ADT 2012 Annual Report Download - page 100

Intellectual Property
Patents, trademarks, copyrights and other proprietary rights are important to our business and we
continuously refine our intellectual property strategy to maintain and improve our competitive position. We
register new intellectual property to protect our ongoing technological innovations and strengthen our brand, and
we take appropriate action against infringements or misappropriations of our intellectual property rights by
others. We review third-party intellectual property rights to help avoid infringement, and to identify strategic
opportunities. We typically enter into confidentiality agreements to further protect our intellectual property.
We own a portfolio of patents that relate to a variety of security and home/business automation technologies
utilized in our business, including security panels and sensors and video and information management solutions.
We also own a portfolio of trademarks, including ADT®, ADT PulseTM, ADT Always There®, Companion
Service®and Creating Customers for Life®, and are a licensee of various patents and trademarks, including from
our third-party suppliers and technology partners. Due to the importance that customers place on reputation and
trust when making a decision on a security provider, our brand is critical to our business. Patents for individual
products extend for varying periods according to the date of patent filing or grant and the legal term of patents in
the various countries where patent protection is obtained. Trademark rights may potentially extend for longer
periods of time and are dependent upon national laws and use of the marks.
Government Regulation and Other Regulatory Matters
Our operations are subject to numerous federal, state and local laws and regulations in the United States and
Canada in areas such as consumer protection, government contracts, trade, environmental protection, labor and
employment, tax, licensing and others. For example, in the U.S., most states in which we operate have licensing
laws directed specifically toward the alarm industry. In certain jurisdictions, we must obtain licenses or permits
in order to comply with standards governing employee selection, training and business conduct.
We also currently rely extensively upon the use of wireline and wireless telephone service to communicate
signals, and wireline and wireless telephone companies in the United States are regulated by the federal and state
governments. The Federal Communications Commission and state public utilities commissions regulate the
operation and use of wireless telephone and radio frequencies. While the usage of wired phone service has been
decreasing, we believe we are well positioned to respond to these trends with alternate transmission methods,
including cellular, digital radio and broadband Internet technologies. Our advertising and sales practices are
regulated by the U.S. Federal Trade Commission and state consumer protection laws. In addition, we are subject
to certain administrative requirements and laws of the jurisdictions in which we operate. These laws and
regulations may include restrictions on the manner in which we promote the sale of our security alarm services
and require us to provide most purchasers of our services with three-day or longer rescission rights.
Some local government authorities have adopted or are considering various measures aimed at reducing
false alarms. Such measures include requiring permits for individual alarm systems, revoking such permits
following a specified number of false alarms, imposing fines on alarm customers or alarm monitoring companies
for false alarms, limiting the number of times police will respond to alarms at a particular location after a
specified number of false alarms, requiring additional verification of an alarm signal before the police respond or
providing no response to residential system alarms.
The alarm industry is also subject to requirements, codes and standards imposed by various insurance,
approval and listing and standards organizations. Depending upon the type of customer, security service provided
and requirements of the applicable local governmental jurisdiction, adherence to the requirements, codes and
standards of such organizations is mandatory in some instances and voluntary in others.
These and other laws and regulations impact the manner in which we conduct our business, and changes in
legislation or government policies can affect our operations, both positively and negatively.
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