Earthlink 2005 Annual Report Download - page 26

impose taxes on the online sale of goods and services and other Internet activities. Future federal and state laws imposing taxes on the
provision of goods and services over the Internet could make it substantially more expensive to operate our business.
Other. Our business is also subject to a variety of other U.S. laws and regulations that could subject us to liabilities, claims or other
remedies, such as laws relating to bulk email or “spam,” access to various types of content by minors, anti-spyware initiatives, encryption, data
protection, security breaches and consumer protection. Compliance with these laws and regulations is complex and may require significant
costs. In addition, the regulatory framework relating to Internet services is evolving and both the federal government and states from time to
time pass legislation that impacts our business. It is likely that additional laws and regulations will be adopted that would affect our business.
We cannot predict the impact that future regulatory changes or developments may have on our business, financial condition, results of
operations or cash flows. The enactment of any additional laws or regulations, increased enforcement activity of existing laws and regulations,
or claims by individuals could significantly impact our costs or the manner in which we conduct business, all of which could adversely impact
our results of operations and cause our business to suffer.
We may not be able to protect our proprietary technologies or successfully defend infringement claims and may be required to enter
licensing arrangements on unfavorable terms.
We regard our trademarks, service marks, copyrights, patents, trade secrets, proprietary technologies, domain names and similar
intellectual property as critical to our success. We rely on trademark, copyright and patent law; trade secret protection; and confidentiality
agreements with our employees, customers, partners and others to protect our proprietary rights. The efforts we have taken to protect our
proprietary rights may not be sufficient or effective. Third parties may infringe or misappropriate our copyrights, trademarks, patents and
similar proprietary rights. If we are unable to protect our proprietary rights from unauthorized use, our brand image may be harmed and our
business may suffer.
The protection of our trademarks, service marks, copyrights, patents, trade secrets, domain names, proprietary technologies and
intellectual property may require the expenditure of significant financial and managerial resources. Moreover, we can not be certain that the
steps we take to protect these assets will adequately protect our rights or that others will not independently develop or otherwise acquire
equivalent or superior technology or other intellectual property rights. Such events could substantially diminish the value of our technology and
property which could adversely affect our business.
We may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to
use certain technologies in the future.
Internet, technology and media companies often possess a significant number of patents. Further, many of these companies and other
parties are actively developing or purchasing search, accelerator, security and other Internet-related technologies. We believe that these parties
will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding
the ownership of technologies and rights associated with online business are likely to continue to arise in the future.
From time to time, third parties have alleged that we infringed on their proprietary rights. We have been subject to, and expect to continue
to be subject to, claims and legal proceedings regarding alleged infringement by us of the patents, trademarks and other intellectual property
rights of third parties. None of these claims has had an adverse effect on our ability to market and sell and support our Internet access services.
As we expand our business and develop new technologies, products and services, we may become increasingly subject to intellectual property
infringement claims. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources,
injunctions against us or the imposition of damages that we must pay. We may need to obtain licenses from third parties who allege
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