Cricket Wireless 2010 Annual Report Download - page 39

We May Not Be Successful in Protecting and Enforcing Our Intellectual Property Rights.
We rely on a combination of patent, service mark, trademark, and trade secret laws and contractual restrictions
to establish and protect our proprietary rights, all of which offer only limited protection. We endeavor to enter into
agreements with our employees and contractors and agreements with parties with whom we do business in order to
limit access to and disclosure of our proprietary information. Despite our efforts, the steps we have taken to protect
our intellectual property may not prevent the misappropriation of our proprietary rights. Moreover, others may
independently develop processes and technologies that are competitive to ours. The enforcement of our intellectual
property rights may depend on any legal actions that we undertake against such infringers being successful, but we
cannot be sure that any such actions will be successful, even when our rights have been infringed.
We cannot assure you that our pending, or any future, patent applications will be granted, that any existing or future
patents will not be challenged, invalidated or circumvented, that any existing or future patents will be enforceable, or that
the rights granted under any patent that may issue will provide us with any competitive advantages.
In addition, we cannot assure you that any trademark or service mark registrations will be issued with respect to
pending or future applications or that any registered trademarks or service marks will be enforceable or provide
adequate protection of our brands. Our inability to secure trademark or service mark protection with respect to our
brands could have a material adverse effect on our business, financial condition and results of operations.
We and Our Suppliers Rely on Third Party Intellectual Property Rights in the Operation of Our
Business.
In conducting our business operations, we and many of our suppliers rely on equipment, software, technology
and content developed by third parties which are protected by and subject to a wide array of patents and other
intellectual property rights. As a result, third parties have asserted and may in the future assert infringement claims
against us or our suppliers based on our or their general business operations and the equipment, software,
technology or other content that we or they use or provide. Due in part to the growth and expansion of our business
operations, we have become subject to increased amounts of litigation, including disputes alleging patent and other
intellectual property infringement relating to the operation of our networks and our sale of handsets and other
devices. See “Part I — Item 3. Legal Proceedings — Patent Litigation” of this report for a description of certain
patent infringement lawsuits that have been brought against us. If plaintiffs in any patent litigation matters brought
against us were to prevail, we could be required to pay substantial damages or settlement costs, and we could be
required to alter the way we conduct business to avoid future infringement, which could have a material adverse
effect on our business, financial condition and results of operations.
In addition, we rely on third-party intellectual property and digital content to provide certain of our wireless services
to customers. In early 2011, we launched Muve Music, an unlimited music download service designed specifically for
mobile handsets. We launched the service in select Cricket markets and expect to expand its availability throughout 2011.
The Muve Music service requires us to license music and other intellectual property rights of third parties. We cannot
guarantee that these licenses will continue to be available to us on commercially reasonable terms or at all. Our licensing
arrangements with these third parties are generally short-term in nature and do not guarantee the continuation or renewal
of these arrangements on reasonable terms, if at all. Our inability to continue to offer customers a wide variety of content
at reasonable costs to us could limit the success of our Muve Music product. In addition, we could become subject to
infringement claims and potential liability for damages or royalties related to music and intellectual property rights of
third parties, including as a result of any unauthorized access to the third-party content we have licensed.
We generally have indemnification agreements with the manufacturers, licensors and vendors who provide us
with the equipment, software and technology that we use in our business to help protect us against possible
infringement claims. However, we do not have indemnification arrangements with all of our partners and suppliers.
In addition, to the extent that there is an indemnification arrangement in place, depending on the nature and scope of
a possible claim, we may not be entitled to seek indemnification under the terms of the agreement. In addition, we
cannot guarantee that the financial condition of an indemnifying party would be sufficient to protect us against all
losses associated with infringement claims or that we would be fully indemnified against all possible losses
associated with a possible claim. In addition, our suppliers may be subject to infringement claims that could prevent
or make it more expensive for them to supply us with the products and services we require to run our business, which
33