ADT 2014 Annual Report Download - page 86

FORM 10-K
ADT®brand name to engage in fraudulent activities, including inducing customers to switch to competing
monitoring service providers, generating leads for competitors and obtaining personal financial information.
Third parties sometimes use ADT’s name and trademarks, or other confusingly similar variance thereof, in other
contexts that may impact our brand. We may not be successful in investigating, preventing or prosecuting all
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 and
has licensed it to a third party in South Korea. 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) 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
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
unavailable or limited in some jurisdictions. Furthermore, while we enter into confidentiality agreements with
certain of our employees and third parties to protect our intellectual property, such confidentiality agreements
could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how
related to the design, manufacture or operation of our products. If it becomes necessary for us to resort to
litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we
may not prevail. Further, adequate remedies may not be available in the event of an unauthorized use or
disclosure of our trade secrets. If we fail to successfully enforce our intellectual property rights, our competitive
position could suffer, which could adversely affect our business, financial condition, results of operations and
cash flows.
Allegations that we have infringed the intellectual property rights of third parties could negatively affect
us.
We may be subject to claims of intellectual property infringement rights by third parties. In particular, as
our services have expanded into areas more heavily populated by intellectual property, we have become subject
to claims alleging infringement of intellectual property, including litigation brought by special purpose or so-
called “non-practicing” entities that focus solely on extracting royalties and settlements by enforcing patent
rights. These companies typically have little or no business or operations and there are few effective deterrents
available to prevent such companies from filing patent infringement lawsuits against us. In addition, we rely on
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