Directions: Read the passage carefully and choose the best answer to the question out of the four alternatives given. Software and intellectual property have come a long way to provide new dimension…

Directions: Read the passage carefully and choose the best answer to the question out of the four alternatives given.

Software and intellectual property have come a long way to provide new dimension to the markets. For a firm to be satisfied with the performance and functionality of an existing product was to risk losing market share to a competitor that targeted the same market. The nature of competition in the industry has been such that, if there is a perceived market for a particular software product, "someone will build it, and someone else will, as well," said Harry C. Reinstein, Chairman and chief executive officer of the Aion Corp.

While many software firms were aware of what intellectual property protection applied to software primarily trade secret law and copyright law, the actions of most of the firms suggested that legal concerns rarely entered into product-development decisions. The collective behavior of firms served to achieve the constitutional aim on which intellectual property law is based: "to promote the progress of science and the useful arts". More specifically, the software industry achieved the intent of intellectual property law, that is, to advance the public good, an objective widely interpreted to mean the generation and wide dissemination of ideas and innovations.

Today's legal ferment indicates that software firms are much more attuned to intellectual property issues. And why not? Copyright law and patent law exist to encourage innovation. Both award limited monopolies to those who invest their resources, effort, and ingenuity in developing products that society may deem useful. Thus intellectual property law offers the potential for private financial gain as an incentive for undertaking the risks of innovation.

Francis D. Fisher, adviser to the Educational Technology Group at the Harvard Law School has expressed concerns that innovation in software will diminish without strong intellectual property protection in the light of the industry's historically high rate of innovation. "It is not enough to suggest that the incentives of monopoly are needed." Fisher maintained, "We need evidence. We need to shift the burden of proof, so that those who believe that the public interest gains from extending property rights to software must prove their case". Among those who believe this case is unproven is Richard Stallman, whose Free Software Foundation and League for programming Freedom provide a test of his conviction that innovation is best served absent prices based on commercial monopoly.

While Fisher may be unconvinced of the need to accord strict intellectual property rights to software, the perception that software is vulnerable to abuses by competitors and users is wide spread. Firms trying to position themselves in the market to earn returns on their investment often devote considerable thought to protection strategies.

Consider the following statements in the light of the passage:
1. Software firms were aware of intellectual property protection applicable to software.
2. Trade secret law and copyright law primarily applied to software.
3. Software protection issues rarely affected product-development decisions.
Which of the given statements is/are correct?