chapter 9

Question 1

appropriability

Answer 1

the degree to which a firm is able to capture the rents from its innovation. this is usually determined by how easily or quickly competitors can imitate the innovation.

Question 2

tacit knowledge

Answer 2

knowledge that cannot be readily codified or transferred in written form.

Question 3

socially complex knowledge

Answer 3

knowledge that arises from the interaction of multiple individuals.

Question 4

patent

Answer 4

a property right protecting a process, machine manufactured item (or design for a manufactured item), or variety of plant (eg. a computer).

Question 5

trademark

Answer 5

a word, phrase, symbol, design, or other indicator that is used to distinguish the source of goods from one party from goods of other. other companies cannot use the trademark but are allowed to produce the same product under a different trademark. it does not require registration, but it does provide advantages.

Question 6

copyright

Answer 6

a form of protection to works of authorship. it is secured automatically when an eligible work is created and fixed in a copy or phono recorded for the first time.

Question 7

utility patent

Answer 7

granted to an inventor who creates or discovers a new and useful process, machine, machine manufactured item, or a combination of materials.

Question 8

design patent

Answer 8

granted to an inventor of an original and ornamental design for a manufactured item.

Question 9

plant patent

Answer 9

granted to an inventor who invents or discovers and asexually reproduces any distinct and new variety of plants.

Question 10

requirements for an invention to be patentable (US)

Answer 10

it must be (1) useful, (2) novel, and (3) not obvious.

Question 11

patent application

Answer 11

1. explain how to make and use the invention and make claims about what it does that makes it a new invention.
2. drawings of the invention are required.
3. invention is reviewed by a patent examiner.
4. patent is published for a time in which other inventors can challenge the patent grant.

Question 12

working requirement

Answer 12

the requirement of most countries to manufacture the invention in the country in which the patent was granted.

Question 13

Paris Convention for the Protection of Industrial Property

Answer 13

a citizen of any member country may patent an invention in any of the member countries and enjoy the same benefits as if the inventor was a citizen of the country. it eliminates any differential patent rights. also, it provides the right of “priority” for patents and trademarks. the inventor may apply for protection in all other member countries once applied to one.

Question 14

Patent Cooperation Treaty

Answer 14

facilitates the application for a patent in multiple countries. an inventor can apply for a patent to a single PCT governmental receiving office and that application reserves the right to file fot patent protection in more than 100 countries for up to 2,5 years.

Question 15

patent trolling

Answer 15

a pejorative term for when an individual or firm misuses patents against other individuals or firms in an attempt to extract money from them.

Question 16

patent thickets

Answer 16

a dense web of overlapping patents that can make it difficult for firms to compete or innovate. this can stifle innovation.

Question 17

service mark

Answer 17

the same as a trademark but distinguishes the provider of a service rather than a product.

Question 18

trade secret

Answer 18

information that belongs to a business that is held in private. information is typically considered a trade secret only if it (a) offers a distinctive advantage to the company in the form of economic rents, and (b) remains valuable only as long as the information remains private. some firms will choose to protect their intellectual property instead of disclosing information in exchange for the grant of a patent.

Question 19

Uniform Trade Secret

Answer 19

states that information only qualifies as a trade secret if: (1) it must not be generally known or readily ascertainable through legitimate means, (2) it must have economic importance that is contingent upon its secrecy, and (3) the trade secret holder must exercise reasonable measures to protect the secrecy of the information. also, no individual or group can copy, use or otherwise benefit from a trade secret without the owner’s authorisation.

Question 20

open-source software

Answer 20

software whose code is made freely available to others for use, augmentation, and resale.

Question 21

liberal diffusion of technology

Answer 21

some firms are willing to lose money by liberally diffusing their technologies to im prove their technology’s chance of rising to the position of dominant design. however, it relinquished the opportunity to capture monopoly rents and control once relinquished, can be very hard to regain. it can result in fragmentation of the technology platform.

Question 22

wholly proprietary systems

Answer 22

goods based on technology that is owned and vigorously patents, copyrights, secrecy, or other mechanism. they may be legally produced and augmented only by their developers.

Question 23

wholly open systems

Answer 23

goods based on technology that is not protected and that is freely available for other production or augmentation by other producers.

Question 24

original equipment manufacturers (OEMs)

Answer 24

firms that assemble goods using components made by other manufacturers, also called value-added resellers (VARs).

Question 25

architectural control

Answer 25

the ability of a firm (or a group of firms) to determine the structure, operation, compatibility, and development of a technology. protecting the technology gives the developing firm architectural control. by controlling the architecture, a firm can ensure that the technology is compatible with its own complements while restricting compatibility with complements produced by others.

Question 26

industry opposition against sole-source technology

Answer 26

sometimes other industry members can exert strong pressure against the adoption of a technology that would give one or a few producers undue control and power causing a technology to be rejected or more hotly contested than a more open technology.

Question 27

technologies in which standardisation and compatibility are important

Answer 27

maintaining the integrity of the core product is essential and external development can put it at risk. the developer should retain some degree of control over the technology or find another governing body with the authority to do so.