Google 2012 Annual Report Download - page 18

12 GOOGLE INC. | Form10-K
PART I
ITEM1A.Risk Factors
unable to attract and retain a substantial number of alternative device manufacturers, distributors, and users to our products and
services, or if we are slow to develop products and technologies that are more compatible with alternative devices and platforms,
we will fail to capture the opportunities available as consumers and advertisers transition to a dynamic, multi-screen environment.
Our business depends on a strong brand, andfailing to maintain and enhance our brand would hurt our ability to
expand our base of users, advertisers, Google Network Members, andother partners.
The brand identity that we have developed has signifi cantly contributed to the success of our business. Maintaining and enhancing
the “Google” brand is critical to expanding our base of users, advertisers, Google Network Members, and other partners. We
believe that the importance of brand recognition will increase due to the relatively low barriers to entry in the internet market.
Our brand may be negatively impacted by a number of factors, including data protection and security issues, service outages,
and product malfunctions. If we fail to maintain and enhance the “Google” brand, or if we incur excessive expenses in this eff ort,
our business, operating results, and fi nancial condition will be materially and adversely aff ected. Maintaining and enhancing our
brand will depend largely on our ability to be a technology leader and continue to provide high-quality innovative products and
services, which we may not do successfully.
A variety of new and existing U.S. and foreign laws could subject us to claims or otherwise harm our business.
We are subject to numerous U.S. and foreign laws and regulations covering a wide variety of subject matters. New laws and
regulations (or new interpretations of existing laws and regulations) may also impact our business. The costs of compliance with
these laws and regulations are high and are likely to increase in the future. Any failure on our part to comply with these laws
and regulations can result in negative publicity and diversion of management time and eff ort and may subject us to signifi cant
liabilities and other penalties.
Furthermore, many of these laws were adopted prior to the advent of the internet and related technologies and, as a result, do
not contemplate or address the unique issues of the internet and related technologies. The laws that do reference the internet are
being interpreted by the courts, but their applicability and scope remain uncertain. For example, the laws relating to the liability of
providers of online services are currently unsettled both within the U.S. and abroad. Claims have also been, or may be, threatened
and fi led against us under both U.S. and foreign laws for defamation, invasion of privacy and other tort claims, unlawful activity, patent,
copyright and trademark infringement, or other theories based on the nature and content of the materials searched and the ads
posted by our users, our products and services, or content generated by our users. Moreover, recent amendments to U.S. patent
laws may aff ect the ability of companies, including us, to protect their innovations and defend against claims of patent infringement.
In addition, the Digital Millennium Copyright Act has provisions that limit, but do not necessarily eliminate, our liability for caching
or hosting, or for listing or linking to, third-party websites that include materials that infringe copyrights or other rights, so long
as we comply with the statutory requirements of this act. Any future legislation impacting these safe harbors may adversely
impact us. Various U.S. and international laws restrict the distribution of materials considered harmful to children and impose
additional restrictions on the ability of online services to collect information from minors. In the area of data protection, many
states have passed laws requiring notifi cation to users when there is a security breach for personal data, such as California’s
Information Practices Act. We face similar risks and costs as our products and services are off ered in international markets and
may be subject to additional regulations.
We are, and may in the future be, subject to intellectual property or other claims, which are costly to defend, could
result in signifi cant damage awards, and could limit our ability to use certain technologies in the future.
Internet, technology, and media companies 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. In addition, patent
holding companies may continue to seek to monetize patents they have purchased or otherwise obtained. As we have grown,
the intellectual property rights claims against us have increased and may continue to increase as we develop new products,
services, and technologies.
We have had patent, copyright, and trademark infringement lawsuits fi led against us claiming that certain of our products, services,
and technologies, including Android, Google Search, Google AdWords, Google AdSense, Motorola products, Google Books, Google
News, Google Image Search, Google Chrome, Google Talk, Google Voice, and YouTube, infringe the intellectual property rights of
others. Third parties have also sought broad injunctive relief against us by fi ling claims in the U.S. International Trade Commission
(ITC) for exclusion and cease and desist orders, which could limit our ability to sell our products or services in the U.S. or elsewhere
if our products or services or those of our customers or suppliers are found to infringe the intellectual property subject to the
claims. Adverse results in any of these lawsuits may include awards of substantial monetary damages, costly royalty or licensing
agreements (if licenses are available at all), or orders preventing us from off ering certain features, functionalities, products,
or services, and may also cause us to change our business practices, and require development of non-infringing products or
technologies, which could result in a loss of revenues for us and otherwise harm our business.
In addition, many of our agreements with our customers and partners, including certain suppliers, require us to indemnify them
for certain intellectual property infringement claims against them, which could increase our costs as a result of defending such
claims, and may require that we pay signifi cant damages if there were an adverse ruling in any such claims. Such customers and
partners may also discontinue the use of our products, services, and technologies, as a result of injunctions or otherwise, which
could result in loss of revenues and adversely impact our business. Moreover, supplier provided intellectual property indemnities
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