Computer Associates 2010 Annual Report Download - page 17

strong central architecture that supports our growth strategy and the Distinguished Engineer Board to encourage and
recognize excellence in engineering.
To keep us on top of major technological advances and to ensure our products continue to work well with those of other
vendors, we are active in most major industry standards organizations and take the lead on many issues. Our professionals
are certified across key standards, including ITIL», PMI and CISPP, and possess knowledge and expertise in key vertical
markets, such as financial services, government, telecommunications, insurance, health care, manufacturing and retail. Further,
we were the first major software company to earn the International Organization for Standardization’s (ISO) 9001:2000 Global
Certification. In addition, our Global IT Operation has attained ISO/IEC 20000-1:2005 and ISO/IEC 27001:2005 certifications.
These certifications demonstrate our leadership in IT service management and information security.
We have approximately 5,900 engineers globally who design and support our software. We have charged to operations
$476 million, $486 million and $526 million in fiscal 2010, 2009 and 2008, respectively, for product development and
enhancements. In fiscal 2010, 2009 and 2008, we capitalized costs of $188 million, $129 million and $112 million,
respectively, for internally developed software.
Our development organization is dedicated to engineering market-leading solutions that meet the needs of customers around
the world. We drive innovation throughout our organization by enabling developers in Canada, China, the Czech Republic,
Germany, India, Israel, Japan, the United Kingdom and the United States to collaborate in both physical and virtual labs.
In the United States, product development is primarily performed at our facilities in Redwood City and San Francisco,
California; Lisle, Illinois; Framingham, Massachusetts; Ewing, New Jersey; Islandia, New York; Pittsburgh, Pennsylvania; Plano,
Texas; and Herndon, Virginia.
Patents and trademarks
Certain aspects of our products and technology are proprietary. We rely on U.S. and foreign intellectual property laws,
including patent, copyright, trademark and trade secret laws to protect our proprietary rights. However, the extent and
duration of protection given to different types of intellectual property rights vary under different countries’ legal systems. In
some countries, full-scale intellectual property protection for our products and technology may be unavailable, or the laws of
other jurisdictions may not protect our proprietary technology rights to the same extent as the laws of the United States. We
also maintain contractual restrictions in our agreements with customers, employees and others to protect our intellectual
property rights. In addition, we occasionally license software and technology from third parties, including some competitors,
and incorporate them into our own software products.
We expect to maintain a portfolio of U.S. and foreign patents that generally expire at various times over the next 20 years.
Although the durations and geographic coverage for our patents may vary, we believe our patent portfolio adequately protects
our interests. We expect to maintain a patent portfolio that includes more than 400 issued patents and 700 pending
applications in the United States and the European Union.
The source code for our products are protected both as trade secrets and as copyrighted works. Some of our customers are
beneficiaries of a source code escrow arrangement that enables them to obtain a contingent, limited right to access our
source code.
We are not aware of any of our products or technologies infringing on the proprietary rights of third parties. Third parties,
however, have asserted and may assert infringement claims against us with respect to our products, and any such assertion
may require us to enter into royalty arrangements or result in costly and time-consuming litigation. Although we have a
number of U.S. and foreign patents and pending applications that may have value to various aspects of our products and
technology, we are not aware of any single patent that is essential to us or to any of our principal business product areas.
Product licensing
Our licensing model offers customers a wide range of purchasing and payment options. Under our flexible licensing terms,
customers can license our software products under multi-year licenses or on a month-to-month basis, with most customers
choosing terms of one to three years, although longer terms are sometimes negotiated in order to obtain greater cost
certainty. We also help customers reduce uncertainty by providing a standard pricing schedule based on simple usage tiers.
Additionally, we offer our customers the ability to establish pricing models for our products based on their key business
metrics. Although this practice is not widely used by our customers, we believe this metric-based approach can provide us
with a competitive advantage in certain circumstances.
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