ADT 2015 Annual Report Download - page 94

FORM 10-K
if the representations and warranties are inaccurate, that we will be able to recover damages from bulk account
sellers in an amount sufficient to fully compensate us for any resulting losses. If any of these risks materializes,
our business, financial condition, results of operations and cash flows could be materially and adversely affected.
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 and
services. 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 unauthorized telemarketing conducted in our
name to induce our existing customers to switch to competing monitoring service providers, lead generation
activities 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.
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 or licensed by
Tyco to a third party 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 or the business conduct of Tyco’s licensees. 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
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