Motorola 2008 Annual Report Download - page 33

of our components are available only from a single source or limited sources. We may not be able to diversify
sources in a timely manner. A reduction or interruption in supplies or a significant increase in the price of supplies
could have a material adverse effect on our businesses.
Our success is dependent, in part, upon our ability to form successful strategic alliances. If these arrangements do
not develop as expected, our business may be adversely impacted.
We currently partner with industry leaders to meet customer product and service requirements and to develop
innovative advances in design and technology. Some of our partnerships allow us to supplement internal
manufacturing capacity and share the cost of developing next-generation technologies. Other partnerships allow us
to offer more services and features to our customers. If such arrangements do not develop as expected, our
business could be adversely impacted.
We rely on third-party distributors, representatives and retailers to sell certain of our products.
In addition to our own sales force, we offer our products through a variety of third-party distributors,
representatives and retailers. Certain of our distributors or representatives may also market other products that
compete with our products. The loss, termination or failure of one or more of our distributors or representatives to
effectively promote our products, or changes in the financial or business condition of these distributors,
representatives or retailers, could affect our ability to bring products to market.
We face many risks relating to intellectual property rights.
Our business will be harmed if: (i) we, our customers and/or our suppliers are found to have infringed
intellectual property rights of third parties, (ii) if the intellectual property indemnities in our supplier agreements
are inadequate to cover damages and losses due to infringement of third-party intellectual property rights by
supplier products, (iii) if we are required to provide broad intellectual property indemnities to our customers, or
(iv) if our intellectual property protection is inadequate to protect our proprietary rights. We may be harmed if we
are forced to make publicly available, under the relevant open-source licenses, certain internally developed
software-related intellectual property as a result of either our use of open-source software code or the use of
third-party software that contains open-source code.
Because our products are comprised of complex technology, much of which we acquire from suppliers through
the purchase of components or licensing of software, we are often involved in or impacted by litigation regarding
patent and other intellectual property rights. Third parties have asserted, and in the future may assert, intellectual
property infringement claims against us and against our customers and suppliers. Defending claims may be
expensive and divert the time and efforts of our management and employees. Increasingly, third parties have
sought broad injunctive relief which could limit our ability to sell our products in the U.S. or elsewhere with
intellectual property subject to the claims. If we do not succeed in any such litigation, we could be required to
expend significant resources to pay damages, develop non-infringing intellectual property or to obtain licenses to
the intellectual property that is the subject of such litigation. However, we cannot be certain that any such licenses,
if available at all, will be available to us on commercially reasonable terms. In some cases, we might be forced to
stop delivering certain products if we or our customer or supplier are subject to a final injunction.
We attempt to negotiate favorable intellectual property indemnities with our suppliers for infringement of
third-party intellectual property rights, but there is no assurance that we will be successful in our negotiations or
that a supplier’s indemnity will cover all damages and losses suffered by Motorola and our customers due to the
infringing products or that a supplier may choose to accept a license or modify or replace its products with non-
infringing products which would otherwise mitigate such damages and losses. Further, Motorola may not be able
to participate in intellectual property litigation involving a supplier and may not be able to influence any ultimate
resolution or outcome that may adversely impact Motorola’s sales if a court enters an injunction that enjoins the
supplier’s products or if the International Trade Commission issues an exclusionary order that blocks Motorola
products from importation into the U.S.
In addition, our customers increasingly demand that we indemnify them broadly from all damages and losses
resulting from intellectual property litigation against them. Because our customers often derive much larger
revenue streams by reselling or leasing our products than we generate from the same products, these indemnity
claims by our customers have the potential to expose us to damages that are much higher than we would be
exposed to if we were sued directly.
Our patent and other intellectual property rights are important competitive tools and may generate income
under license agreements. We regard our intellectual property rights as proprietary and attempt to protect them
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