Motorola 2013 Annual Report Download - page 20

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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 Trademark Holdings, LLC (“MTH”), which is currently owned by Motorola
Mobility, a subsidiary of Google and is under contract to be sold to Lenovo. 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. A
change of control of Motorola Mobility, such as the sale to Lenovo, or bankruptcy of Motorola Mobility could result in an
incompatible third-party owning the Motorola Marks.
We have a worldwide, perpetual and royalty-free license from MTH 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. There are
risks associated with both Motorola Mobility and the Company using the Motorola Marks and with this loss of ownership. As
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. This risk could increase under Lenovo's control if
they expand their use of the Motorola Marks. 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. We believe such an approval is not likely to be granted by Lenovo. 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 the Motorola brand.
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, MTH 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. Motorola Mobility was acquired by Google
in May 2012, which resulted in Google having effective control over the Motorola Marks. Google recently signed a contract to
sell Motorola Mobility and the Motorola Marks to Lenovo. In 2013 Motorola Mobility modified certain Motorola Marks used
by the Company. Motorola Mobility may require the Company to adopt the use of the modified Motorola Marks, which would
result in the Company incurring the costs of rebranding.
Upon the closing of the sale of Motorola Mobility to Lenovo, Lenovo will gain control of the Motorola Marks. In
addition, neither Motorola Mobility nor Google are prohibited, and Lenovo will not be prohibited, from selling the Motorola
Marks. In the event of a liquidation of Motorola Mobility or the then owner of the Motorola Marks, 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 associated with sharing the Motorola Marks. In addition,
there is a risk that, in the event of a bankruptcy of Motorola Mobility or the then owner of the Motorola Marks, Motorola
Mobility, the then owner or its bankruptcy trustee may attempt to reject the license, or a bankruptcy court may refuse to uphold
the license or certain of its terms. Such a loss could negatively affect our business, results of operations and financial condition.
We have completed a number of large divestitures over the last several years and have ongoing potential liability associated
with those transactions and the businesses we divested. We may complete future divestitures with similar risks.
Over the last several years we have spun-off or sold a number of businesses, including Motorola Mobility and our
Networks business and we may divest other businesses in the future. In connection with many of our divestitures we remain
liable for certain pre-closing liabilities associated with the divested business, such as pension liabilities, taxes, employment,
environmental liabilities and litigation. In certain situations, such as our spin-off transactions, we may retain risk for pre-closing
liabilities in the event of a liquidation or bankruptcy of the company we spun off, even if they assumed certain liabilities
because they were incurred when they were part of the Company and a third-party may not have consented to the assumption.
In addition, although we often assign contracts associated with the divested business to a buyer in a divestiture, often that
assignment will be subject to the consent of the contractual counterparty, which may not be obtained or may be conditioned,
resulting in the company remaining liable under the contract. In addition, in most of our divestitures we make representations
and warranties and agree to covenants relating to the business divested. We remain liable for a period of time for breaches of
representations, warranties and covenants and we also indemnify buyers in the event of such breaches and for other specific
risks. Even though we establish reserves for any expected ongoing liability associated with divested businesses, those reserves
may not be sufficient if unexpected liabilities arise and this could negatively impact our financial condition and future results of
operations.