ADT 2015 Annual Report Download - page 82

FORM 10-K
due to weather related incidences, we may see increased servicing costs related to higher alarm signals and
customer service requests as a result of customer power outages and related issues.
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 Pulse®, 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, provincial and local laws and regulations in the United
States and Canada in areas such as consumer protection, occupational licensing, environmental protection, labor
and employment, tax, licensing and other laws and regulations. Most states and provinces in which we operate
have licensing laws directed specifically toward the monitored security 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 both wireline and wireless telecommunications to
communicate signals, and wireline and wireless telephone companies in the United States and Canada are
regulated by federal, state, provincial and local governments. The operation and use of wireless telephone and
radio frequencies is regulated in the United States by the Federal Communications Commission (“FCC”) and
state public utilities commissions and in Canada by the Canadian Radio-Television Telecommunications
Commission (“CRTC”). Although the use of wireline phone service has been decreasing, we believe we are well
positioned to respond to these trends with alternate transmission methods that we already employ, including
cellular and broadband Internet technologies. Our advertising and sales practices are regulated by the U.S.
Federal Trade Commission (“FTC”), the Canadian Competition Bureau and state and provincial 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 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 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. See risk factors “We could be assessed penalties for false
alarms” and “Police departments could refuse to respond to calls from monitored security service companies.”
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