Chapter 9 = midterm

Question 1

What is Appropriability?

Answer 1

The degree to which a firm is able to capture the rents from its innovation.

Question 2

What is an innovation’s appropriability determined by?

Answer 2

how easily or quickly competitors can imitate the innovation, which is a function of both the nature of the technology itself and the strength of the mechanisms used to protect the innovation.

Question 3

What is tacit knowledge?

Answer 3

Knowledge that cannot be readily codified or transferred to written form.

Question 4

What is socially complex knowledge?

Answer 4

Knowledge that arises from the interaction of multiple individuals.

Question 5

What are three common protection mechanisms?

Answer 5

Patents, Trademarks and Copyrights.

Question 6

What is a Patent?

Answer 6

A property right protecting a process, machine, manufactured item (or design for manufactured item), or a variety of plants. Protects an invention; product or process.

Question 7

What is a Trademark?

Answer 7

An indicator used to distinguish the source of a good. Protects words or symbols (logos).

Question 8

What is a Copyright?

Answer 8

A property right protecting works of authorship. Protects an original artistic or literary work.

Question 9

What is the purpose of intellectual property protection?

Answer 9

To provide recognition and incentive for creative work

Question 10

What are the different categories of patents in the US?

Answer 10

1. Utility patent, for a new and useful process, machine, manufactured item or combination of materials.
2. Design patent, for an original and ornamental design for a manufactured item.
3. Plant patent, for the discovery and asexual reproduction of a distinct and new variety of plant.

Question 11

What criteria must usually be met for an invention to qualify for a patent?

Answer 11

1. It must be useful - produce a desirable result, solve a problem, improve or propose a new use for an existing development or show potential of doing so.
2. It must be novel - not already patented or described in public literature, or be in public use for more than a year.
3. It must not be obvious - an experienced or skilled person in the particular art of the patent would not be expected to achieve the same invention with a normal amount of effort.

Question 12

What things are typically not patentable?

Answer 12

• Discovery of scientific principles that pertain to natural laws (gravity)
• Substituting one material for another (plastic→metal)
• Merely changing the size of an already existing device
• Making something more portable
• Substituting an element for an equivalent element
• Altering an item’s shape

Question 13

Why is patenting a serious undertaking?

Answer 13

To apply for a patent, the inventor must explain how to make and use the invention, and claim why it is a new invention. Drawings are also often required. The application is reviewed by a patent examiner and the patent is then published for a time in which other inventors can challenge the patent grant (for example if they think it infringes on previously granted patents). The patent is granted if the standards for patentability are met, but the entire process from filing to grant is lengthy (up to 5-6 years).

Question 14

How long does a patent often last?

Answer 14

20 years.

Question 15

What is the “working requirement” in many countries’ national patent laws?

Answer 15

The invention should be manufactured in the country in which the patent was granted within a certain time frame (often 3 years) after grant. Prevents inventors from patenting inventions in countries where they have no intention of setting up production.

Question 16

What are two of the most significant international treaties to make simultaneous patenting in several countries easier?

Answer 16

1. The Paris Convention for the Protection of Industrial Property (the Paris Convention Priority). Patent in any member country with same rights as citizens and right of priority (treated as same date as first).
2. The Patent Cooperation Treaty. Can apply to multiple nations later without getting expense of multiple applications at the same time (asses granting and profitability).

Question 17

What is patent trolling?

Answer 17

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 18

What is patent thickets?

Answer 18

A dense web of overlapping patents that can make it difficult for firms to compete or innovate. (falling prey to suits by other firms).

Question 19

What can trademark rights be used for?

Answer 19

To prevent others from using a mark that is similar enough to be confusing, but they cannot be used to prevent others from producing or selling the same goods or services under a clearly different mark.

Question 20

What are advantages of registering a trademark?

Answer 20

A trademark does not require registration, but:

• Provides public notice of the registrant’s claim of ownership of the mark.
• Marks must be registered before a suit can be brought in federal court against an infringement of the mark.
• Registration can be used to establish international rights over the trademark.

Question 21

How long can a trademark last?

Answer 21

As long as the trademark is in use, but the registration requires periodic renewal.

Question 22

What are the two treaties that govern the World Intellectual Property Organization’s administrative system of international registrations of marks?

