Logitech 2004 Annual Report Download - page 50

of our remaining or future VAT receivable, we could experience both a one-time charge for the write-down of
our VAT receivable and on-going lower margins due to the lack of reimbursement of VAT, either of which could
significantly harm our financial condition, operating results and cash flows.
Our introduction of new product lines may consume significant resources and not result in significant
future revenues.
We will continue to expand our product offerings with new product lines such as headsets for mobile
phones, and other products that are outside of our traditional areas of expertise. To accomplish this, we have
committed resources to develop, sell and market these new products. With limited experience in these product
lines and because these products may be based on technologies that are new to us, it may be difficult for us to
accurately anticipate and forecast revenues, manufacturing costs, customer support costs and product returns. In
addition, because the technologies may be new to us, we may have a greater risk of unknowingly infringing on
proprietary technology. Our ongoing investments in the development and marketing of new lines of products
could produce higher costs without a proportional increase in revenues.
We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the
development of products that compete with our products.
Our future success depends in part on our proprietary technology, technical know-how and other intellectual
property. We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property
laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to
protect our intellectual property.
We hold various United States and European patents and pending applications, together with corresponding
patents and pending applications from other countries. It is possible that any patent owned by us will be
invalidated, deemed unenforceable, circumvented or challenged, that the patent rights granted will not provide
competitive advantages to us, or that any of our pending or future patent applications will not be issued. In
addition, other intellectual property laws or our confidentiality procedures and contractual provisions, may not
adequately protect our intellectual property. Also, others may independently develop similar technology,
duplicate our products, or design around our patents or other intellectual property rights. In addition,
unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard
as proprietary. Any of these events could significantly harm our business, financial condition and operating
results.
We are also increasing our reliance on technologies that we license or acquire from others. We may find it
necessary or desirable in the future to obtain licenses or other rights relating to one or more of our products or to
current or future technologies. These licenses or other rights may not be available on commercially reasonable
terms, or at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on
favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect
on our business, financial condition and operating results. Moreover, the use of intellectual property licensed
from third parties may limit our ability to protect the proprietary rights in our products.
Pending lawsuits could adversely impact us.
We are currently involved in pending lawsuits and claims involving patent infringement claims by third
parties and commercial matters that arise in the normal course of business. We believe that these lawsuits are
without merit and we intend to defend them vigorously. However, our defense of these actions may not be
successful. Any judgment in or settlement of these lawsuits may have a material adverse impact on our business,
financial condition and results of operations.
Pending and future litigation and disputes arising over patent infringement claims, commercial matters, or
other litigation involving us, whether as plaintiff or defendant, regardless of outcome, may result in significant
12