
  1. a.
    It must be novel and non-obvious.
  2. b.
    It must be original and expressed in a tangible form that can be seen or copied.
  3. c.
    It must be not generally known by others, and it must have been subject to reasonable efforts to avoid public disclosure.

Answer

C. It must be not generally known by others, and it must have been subject to reasonable efforts to avoid public disclosure.

5-5 §5.AQ source ↗

What is one key advantage of trade secret protection versus patent protection?
  1. a.
    It protects the information to be kept secret indefinitely.
  2. b.
    It prevents others from ever independently deriving the same information.
  3. c.
    Both of the above are correct.

Answer

A. It protects the information to be kept secret indefinitely.

5-6 §5.AQ source ↗

If you invent faster-than-light travel but believe someone will be able to reverse engineer it by examining your starship, should you patent it or keep it as a trade secret?
  1. a.
    Keep it as a trade secret.
  2. b.
    Patent it.

Answer

B. Patent it.

5-7 §5.AQ source ↗

What did the Supreme Court note in the case of Bonito Boats v. Thunder Craft Boats?
  1. a.
    One cannot legally misappropriate trade secrets.
  2. b.
    Nobody is above the law, not even a trade secret owner.
  3. c.
    The holder of a trade secret does not have protection against reverse engineering.

Answer

C. The holder of a trade secret does not have protection against reverse engineering.

5-8 §5.AQ source ↗

If information is protected as a valid trade secret, a competitor can be stopped from using it no matter who he obtained it from. True or False?
  1. a.
    True
  2. b.
    False

Answer

B. False

5-9 §5.AQ source ↗

Trade secret protection is guaranteed by the federal government. True or False?
  1. a.
    True
  2. b.
    False

Answer

B. False

5-10 §5.AQ source ↗

In which country did trade secret law first originate in the early 1800s?
  1. a.
    France.
  2. b.
    The United States.
  3. c.
    England.

Answer

C. England.

5-11 §5.AQ source ↗

What impact did the Uniform Trade Secrets Act (UTSA) of 1979 have on trade secret protection in the United States?
  1. a.
    It was the first trade secret law binding on every state.
  2. b.
    It served as a model that was adopted by 48 of the 50 U.S. states.
  3. c.
    It served as a model that was adopted by every state.

Answer

B. It served as a model that was adopted by 48 of the 50 U.S. states.

5-12 §5.AQ source ↗

Which of the following best describes the problem with the current lack of uniform federal protection of trade secrets?
  1. a.
    There is no real protection against misappropriation of trade secrets.
  2. b.
    The protections against trade secret theft are very uneven.
  3. c.
    A federal trade secret law would merely replicate state protections.

Answer

B. The protections against trade secret theft are very uneven.

5-13 §5.AQ source ↗

Which of the following could be considered a trade secret so long as reasonable steps had been taken to prevent its disclosure?
  1. a.
    Sales information.
  2. b.
    Customer lists.
  3. c.
    Manufacturing techniques.
  4. d.
    All of the above.

Answer

D. All of the above.

5-14 §5.AQ source ↗

Is information not known to the public considered to be a trade secret?
  1. a.
    Yes.
  2. b.
    No.
  3. c.
    It depends.

Answer

C. It depends.

5-15 §5.AQ source ↗

Would a customer list always be considered a trade secret?
  1. a.
    It depends on whether the customers want to be identified or not.
  2. b.
    To be considered a trade secret, the names of customers must not be available or discernable through public sources.

Answer

B. To be considered a trade secret, the names of customers must not be available or discernable through public sources.

5-16 §5.AQ source ↗

Can a mere idea be considered a trade secret?
  1. a.
    No. Just as you cannot patent or copyright a mere idea, you cannot protect a mere idea with a trade secret.
  2. b.
    Yes. Under the Uniform Trade Secrets Act, even an idea can sometimes be considered a trade secret.

Answer

A. No. Just as you cannot patent or copyright a mere idea, you cannot protect a mere idea with a trade secret.

5-17 §5.AQ source ↗

To gain trade secret protection, what must the owner do with confidential information?
  1. a.
    Publicize it as widely as possible.
  2. b.
    Not disclose it.
  3. c.
    Take active steps to keep the information secret.

