Google 2013 Annual Report Download - page 75


PART II
ITEM8.Notes to Consolidated Financial Statements
EPA 
InFebruary2009,welearnedofaU.S.EnvironmentalProtectionAgency(EPA)investigationintoanallegedreleaseofrefrigerant
atoneofoursmallerdatacenterfacilities,whichweacquiredfromDoubleClick,andtheaccuracyofrelatedstatementsand
records.WearecooperatingwiththeEPAandhaveprovideddocumentsandothermaterials.
    
Wehavehadpatent,copyright,andtrademarkinfringementlawsuitsledagainstusclaimingthatcertainofourproducts,services,
andtechnologies,includingAndroid,GoogleSearch,GoogleAdWords,GoogleAdSense,GoogleBooks,GoogleNews,Google
ImageSearch,GoogleChrome,GoogleTalk,GoogleVoice,MotoroladevicesandYouTube,infringetheintellectualpropertyrights
ofothers.Adverseresultsintheselawsuitsmayincludeawardsofsubstantialmonetarydamages,costlyroyaltyorlicensing
agreements,ororderspreventingusfromo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,theU.S.InternationalTradeCommission(ITC)hasincreasingly
becomeanimportantforumtolitigateintellectualpropertydisputesbecauseanultimatelossforacompanyoritssuppliersin
anITCactioncouldresultinaprohibitiononimportinginfringingproductsintotheU.S.SincetheU.S.isanimportantmarket,a
prohibitiononimportationcouldhaveanadverseeectonus,includingpreventingusfromimportingmanyimportantproducts
intotheU.S.ornecessitatingworkaroundsthatmaylimitcertainfeaturesofourproducts.
Furthermore,manyofouragreementswithourcustomersandpartnersrequireustoindemnifythemforcertainintellectual
propertyinfringementclaimsagainstthem,whichwouldincreaseourcostsasaresultofdefendingsuchclaims,andmayrequire
thatwepaysignicantdamagesiftherewereanadverserulinginanysuchclaims.Ourcustomersandpartnersmay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.

Wearealsoregularlysubjecttoclaims,suits,governmentinvestigations,andotherproceedingsinvolvingcompetitionandantitrust
(suchasthependinginvestigationbytheECdescribedabove),intellectualproperty,privacy,tax,laborandemployment,commercial
disputes,contentgeneratedbyourusers,goodsandservicesoeredbyadvertisersorpublishersusingourplatforms,personal
injury,consumerprotection,andothermatters.Suchclaims,suits,governmentinvestigations,andotherproceedingscouldresult
innes,civilorcriminalpenalties,orotheradverseconsequences.
Certainofouroutstandinglegalmattersincludespeculativeclaimsforsubstantialorindeterminateamountsofdamages.We
recordaliabilitywhenwebelievethatitisprobablethatalosshasbeenincurredandtheamountcanbereasonablyestimated.We
evaluate,onamonthlybasis,developmentsinourlegalmattersthatcouldaecttheamountofliabilitythathasbeenpreviously
accrued,andmakeadjustmentsasappropriate.Signicantjudgmentisrequiredtodeterminebothlikelihoodoftherebeingand
theestimatedamountofalossrelatedtosuchmatters.
Withrespecttoouroutstandinglegalmatters,basedonourcurrentknowledge,webelievethattheamountorrangeofreasonably
possiblelosswillnot,eitherindividuallyorintheaggregate,haveamaterialadverseeectonourbusiness,consolidatednancial
position,resultsofoperations,orcashows.However,theoutcomeofsuchlegalmattersisinherentlyunpredictableandsubject
tosignicantuncertainties.
Weexpenselegalfeesintheperiodinwhichtheyareincurred.
Taxes
WeareunderauditbytheInternalRevenueService(IRS)andvariousothertaxauthorities,includingEuropeangovernments,with
regardstoincometaxandindirecttaxmatters.Wehavereservedforpotentialadjustmentstoourprovisionforincometaxesand
accrualofindirecttaxesthatmayresultfromexaminationsby,oranynegotiatedagreementswith,thesetaxauthorities,andwe
believethatthenaloutcomeoftheseexaminationsoragreementswillnothaveamaterialeectonourresultsofoperations.If
eventsoccurwhichindicatepaymentoftheseamountsisunnecessary,thereversaloftheliabilitieswouldresultintherecognition
ofbenetsintheperiodwedeterminetheliabilitiesarenolongernecessary.Ifourestimatesofthefederal,state,andforeign
incometaxliabilitiesandindirecttaxliabilitiesarelessthantheultimateassessment,afurtherchargetoexpensewouldresult.
 Stockholders’ Equity
Convertible Preferred Stock
Ourboardofdirectorshasauthorized100,000,000sharesofconvertiblepreferredstock,$0.001parvalue,issuableinseries.As
ofDecember31,2012and2013,therewerenosharesissuedoroutstanding.
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contents
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