LifeLock 2013 Annual Report Download - page 28

Our inability to generate or obtain the financial resources needed to fund our business and growth strategies may require us to delay, scale back, or
eliminate some or all of our operations or the expansion of our business, which may have a material adverse effect on our business, operating results, financial
condition, and prospects.
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The success of our business depends in part on our ability to protect our intellectual property and the LifeLock brand. We rely on a combination of
federal, state, and common law trademark, patent, and trade secret laws, confidentiality procedures, and contractual provisions to protect our intellectual
property. However, these measures afford only limited protection and might be challenged, invalidated, or circumvented by third parties. The measures we
take to protect our intellectual property may not be sufficient or effective, and in some instances we have not undertaken comprehensive searches with respect
to certain of our intellectual property. We have limited protections in countries outside the United States, such as registrations for key trademarks. Moreover,
our competitors may independently develop similar intellectual property.
While we generally obtain non-disclosure agreements from each of our employees and independent contractors, there are former independent contractors
from whom we have not obtained these agreements. Therefore, these former independent contractors may inappropriately disclose our confidential information
or use that confidential information illegally, which could subject us to liability to third parti es.
We currently have a number of issued and pending patents and trademarks, many of which were procured in connection with our acquisition of ID
Analytics. We cannot assure you that any patents will issue from our currently pending patent applications in a manner that gives us the protection that we
seek, if at all, or that any future patents issued to us will not be challenged, invalidated, or circumvented. Any patents that may issue in the future from
pending or future patent applications may not provid e sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. We
also cannot assure you that any future trademark or service mark registrations will be issued from pending or future applications or that any registered
trademarks or service marks will be enforceable or provide adequate protection of our proprietary rights.
We may find it necessary to take legal action in the future to enforce or protect our intellectual property rights, and such action may be expensive and
time consuming. In addition, we may be unable to obtain a favorable outcome in any such intellectual property litigation.
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From time to time, third parties may claim that our services infringe or otherwise violate their intellectual property rights. We may be subject to legal
proceedings and claims, including claims of alleged infringement by us of the intellectual property rights of third parties. Any dispute or litigation regarding
intellectual property could be expensive and time consuming, regardless of the merits of any claim, and could divert our management and key per sonnel from
our business operations.
If we were to discover or be notified that our services potentially infringe or otherwise violate the intellectual property rights of others, we may need to
obtain licenses from these parties in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or at all, and any
such license may substantially restrict our use of the intellectual property. Moreover, if we are sued for infringement and lose the lawsuit, we could be requ ired
to pay substantial damages or be enjoined from offering the infringing services. Our intellectual property portfolio may not be useful in asserting a
counterclaim, or negotiating a license, in response to a claim of intellectual property infringement. Any of the foregoing could cause us to incur significant costs
and prevent us from selling our services.
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Our services utilize intellectual property, technology, and content owned by third parties. From time to time, we may be required to renegotiate with these
third parties or negotiate with other third parties to include or continue using their intellectual property, technology, or content in our existing service offerings,
in new versions of our service offerings, or in new services that we offer. We may not be able to obtain the necessary rights from these third parties on
commercially reasonable terms, or at all, and the third-party intellectual property, technology, and content we use or desire to use may not be appropriately
supported, maintained, or enhanced by the third parties. If we are unable to obtain the rights necessary to use or continue to use third-party intellectual
property, technology, and content in our services, or if those third parties are unable to support, maintain, and enhance their intellectual property, technology,
and content, we could experience increased costs or delays or reductions in our service offerings, which in turn may harm our financial condition, damage our
brand, and result in the loss of customers.
We are building our intellectual property portfolio internally and through acquisitions, such as our acquisitions of ID Analytics. We may be required to
incur substantial expenses to do so, and our efforts may not be successful.
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