Adobe 2012 Annual Report Download - page 42

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Mergers and acquisitions of high technology companies are inherently risky, and ultimately, if we do not complete an
announced acquisition transaction or integrate an acquired business successfully and in a timely manner, we may not realize the
benefits of the acquisition to the extent anticipated.
We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a
result of litigation or other proceedings.
In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property
rights, or disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights,
we have been, are currently and may in the future be subject to claims, negotiations or complex, protracted litigation. Intellectual
property disputes and litigation are typically very costly and can be disruptive to our business operations by diverting the attention
and energies of management and key technical personnel. Although we have successfully defended or resolved past litigation and
disputes, we may not prevail in any ongoing or future litigation and disputes. Third-party intellectual property disputes, including
those emanating from non-practicing entities, could subject us to significant liabilities, require us to enter into royalty and licensing
arrangements on unfavorable terms, prevent us from licensing certain of our products or offering certain of our services, subject
us to injunctions restricting our sale of products or services, cause severe disruptions to our operations or the markets in which
we compete, or require us to satisfy indemnification commitments with our customers including contractual provisions under
various license arrangements and service agreements. In addition, we may incur significant costs in acquiring the necessary third-
party intellectual property rights for use in our products. Any of these occurrences could seriously harm our business.
We may not be able to protect our intellectual property rights, including our source code, from third-party infringers or unauthorized
copying, use or disclosure.
Although we defend our intellectual property rights and combat unlicensed copying, access and use of software and
intellectual property through a variety of techniques, preventing unauthorized use or infringement of our rights is inherently
difficult. We actively combat software piracy as part of our enforcement of our intellectual property rights, but we nonetheless
lose significant revenue due to illegal use of our software. If piracy activities increase, it may further harm our business.
Additionally, we take significant measures to protect the secrecy of our confidential information and trade secrets, including
our source code. If unauthorized disclosure of our source code occurs through security breach, attack or otherwise, we could
potentially lose future trade secret protection for that source code. The loss of future trade secret protection could make it easier
for third parties to compete with our products by copying functionality, which could adversely affect our revenue and operating
margins. We also seek to protect our confidential information and trade secrets through the use of non-disclosure agreements with
our customers, contractors, vendors and partners. However, there is a risk that our confidential information and trade secrets may
be disclosed or published without our authorization, and in these situations it may be difficult and/or costly for us to enforce our
rights.
Increasing regulatory focus on privacy issues and expanding laws and regulations could impact our new business models and
expose us to increased liability.
Our new business models are more highly regulated, including for privacy and data security. We are also expanding these
new models in countries that have more stringent data protection laws than those in the U.S. With these new business models, our
liability exposure, compliance requirements and costs associated with privacy issues will likely increase. Privacy laws globally
are changing and evolving. Governments, privacy advocates and class action attorneys are increasingly scrutinizing how companies
collect, process, use, store, share or transmit personal data. New laws and industry self-regulatory codes have been enacted and
more are being considered that may affect our ability to reach current and prospective consumers, to understand how our products
and services are being used, to respond to consumer requests allowed under the laws, and to implement our new business models
effectively. These new laws and regulations would similarly affect our competitors as well as our customers. Any perception of
our practices or products as an invasion of privacy, whether or not consistent with current regulations and industry practices, may
subject us to public criticism, class action lawsuits, reputational harm or claims by regulators, industry groups or other third parties,
all of which could disrupt our business and expose us to increased liability.
On behalf of certain of our customers using some of our services, we collect and store information derived from the activities
of website visitors, which may include anonymous and/or personal information. This enables us to provide such customers with
reports on aggregated anonymous or personal information from and about the visitors to their websites in the manner specifically
directed by each such individual customer. Federal, state and foreign governments and agencies have adopted or are considering
adopting laws regarding the collection, use and disclosure of this information. Our compliance with privacy laws and regulations
and our reputation among the public body of website visitors depend on such customers’ adherence to privacy laws and regulations
and their use of our services in ways consistent with such visitors’ expectations. We also rely on representations made to us by
customers that their own use of our services and the information they provide to us via our services do not violate any applicable
privacy laws, rules and regulations or their own privacy policies. We ask customers to represent to us that they provide their website
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