Answer

C. Take active steps to keep the information secret.

5-18 §5.AQ source ↗

What are the benefits of developing a written trade secret plan?
  1. a.
    It serves as a policy manual that prevents situations in which unwritten rules are followed and security procedures are ignored.
  2. b.
    In the event of litigation, it can serve as proof that you took active steps to keep the information secret.
  3. c.
    Both of these.

Answer

C. Both of these.

5-19 §5.AQ source ↗

How should companies handle written trade secrets?
  1. a.
    Shred them.
  2. b.
    Mark them “secret” or “confidential,” among other measures taken.
  3. c.
    Never store them on a computer.

Answer

B. Mark them “secret” or “confidential,” among other measures taken.

5-20 §5.AQ source ↗

Which of these is an example of “passive disclosure” of a trade secret?
  1. a.
    Leaving confidential documents lying around for anyone to see.
  2. b.
    Inadvertently disseminating information at trade shows or conferences.
  3. c.
    Disclosing confidential information in press releases, newspaper articles, or marketing collateral.

Answer

A. Leaving confidential documents lying around for anyone to see.

5-21 §5.AQ source ↗

What is one way to guard against the active disclosure of trade secret information?
  1. a.
    Prevent employee attendance at trade shows and seminars.
  2. b.
    Appoint a trade secret committee to approve publications, speeches, and marketing collateral prior to disclosure.
  3. c.
    Avoid meeting with prospective buyers, customers, or licensees.

Answer

B. Appoint a trade secret committee to approve publications, speeches, and marketing collateral prior to disclosure.

5-22 §5.AQ source ↗

Which of the following is NOT an example of misappropriation of a trade secret?
  1. a.
    Acquisition of a trade secret through improper means.
  2. b.
    Deliberate disclosure of a trade secret by the trade secret owner.
  3. c.
    Disclosure of a trade secret without consent.

Answer

B. Deliberate disclosure of a trade secret by the trade secret owner.

5-23 §5.AQ source ↗

The UTSA not only prohibits the actual disclosure or use of a trade secret, it also protects against the “threatened” disclosure of trade secrets. When might a court intervene to stop a “threatened” disclosure before the actual disclosure takes place?
  1. a.
    An employee goes to work for another company in a different industry.
  2. b.
    An employee caught embezzling is fired and the employer believes the same lack of morals will lead to the fired employee disclosing trade secrets.
  3. c.
    An employee goes to work for an arch competitor in a comparable job position.

Answer

C. An employee goes to work for an arch competitor in a comparable job position.

5-24 §5.AQ source ↗

The burden of proof in a threatened trade secret misappropriation case lies with whom?
  1. a.
    The trade secret owner.
  2. b.
    The former employee who leaves to go work for a competitor.
  3. c.
    The competitor, who must prove he did no wrong by hiring the ex-employee.

Answer

A. The trade secret owner.

5-25 §5.AQ source ↗

What remedies does the UTSA provide for the misappropriation of trade secrets? (Choose all that apply.)
  1. a.
    Criminal penalties of up to five years for a first offense.
  2. b.
    Statutory damages.
  3. c.
    Injunctive relief.
  4. d.
    Exemplary damages.
  5. e.
    Attorneys’ fees.

Answer

B. Statutory damages.

5-26 §5.AQ source ↗

What remedies were imposed in the case of Mattel, Inc. v. MGA Entm’t, Inc. in 2013?
  1. a.
    An injunction barring a new employer from hiring the former employee of the trade secret owner.
  2. b.
    $85 million in exemplary (punitive) damages awarded to the trade secret owner.

Answer

B. $85 million in exemplary (punitive) damages awarded to the trade secret owner.

End of the book.

Problems and answers are adapted from Introduction to Intellectual Property by David Kline, Bernard Cassidy and Steve Fox, attributed to The Michelson 20MM Foundation and published by OpenStax, and are used under the CC BY-NC-SA 4.0 licence. Access for free at https://openstax.org/books/introduction-intellectual-property/pages/1-introduction. Changes were made to the original material, including updates to art, structure, and other content updates. Art is credited in its own caption wherever the book credits it. This adaptation is released under the same licence, is non-commercial, and is neither affiliated with nor endorsed by OpenStax, Rice University or The Michelson 20MM Foundation.