HP 2015 Annual Report Download - page 32

Table of Contents
defective or incompatible with future versions of our products, or our relationship with the third party may deteriorate, or our agreements with the third party
may expire or be terminated. We may face legal or business disputes with licensors that may threaten or lead to the disruption of inbound licensing
relationships. In order to remain in compliance with the terms of our licenses, we must carefully monitor and manage our use of third-party software
components, including both proprietary and open source license terms that may require the licensing or public disclosure of our intellectual property without
compensation or on undesirable terms. Additionally, some of these licenses may not be available to us in the future on terms that are acceptable or that allow
our product offerings to remain competitive. Our inability to obtain licenses or rights on favorable terms could have a material effect on our business,
including our financial condition and results of operations. In addition, it is possible that as a consequence of a merger or acquisition, third-parties may
obtain licenses to some of our intellectual property rights or our business may be subject to certain restrictions that were not in place prior to such transaction.
Because the availability and cost of licenses from third parties depends upon the willingness of third parties to deal with us on the terms we request, there is a
risk that third parties who license to our competitors will either refuse to license us at all, or refuse to license us on terms equally favorable to those granted to
our competitors. Consequently, we may lose a competitive advantage with respect to these intellectual property rights or we may be required to enter into
costly arrangements in order to terminate or limit these rights.
Third-party claims of intellectual property infringement are commonplace in the IT industry and successful third-party claims may limit or disrupt our
ability to sell our products and services.
Third-parties also may claim that we or customers indemnified by us are infringing upon their intellectual property rights. For example, patent assertion
entities may purchase intellectual property assets for the purpose of asserting claims of infringement and attempting to extract settlements from companies
such as HP Inc. and our customers. If we cannot or do not license allegedly infringed intellectual property at all or on reasonable terms, or if we are required to
substitute similar technology from another source, our operations could be adversely affected. Even if we believe that intellectual property claims are without
merit, they can be time-consuming and costly to defend against and may divert management's attention and resources away from our business. Claims of
intellectual property infringement also might require us to redesign affected products, enter into costly settlement or license agreements, pay costly damage
awards, or face a temporary or permanent injunction prohibiting us from importing, marketing or selling certain of our products. Even if we have an
agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to us.
Further, our results of operations and cash flows have been and could continue to be affected in certain periods and on an ongoing basis by the
imposition, accrual and payment of copyright levies or similar fees. In certain countries (primarily in Europe), proceedings are ongoing or have been
concluded involving our company in which groups representing copyright owners have sought or are seeking to impose upon and collect from HP Inc. levies
upon equipment (such as PCs, MFDs and printers) alleged to be copying devices under applicable laws. Other such groups have also sought to modify
existing levy schemes to increase the amount of the levies that can be collected from us. Other countries that have not imposed levies on these types of
devices are expected to extend existing levy schemes, and countries that do not currently have levy schemes may decide to impose copyright levies on these
types of devices. The total amount of the copyright levies will depend on the types of products determined to be subject to the levy, the number of units of
those products sold during the period covered by the levy, and the per unit fee for each type of product, all of which are affected by several factors, including
the outcome of ongoing litigation involving us and other industry participants and possible action by the legislative bodies in the applicable countries, and
could be substantial. Consequently, the ultimate impact of these copyright levies or similar fees, and our ability to recover such amounts through increased
prices, remains uncertain.
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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