Cisco 2013 Annual Report Download - page 36

were brought directly against us or our customers. Furthermore, because of the potential for high court awards that are not
necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts. If any
infringement or other intellectual property claim made against us by any third party is successful, if we are required to
indemnify a customer with respect to a claim against the customer, or if we fail to develop non-infringing technology or
license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial
condition could be materially and adversely affected.
Our exposure to risks associated with the use of intellectual property may be increased as a result of acquisitions, as we have a
lower level of visibility into the development process with respect to such technology or the care taken to safeguard against
infringement risks. Further, in the past, third parties have made infringement and similar claims after we have acquired
technology that had not been asserted prior to our acquisition.
WE RELY ON THE AVAILABILITY OF THIRD-PARTY LICENSES
Many of our products are designed to include software or other intellectual property licensed from third parties. It may be
necessary in the future to seek or renew licenses relating to various aspects of these products. There can be no assurance that
the necessary licenses would be available on acceptable terms, if at all. The inability to obtain certain licenses or other rights
or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a
material adverse effect on our business, operating results, and financial condition. Moreover, the inclusion in our products of
software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to protect our
proprietary rights in our products.
OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED AND DAMAGE TO OUR REPUTATION MAY
OCCUR DUE TO PRODUCTION AND SALE OF COUNTERFEIT VERSIONS OF OUR PRODUCTS
As is the case with leading products around the world, our products are subject to efforts by third parties to
produce counterfeit versions of our products. While we work diligently with law enforcement authorities in various countries
to block the manufacture of counterfeit goods and to interdict their sale, and to detect counterfeit products in customer
networks, and have succeeded in prosecuting counterfeiters and their distributors, resulting in fines, imprisonment and
restitution to us, there can be no guarantee that such efforts will succeed. While counterfeiters often aim their sales at
customers who might not have otherwise purchased our products due to lack of verifiability of origin and service, such
counterfeit sales, to the extent they replace otherwise legitimate sales, could adversely affect our operating results.
OUR OPERATING RESULTS AND FUTURE PROSPECTS COULD BE MATERIALLY HARMED BY
UNCERTAINTIES OF REGULATION OF THE INTERNET
Currently, few laws or regulations apply directly to access or commerce on the Internet. We could be materially adversely
affected by regulation of the Internet and Internet commerce in any country where we operate. Such regulations could include
matters such as voice over the Internet or using IP, encryption technology, sales or other taxes on Internet product or service
sales, and access charges for Internet service providers. The adoption of regulation of the Internet and Internet commerce
could decrease demand for our products and, at the same time, increase the cost of selling our products, which could have a
material adverse effect on our business, operating results, and financial condition.
CHANGES IN TELECOMMUNICATIONS REGULATION AND TARIFFS COULD HARM OUR PROSPECTS
AND FUTURE SALES
Changes in telecommunications requirements, or regulatory requirements in other industries in which we operate, in the
United States or other countries could affect the sales of our products. In particular, we believe that there may be future
changes in U.S. telecommunications regulations that could slow the expansion of the service providers’ network
infrastructures and materially adversely affect our business, operating results, and financial condition.
Future changes in tariffs by regulatory agencies or application of tariff requirements to currently untariffed services could
affect the sales of our products for certain classes of customers. Additionally, in the United States, our products must comply
with various requirements and regulations of the Federal Communications Commission and other regulatory authorities. In
countries outside of the United States, our products must meet various requirements of local telecommunications and other
industry authorities. Changes in tariffs or failure by us to obtain timely approval of products could have a material adverse
effect on our business, operating results, and financial condition.
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