Motorola 2010 Annual Report Download - page 32

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In connection with the Distribution of Motorola Mobility, Motorola Mobility indemnified us for certain liabilities
and we indemnified Motorola Mobility for certain liabilities. This indemnity may not be sufficient to insure us
against the full amount of the liabilities assumed by Motorola Mobility and Motorola Mobility may be unable to
satisfy its indemnification obligations to us in the future.
Pursuant to the Master Separation and Distribution Agreement and certain other agreements with Motorola
Mobility, Motorola Mobility agreed to indemnify us for certain liabilities, and we agreed to indemnify Motorola
Mobility for certain liabilities, in each case for uncapped amounts. There can be no assurance that the indemnity
from Motorola Mobility will be sufficient to protect us against the full amount of such liabilities, or that Motorola
Mobility will be able to fully satisfy its indemnification obligations. Third-parties could also seek to hold us
responsible for any of the liabilities that Motorola Mobility has agreed to assume. Even if we ultimately succeed in
recovering from Motorola Mobility any amounts for which we are held liable, we may be temporarily required to
bear these losses ourselves. In addition, indemnities that we may be required to provide Motorola Mobility are not
subject to any cap, may be significant and could negatively impact our business. Each of these risks could negatively
affect our business, results of operations and financial condition. For more detailed information, see the Amended
and Restated Master Separation and Distribution Agreement which was filed as an exhibit to our Form 10-Q for the
third quarter 2010.
We no longer own certain logos and other trademarks, trade names and service marks, including MOTOROLA,
MOTO, MOTOROLA SOLUTIONS and the Stylized M logo and all derivatives and formatives thereof
(“Motorola Marks”) and we license the Motorola Marks from Motorola Mobility. Our joint use of the Motorola
Marks could result in product and market confusion and negatively impact our ability to expand our business under
the Motorola brand. In addition, if we do not comply with the terms of the license agreement we could lose our
rights to the Motorola Marks.
We have a worldwide, perpetual and royalty-free license from Motorola Mobility to use the Motorola Marks
as part of our corporate name and in connection with the manufacture, sale, and marketing of our current products
and services. The license of the Motorola Marks is important to us because of the reputation of the Motorola brand
for our products and services. Although we will continue to be able to use the Motorola Marks in certain fields of
use we no longer own the Motorola Marks after the Distribution of Motorola Mobility. There are risks associated
with both Motorola Mobility and the Company using the Motorola Marks and with this loss of ownership. Because
both Motorola Mobility and the Company will be using the Motorola Marks, confusion could arise in the market,
including customer and investor confusion regarding the products offered by and the actions of the two companies.
This risk could increase as both Motorola Mobility’s and our products continue to converge. Also, any negative
publicity associated with either company in the future could adversely affect the public image of the other. In
addition because our license of the Motorola Marks will be limited to products and services within our specified
fields of use, we will not be permitted to use the Motorola Marks in other fields of use without the approval of
Motorola Mobility. In the event that we desire to expand our business into any other fields of use, we may need to
do so with a brand other than Motorola. Developing a brand as well-known and with as much brand equity as
Motorola could take considerable time and expense. The risk of needing to develop a second brand increases as
Motorola Mobility’s and our products continue to converge and as our business expands into other fields of use. In
addition, we could lose our rights to use the Motorola Marks if we do not comply with the terms of the license
agreement. Such a loss could negatively affect our business, results of operations and financial condition.
Furthermore, Motorola Mobility has the right to license the brand to third parties and either Motorola Mobility or
licensed third parties may use the brand in ways that make the brand less attractive for customers of Motorola
Solutions, creating increased risk that Motorola Solutions may need to develop an alternate or additional brand.
A change of control of or bankruptcy of Motorola Mobility could result in an incompatible third-party owning the
Motorola Marks or the loss of certain rights, including the license.
Since Motorola Mobility owns the Motorola Marks, in the event Motorola Mobility is acquired, the acquiring
entity would gain control of the Motorola Marks. Similarly, in the event of a liquidation of Motorola Mobility it is
possible that a bankruptcy court would permit the Motorola Marks to be assigned to a third-party. While our right
to use the Motorola Marks under our license should continue in our specified field of use in such situations, it is
possible that we could be party to a license arrangement with a third-party whose interests are incompatible with
ours, thereby potentially making the license arrangement difficult to administer, and increasing the costs and risks