ADT 2013 Annual Report Download - page 77

FORM 10-K
not to compete with Broadview Security in the United States, Puerto Rico and Canada with respect to the security
alarm systems or personal emergency response systems businesses for a period of five years from the date of the
Broadview Spin-Off. Following the expiration of the non-competition and non-solicitation agreement in October
2013, The Brink’s Company is free to directly pursue competitive activities in these businesses and to license the
Brink’s brand to other existing or potential competitors in these businesses. In addition, although the Separation
and Distribution Agreement with Tyco that we entered into in connection with the Separation (“2012 Separation
and Distribution Agreement”) includes non-competition provisions, the non-competition provisions will expire
on September 29, 2014, with respect to certain facilities no longer shared between ADT and Tyco, at which time,
Tyco will be free to compete with us in the residential and small business security market. Such competitive
activities could have a material adverse effect on our business, financial condition, results of operations and cash
flows. However, where ADT and Tyco continue to co-locate in the same office space beyond September 29,
2014, those offices continue to be bound by the non-competition provisions.
Unauthorized use of our brand name by third parties, and the expenses incurred in developing and
preserving the value of our brand name, may adversely affect our business.
Our brand name is critical to our success. Unauthorized use of our brand name by third parties may
adversely affect our business and reputation, including the perceived quality and reliability of our products. We
rely on trademark law, company brand name protection policies and agreements with our employees, customers,
business partners and others to protect the value of our brand name. Despite our precautions, we cannot provide
assurance that those procedures are sufficiently effective to protect against unauthorized third-party use of our
brand name. In particular, in recent years various third parties have used the ADT®brand name to engage in
fraudulent activities, including inducing customers to switch monitoring service providers, generating leads for
competitors and obtaining personal financial information. We may not be successful in investigating, preventing
or prosecuting unauthorized third-party use of our brand name. Future litigation with respect to such
unauthorized use could also result in substantial costs and diversion of our resources. These factors could
adversely affect our reputation, business, financial condition, results of operations and cash flows.
We do not own the right to use certain of our trademarks, including the ADT®brand name, outside of the
United States and Canada.
Following the Separation, Tyco owns the ADT®brand name outside of the United States and Canada.
Therefore, in order to expand our business outside the United States and Canada, we would need to either acquire
or otherwise license the ADT®brand name from Tyco (to the extent not already used by Tyco in the applicable
jurisdictions(s)) or use an alternative brand name. This would put us at a distinct competitive disadvantage.
Development of a new brand outside the United States and Canada could be costly and would also require us to
market other brands as superior alternatives to the ADT®brand, which could undermine its value among
customers within the United States and Canadian residential and small business security markets. These factors
may make it difficult for us to develop a business outside of the United States and Canada. These factors also
expose us to the risk that the ADT®brand name could suffer reputational damage or devaluation for reasons
outside of our control, including Tyco’s business conduct outside of the United States and Canada. Any of these
factors may materially and adversely affect our business, financial condition, results of operations and cash
flows.
Infringement of our intellectual property rights could negatively affect us.
We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and
licensing arrangements to establish and protect our proprietary rights. We cannot guarantee, however, that the
steps we have taken to protect our intellectual property will be adequate to prevent infringement of our rights or
misappropriation of our technology. Adverse events affecting the use of our trademarks could affect our use of
those trademarks and negatively impact our brands. In addition, if we expand our business outside of the
United States and Canada in the future, effective patent, trademark, copyright and trade secret protection may be
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