Computer Associates 2016 Annual Report Download - page 28

and higher development costs if our Products contain errors that we have not detected or if our Products otherwise fail to meet
our customers’ expectations. Significant technical challenges also arise with our Products because our customers license and
deploy our Products across a variety of computer platforms and integrate them with a number of third party software
applications and databases. These combinations increase our risk further because, in the event of a system-wide failure, it may
be difficult to determine which product is at fault. As a result, we may be harmed by the failure of another supplier’s products.
As a result of the foregoing, we could experience:
• Loss of or delay in revenue and loss of market share;
• Loss of customers, including the inability to obtain repeat business with existing key customers;
• Damage to our reputation;
• Failure to achieve market acceptance;
• Diversion of development resources;
• Remediation efforts that may be required;
• Increased service and warranty costs;
• Legal actions by customers or government authorities against us that, whether or not successful, could be costly, distracting
and time-consuming;
• Increased insurance costs; and
• Failure to successfully complete service or customer support engagements for product installations, implementations and
integrations.
Consequently, the discovery of errors in our Products after delivery could materially adversely affect our business, financial
condition, operating results and cash flow.
Failure to protect our intellectual property rights and source code would weaken our competitive position.
Our success is highly dependent upon our proprietary technology, including our software and our source code for that software,
both organically developed and acquired. Failure to protect such technology could lead to the loss of valuable assets and our
competitive advantage. We protect our proprietary information through the use of patents, copyrights, trademarks, trade secret
laws, confidentiality procedures and contractual provisions. Notwithstanding our efforts to protect our proprietary rights,
policing unauthorized use or copying of our proprietary information is difficult. Unauthorized use or copying occurs from time
to time and litigation to enforce intellectual property rights could result in significant costs and diversion of resources.
Moreover, the laws of some foreign jurisdictions do not afford the same degree of protection to our proprietary rights as do the
laws of the United States. For example, for some of our products, we rely on “shrink-wrap” or “click-on” licenses, which may be
unenforceable in whole or in part in some jurisdictions in which we operate. In addition, patents we have obtained may be
circumvented, challenged, invalidated or designed around by other companies. Furthermore, confidentiality procedures and
contractual provisions can be difficult to enforce and, even if successfully enforced, may not have effective remedies available to
ameliorate unauthorized disclosure of our intellectual property. If we do not adequately protect our intellectual property for
these or other reasons, our business, financial condition, operating results and cash flow could be materially adversely affected.
Refer to Part I, Item 1, “Business—Intellectual Property,” of this Form 10-K for additional information.
Certain software that we use in our products is licensed from third parties and, for that reason, may not be
available to us in the future, which has the potential to delay product development and production or cause us to
incur additional expense, which could materially adversely affect our business, financial condition, operating
results and cash flow.
Some of our solutions contain software licensed from third parties. Some of these licenses may not be available to us in the
future on terms that are acceptable to us or allow our products to remain competitive. The loss of these licenses or the inability
to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of
existing products. We may also choose to pay a premium price for such a license in certain circumstances where the benefit of
continuity of the licensed product would outweigh the premium cost of the license. The unavailability of these licenses or the
necessity of agreeing to commercially unreasonable terms for such licenses could materially adversely affect our business,
financial condition, operating results and cash flow.
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