Danaher 2011 Annual Report Download - page 25

Table of Contents


We own numerous patents, trademarks, copyrights, trade secrets and other intellectual property and licenses to intellectual property owned by others, which in
aggregate are important to our business. The intellectual property rights that we obtain, however, may not be sufficiently broad or otherwise may not provide
us a significant competitive advantage, and patents may not be issued for pending or future patent applications owned by or licensed to us. In addition, the
steps that we and our licensors have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated,
circumvented or designed-around, particularly in countries where intellectual property rights are not highly developed or protected. In some circumstances,
enforcement may not be available to us because an infringer has a dominant intellectual property position or for other business reasons. Our failure to obtain or
maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or
unauthorized use of such property and the cost of enforcing our intellectual property rights could adversely impact our competitive position and financial
statements.
We also rely on nondisclosure and noncompetition agreements with employees, consultants and other parties to protect, in part, trade secrets and other
proprietary rights. There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be
breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or
that third parties will not otherwise gain access to our trade secrets or other proprietary rights.


From time to time, we receive notices from third parties regarding intellectual property infringement or misappropriation. Any dispute or litigation regarding
intellectual property could be costly and time-consuming due to the complexity of many of our technologies and the uncertainty of intellectual property
litigation. Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim of infringement or
misappropriation. In addition, as a result of such claims of infringement or misappropriation, we could lose our rights to critical technology, be unable to
license critical technology or sell critical products and services, be required to pay substantial damages or license fees with respect to the infringed rights or be
required to redesign our products at substantial cost, any of which could adversely impact our competitive position and financial statements. Even if we
successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources,
which could adversely affect our financial statements.


Manufacturing or design defects in (including in products or components that we source from third parties), unanticipated use of, or inadequate disclosure of
risks relating to the use of products that we make or sell can lead to personal injury, death or property damage. These events could lead to recalls or safety
alerts relating to our products, result in the removal of a product from the market and result in product liability claims being brought against us. Recalls,
removals and product liability claims can result in significant costs, as well as negative publicity and damage to our reputation that could reduce demand for
our products.


As of December 31, 2011, we had approximately $5.3 billion in outstanding indebtedness. In addition, based on the availability under our credit facilities as
of December 31, 2011, we had the ability to incur an additional $1.5 billion of indebtedness in direct borrowings or under our outstanding commercial paper
facilities. Our debt level and related debt service obligations can have negative consequences, including (1) requiring us to dedicate significant cash flow from
operations to the payment of principal and interest on our debt, which reduces the funds we have available for other purposes such as acquisitions and capital
investment; (2) reducing our flexibility in planning for or reacting to changes in our business and market conditions; and (3) exposing us to interest rate risk
since a portion of our debt obligations are at variable rates. We may incur significantly more debt in the future, particularly to finance acquisitions.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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