Google 2009 Annual Report Download - page 43

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We also seek to maintain certain intellectual property as trade secrets. The secrecy could be compromised by
outside parties, or by our employees, which would cause us to lose the competitive advantage resulting from these
trade secrets.
We are, and may in the future be, subject to intellectual property rights claims, which are costly to
defend, could require us to pay damages, and could limit our ability to use certain technologies in the
future.
Companies in the internet, technology, and media industries own large numbers of patents, copyrights,
trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other
violations of intellectual property rights. As we have grown, the intellectual property rights claims against us have
increased and may continue to increase. Our products, services, and technologies may not be able to withstand
any third-party claims and regardless of the merits of the claim, intellectual property claims are often time-
consuming and expensive to litigate or settle. In addition, to the extent claims against us are successful, we may
have to pay substantial monetary damages or discontinue any of our services or practices that are found to be in
violation of another party’s rights.
We also may have to seek a license to continue such practices, which may significantly increase our operating
expenses. In addition, many of our agreements with our Google Network members and other partners require us to
indemnify these members for certain third-party intellectual property infringement claims, which would increase
our costs as a result of defending such claims and may require that we pay damages if there were an adverse
ruling in any such claims.
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, Chile, China, France, Germany, Israel, Italy, Taiwan, and the United Kingdom.
We have also had copyright claims filed against us by companies 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 the rights of others. In the U.S. we announced a settlement with the Authors
Guild and the Association of American Publishers. However, this class action settlement is subject to approval by
the U.S. District Court for the Southern District of New York, and we may be subject to additional claims with
respect to Google Book Search both in the U.S. and in other parts of the world. 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 revenues 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, the risk of harm from such lawsuits could be substantial.
We have also had patent lawsuits filed against us alleging that certain of our products and services, including
Android, Google Web Search, Google AdWords, Google AdSense, Google Talk, 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 rulings, could prevent us from
offering certain features, functionalities, products, or services, which could result in a loss of revenues for us or
otherwise harm our business.
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