Avid 2005 Annual Report Download - page 31

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Our future growth could be harmed if we lose the services of certain employees.
Our success depends upon the services of a talented and dedicated workforce, including members of our executive team and
employees in technical positions. The loss of the services of one or more key employees could harm our business. Our success
also depends upon our ability to attract and retain highly skilled new employees. Competition for such employees is intense in
the industries and geographic areas in which we operate. In the past, we have relied on our ability to grant stock options as one
mechanism for recruiting and retaining highly skilled talent. However, changes in the accounting rules that will require us to expense
stock options will impair our ability to provide these incentives without incurring compensation costs. If we are unable to compete
successfully for talented employees, our business could suffer.
If we fail to manage our growth effectively, our business could be harmed.
Our success depends on our ability to manage the growth of our operations effectively. As a result of our acquisitions and
increasing demand for our products and services, the scope of our operations has grown both domestically and internationally. Our
management team will face challenges inherent in efficiently managing an increased number of employees over larger geographic
distances. These challenges include implementing effective operational systems, procedures and controls, as well as training new
personnel. Inability to successfully respond to these challenges could have a material adverse effect on the growth of our business.
Our websites could subject us to legal claims that could harm our business.
Some of our websites provide interactive information and services to our customers. To the extent that materials may be posted on
or downloaded from these websites and distributed to others, we may be subject to claims for defamation, negligence, copyright
or trademark infringement, personal injury, or other theories of liability based on the nature, content, publication or distribution of
such materials. In addition, although we have attempted to limit our exposure by contract, we may also be subject to claims for
indemnification by end users in the event that the security of our websites is compromised. As these websites are available on a
worldwide basis, they could potentially be subject to a wide variety of international laws.
We could incur substantial costs protecting our intellectual property or defending against a claim of infringement.
Our ability to compete successfully and achieve future revenue growth depends, in part, on our ability to protect our proprietary
technology and operate without infringing upon the intellectual property rights of others. We rely upon a combination of patent,
copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions, as well as required hardware
components and security keys, to protect our proprietary technology. However, our means of protecting our proprietary rights may
not be adequate. In addition, the laws of certain countries do not protect our proprietary technology to the same extent as do the
laws of the United States. From time to time unauthorized parties have obtained, copied and used information that we consider
proprietary. Policing the unauthorized use of our proprietary technology is costly and time-consuming and we are unable to measure
the extent to which such unauthorized use, including piracy, of our software exists. We expect software piracy to continue to be a
persistent problem.
We occasionally receive communications suggesting that our products may infringe the intellectual property rights of others. It is
our practice to investigate the factual basis of such communications and negotiate licenses where appropriate. While it may be
necessary or desirable in the future to obtain licenses relating to one or more products or relating to current or future technologies,
we may be unable to do so on commercially reasonable terms. If we are unable to protect our proprietary technology or unable to
negotiate licenses for the use of others’ intellectual property, our business could be impaired.
We also may be liable to some of our customers for damages that they may incur in connection with intellectual property claims.
Although we attempt to limit our exposure to liability arising from infringement of third-party intellectual property rights in our
agreements with customers, we may not always be successful. If we are required to pay damages to our customers, or indemnify our
customers for damages they incur, our business could be harmed. Moreover, even if a particular claim falls outside of our indemnity
or warranty obligations to our customers, our customers may be entitled to additional contractual remedies against us.