Answer 22

• The Madrid agreement concerning the international registration of marks
• The Madrid protocol.

Question 23

How are the rights of copyright established?

Answer 23

By legitimate use of the work

Question 24

What does the owner of a copyright have exclusive right to do (or authorise other to do)?

Answer 24

• Reproduce the work in copies or phonorecords
• Prepare derivative works based upon the work
• Distribute copies of phonorecords of the work to the public by sale or other transfer of ownership, or by rental, lease or lending
• Perform the work publicly
• Display the copyrighted work publicly

Question 25

What does the US doctrine of fair use stipulate?

Answer 25

In most circumstances not a violation of copyright for others to use the material for purposes such as criticism, comment, news reporting, teaching, scholarship or research.

Question 26

What can not be copyrighted?

Answer 26

Work that has not been fixed in a tangible form of expression (improvisation not recorded), titles, names, short phrases, slogans, familiar symbols and lists of ingredients

Question 27

Why is it advantageous to register a copyright?

Answer 27

it establishes a public record of the copyright claim which is required before filing an infringement suit in court

Question 28

How long does a copyright last?

Answer 28

In the US, copyright protection to works created after 1978 lasts for the author’s life plus an additional 70 years.

Question 29

What is an international treaty to simplify international copyright?

Answer 29

The Berne Union for the Protection of Literary and Artistic Property (the Berne Convention). It specifies a minimum level of protection for all member countries, and requires countries to offer the same protection to both its own citizens and foreign nationals.

Question 30

What is a Trade secret?

Answer 30

Information that belongs to a business that is held private.

Question 31

What two criteria should information posses to be considered a trade secret?

Answer 31

• offers a distinctive advantage to the company in the form of economic rents, and
• remains valuable only as long as the information remains private.

Question 32

What criteria must trade secrets meet under the Uniform trade secret act?

Answer 32

• The information must not be generally known or readily ascertainable through legitimate means.
• The information must have economic importance that is contingent upon its secrecy.
• The trade secret holder must exercise reasonable measures to protect the secrecy of the information.

Question 33

No individual or group can copy, use or otherwise benefit from a trade secret without the owner’s authorization if they meet any of the following conditions:

Answer 33

• They are bound by a duty of confidentiality (employees, lawyers)
• They have signed a nondisclosure agreement
• They acquire the secret through improper means such as theft or bribery
• They acquire the information from someone who did not have the right to disclose it
• They learn about the secret by mistake but have reason to know that the information was a protected trade secret.

Question 34

What is Open source software?

Answer 34

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

Question 35

What are Wholly proprietary systems?

Answer 35

Goods based on technology that is owned and vigorously protected through patents, copyrights, secrecy, or other mechanisms. They may be legally produced and augmented only by their developers. May be less likely to be adopted readily by customers because of higher costs and the inability to mix and match components.

Question 36

What are Wholly open systems?

Answer 36

Goods based on technology that is not protected and that is freely available for production or augmentation by other producers. Usually quickly commoditized and provide little appropriability of rents to their developers.

Question 37

What are Original equipment manufacturers (OEMs)?

Answer 37

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

Question 38

What are the different degrees of protecting an innovation?

Answer 38

1. Wholly proprietary
2. Limited licensing
3. Moderate licensing
4. Liberal licensing
5. Wholly open

Question 39

What is Architectural control?

Answer 39

The ability of a firm (or group of firms) to determine the structure, operation, compatibility and development of a technology. Can be increased by protecting the technology.

Question 40

What is the primary argument for diffusing a technology instead of protecting it?

Answer 40

Open technologies may accrue more rapid adoptions.

Question 41

What are some costs and risks with allowing external development (diffusion)?

Answer 41

• External efforts typically lack the coordination of internal development. Developers may work in different/conflicting directions, or simultaneously work on the same problem.
• Whether and how improvements get incorporated into the technology and disseminated to other users can be very problematic.

Question 42

If a firm is unable to produce a technology at sufficient volume or quality, or is it is heavily influenced by complementary goods, they should:

Answer 42

encourage collective production of complements through a more open technology strategy and utilize forms of sponsorship.

Question 43

When is architectural control extra valuable?

Answer 43

If a firm is a significant producer of complements to the technology in question. They can then typically design the technology to be compatible with its own complements and incompatible with those of competitors.