Kodak 2005 Annual Report Download - page 17

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acceptance that differs from the product’s realizable customer demand and revenue stream. Further, in the face of intense industry competition, any
unanticipated delay in implementing certain product strategies (including digital products, category expansion and digitization) or in the
development, production or marketing of a new product could decrease any advantage Kodak may have to be the fi rst or among the fi rst to market
and could adversely affect Kodak’s revenues. Kodak’s failure to carry out a product rollout in the time frame anticipated and in the quantities
appropriate to customer demand, or at all, could adversely affect future demand for Kodak’s products and services and have an adverse effect on its
business. This risk is exacerbated when a product has a short life cycle or a competitor introduces a new product just before Kodak’s introduction of
a similar product.
If we cannot effectively anticipate trends and respond to changing customer preferences, this could aversely affect our revenues.
Due to changes in technology, the market for traditional photography products and services is in decline and, as a result, product development has
focused on digital capture devices (digital cameras and scanners) designed to improve the image acquisition or digitalization process, software
products designed to enhance and simplify the digital workfl ow, output devices (thermal printers, digital silver halide writers and commercial printing
systems and solutions) designed to produce high quality images, and media (thermal and silver halide) optimized for digital workfl ows. Kodak’s
success depends in part on its ability to develop and introduce new products and services in a timely manner that keep pace with technological
developments and that are accepted in the market. The Company continues to introduce new consumer and commercial digital product offerings,
however, there can be no assurance that the Company will be successful in anticipating and developing new products, product enhancements or new
solutions and services to adequately address changing technologies and customer requirements. In addition, if the Company is unable to anticipate
and develop improvements to its current technology, to adapt its products to changing customer preferences or requirements or to continue to produce
high quality products in a timely and cost-effective manner in order to compete with products offered by its competitors, this could adversely affect
the revenues of the Company.
If we cannot adequately protect our intellectual property, our business could be harmed.
Kodak has made substantial investments in technologies and has fi led patent applications and obtained patents to protect its intellectual property
rights as well as the interests of Kodak licensees. The execution and enforcement of licensing agreements protects the Company’s intellectual
property rights and provides a revenue stream in the form of royalties that enables Kodak to further innovate and provide the marketplace with new
products and services. There is no assurance that such measures will be adequate to protect the Company’s intellectual property.
Our revenue, earnings and expenses may suffer if we cannot continue to implement our intellectual property licensing strategies.
Kodak’s ability to execute its intellectual property licensing strategies could also affect the Company’s revenue and earnings. Kodak’s failure to
develop and properly manage new intellectual property could adversely affect market positions and business opportunities. Furthermore, Kodak’s
failure to manage the costs associated with intellectual property generation, licensing and litigation could adversely affect the profi tability of
Kodak’s operations.
Our revenue, earnings and expenses may suffer if we cannot continue to license or enforce our intellectual property rights.
Kodak relies upon patent, copyright, trademark and trade secret laws in the United States and similar laws in other countries, and agreements with
its employees, customers, suppliers and other parties, to establish, maintain and enforce its intellectual property rights. Any of Kodak’s direct or
indirect intellectual property rights could, however, be challenged, invalidated or circumvented, or such intellectual property rights may not be
suffi cient to permit the Company to take advantage of current market trends or otherwise to provide competitive advantages, which could result in
costly product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of certain countries do not
protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions, Kodak may be unable to protect
its proprietary technology adequately against unauthorized third party copying or use, which could adversely affect its competitive position. Also,
because of the rapid pace of technological change in the information technology industry, much of our business and many of our products rely on key
technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third
parties at all or on reasonable terms, or such parties may demand cross-licenses.
Our revenue, earnings and expenses may suffer if third parties assert that we violate their intellectual property rights.
Third parties may claim that Kodak or customers indemnifi ed by Kodak are infringing upon their intellectual property rights. In recent years,
individuals and groups have begun purchasing intellectual property assets for the sole purpose of making claims of infringement and attempting to
extract settlements from large companies like Kodak. Even if Kodak believes that the claims are without merit, the claims can be time-consuming and
costly to defend and distract management’s attention and resources. Claims of intellectual property infringement also might require Kodak to redesign
affected products, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction