Google 2008 Annual Report Download - page 105

Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. We currently have three cases pending at the European Court of Justice, which will
address questions regarding whether advertisers and search engines can be held liable for use of trademarked
terms in keyword advertising. We are litigating, or have recently litigated similar issues in other cases, in the U.S.,
Australia, Austria, Brazil, China, France, Germany, Israel, and Italy.
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 have also had patent lawsuits filed against us alleging that certain of our products and services, including
Google Web Search, Google AdWords, Google AdSense and Google Chrome, infringe patents held by others. In
addition, the number of demands for license fees and the dollar amounts associated with each request continue to
increase. Adverse results in these lawsuits, or our decision to license patents based upon these demands, may
result in substantial costs and, in the case of adverse litigation results, could prevent us from offering certain
features, functionalities, products or services, which could result in a loss of revenue for us or otherwise harm our
business.
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 and threatened 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.
Income Taxes
We are currently under audit by the IRS and various other tax authorities. We have reserved for potential
adjustments to our provision for income taxes that may result from examinations by, or any negotiated
agreements with, these tax authorities, and we believe that the final outcome of these examinations or agreements
will not have a material effect on our results of operations. If events occur which indicate payment of these
89