Enom 2014 Annual Report Download - page 27

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laws or regulations could result in a loss of consumer confidence in us, or result in actions against us by governmental entities or
others, all of which could potentially cause us to lose consumers and revenue.
We must also comply with certain foreign and U.S. laws and regulations that apply to our international operations. Our business
operations in countries outside the United States are subject to a number of U.S. federal laws and regulations, including restrictions
imposed by the Foreign Corrupt Practices Act (“FCPA”) and economic and trade sanctions administered by the Office of Foreign
Assets Control (“OFAC”) and the U.S. Commerce Department based on U.S. foreign policy and national security goals against
targeted foreign states, organizations and individuals. The FCPA is intended to prohibit bribery of foreign officials or parties and
requires public companies in the United States to keep books and records that accurately and fairly reflect those companies’
transactions. OFAC regulations prohibit U.S.-based entities from entering into or facilitating transactions with, for the benefit of, or
involving the property of, persons, governments or countries designated by the U.S. government under one or more sanctions regimes,
which could include transactions that provide a benefit that is received in an OFAC designated country. Additionally, some of the
products and services we provide to customers globally may require approval under applicable U.S. export law.
VAT, sales and use, and similar tax laws and rates vary greatly by jurisdiction. We do not collect such taxes in every jurisdiction
in which we have sales based on our belief that such taxes are not applicable. Certain jurisdictions in which we do not collect VAT,
sales and use, or similar taxes on our sales may assert that such taxes are applicable, which could result in tax assessments, penalties
and interest for prior periods, and a requirement to collect such taxes in the future. Such tax assessments, penalties and interest, or
future requirements may materially and adversely affect our business, financial condition and operating results.
If we fail to comply with applicable laws and regulations, we could be exposed to claims for damages, financial penalties,
reputational harm, incarceration of our employees or restrictions on our operations, which could increase our costs of operations,
reduce our profits or cause us to forgo opportunities that would otherwise support our growth.
Changes in state, federal or international taxation laws and regulations may adversely affect our business.
Due to the global nature of the Internet, it is possible that, although our services and the Internet transmissions related to them
typically originate in Nevada and California, governments of other states or foreign countries might attempt to regulate our
transmissions or levy sales, income or other taxes relating to our activities. Tax authorities at the international, federal, state and local
levels are also currently reviewing the appropriate treatment of companies engaged in Internet commerce. New or revised
international, federal, state or local tax regulations may subject us or our customers to additional sales, income, VAT and other taxes.
We cannot predict the effect of current attempts to impose sales, income, VAT or other taxes on commerce over the Internet. New or
revised taxes and, in particular, additional sales taxes or VAT, would likely increase the cost of doing business online and decrease the
attractiveness of advertising and selling goods and services over the Internet. New taxes could also create significant increases in
internal costs necessary to capture data and collect and remit taxes. Any of these events could have an adverse effect on our business
and results of operations.
Third parties may sue us for intellectual property infringement or misappropriation or make similar claims which, if successful,
could require us to pay significant damages, incur expenses or curtail our offerings.
We cannot be certain that our internally developed or acquired systems and technologies do not and will not infringe the
intellectual property rights of others. In addition, we license content, software and other intellectual property rights from third parties
and may be subject to claims of infringement or misappropriation if such parties do not possess the necessary intellectual property
rights to the products or services they license to us. We have in the past and may in the future be subject to legal proceedings and
claims that we have infringed the patent or other intellectual property rights of a third party. These claims sometimes involve patent
holding companies or other patent owners who have no relevant product revenue and against whom our own patents may provide little
or no deterrence. In addition, third parties may in the future assert intellectual property infringement claims against our customers,
which we have agreed in certain circumstances to indemnify and defend against such claims. Any intellectual property-related
infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and could divert management
resources and attention. If we are found liable for infringement or misappropriation, we may be required to enter into licensing
agreements, if available on acceptable terms or at all, pay substantial damages or limit or curtail our systems and technologies. Also,
any successful lawsuit against us could subject us to the invalidation of our proprietary rights. Moreover, we may need to redesign
some of our systems and technologies to avoid future infringement liability. Any of the foregoing could prevent us from competing
effectively and increase our costs.
Additionally, our Society6 and Saatchi Art digital artist marketplaces allow artists to sell original designs on various types of
consumer products. On occasion, the designs posted to Society6 or Saatchi Art may infringe certain copyrights or trademarks or
misappropriate the right of publicity of well-known figures. As a result, we may be the subject of letters, lawsuits and takedown
notices from rights holders, and the Digital Millennium Copyright Act may not provide safe-harbors for all types of infringing content