Google 2007 Annual Report Download - page 101

Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
purchase orders prior to the date of delivery. The majority of these purchase obligations are related to data center
operations and facility build-outs. These non-cancelable contractual obligations and open purchase orders amounts do
not include payments we may be obligated to make based upon vendors achieving certain milestones.
Letters of Credit
At December 31, 2007 and associated with several leased facilities, we had unused letters of credit for $20.4 million.
At December 31, 2007, we were in compliance with our financial covenants under the letters of credit.
Indemnifications
In the normal course of business to facilitate transactions of our services and products, we indemnify certain parties,
including advertisers, Google Network members and lessors, with respect to certain matters. We have agreed to hold
certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property
infringement or other claims made against certain parties. These agreements may limit the time within which an
indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification
agreements with our officers and directors, and our bylaws contain similar indemnification obligations to our agents.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular
agreement. Historically, payments made by us under these agreements have not had a material impact on our operating
results, financial position, or cash flows.
Legal Matters
Companies have filed trademark infringement and related claims against us over the display of ads in response to
user queries that include trademark terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction.
Courts in France have held us liable for allowing advertisers to select certain trademarked terms as keywords. We are
appealing those decisions. We were also subject to two lawsuits in Germany on similar matters where the courts held that
we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating or have
recently litigated similar issues in other cases in the U.S., France, Germany, Israel, Italy, Austria and Australia.
We have also had copyright claims filed against us alleging that features of certain of our products and services,
including Google Web Search, Google News, Google Video, Google Image Search, Google Book Search and YouTube,
infringe their rights. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty
or licensing agreements or orders preventing us from offering certain functionalities, and may also result in a change in our
business practices, which could result in a loss of revenue for us or otherwise harm our business. In addition, any time one
of our products or services links to or hosts material in which others allegedly own copyrights, we face the risk of being
sued for copyright infringement or related claims. Because these products and services comprise the majority of our
products and services, our business could be harmed in the event of an adverse result in any of these claims.
We are also a party to other litigation and subject to claims incident to the ordinary course of business, including
intellectual property claims (in addition to the trademark and copyright matters noted above), labor and employment
claims, breach of contract claims, tax and other matters.
Although the results of litigation and claims cannot be predicted with certainty, we believe that the final outcome of
the matters discussed above will not have a material adverse effect on our business, consolidated financial position, results
of operations or cash flows.
87