Orbitz 2008 Annual Report Download - page 22

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We may not protect our intellectual property effectively, which would allow competitors to duplicate our products and services. This could make it more
difficult for us to compete with them.
Our success and ability to compete depend, in part, upon our technology and other intellectual property, including our brands. Among our significant assets
are our software and other proprietary information and intellectual property rights. We rely on a combination of copyright, trademark and patent laws, trade
secrets, confidentiality procedures and contractual provisions to protect these assets. However, we have a limited number of patents, and our software and related
documentation are protected principally under trade secret and copyright laws, which afford only limited protection, and the laws of some jurisdictions provide
less protection for our proprietary rights than the laws of the U.S. We have granted Travelport an exclusive license to our supplier link technology, including our
patents related to that technology. Under the exclusive license, Travelport has the first right to enforce those patents, and so we will only be able to bring actions
to enforce those patents if Travelport declines to do so. Unauthorized use and misuse of our intellectual property could have a material adverse effect on our
business, financial condition and results of operations, and the legal remedies available to us may not adequately compensate us for the damages caused by
unauthorized use.
Further, intellectual property challenges have been increasingly brought against members of the travel industry. These legal actions have in the past and
might in the future result in substantial costs and diversion of resources and management attention. In addition, we may need to take legal action in the future to
enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others, and these
enforcement actions could result in the invalidation or other impairment of intellectual property rights we assert.
We carry significant goodwill and indefinite-lived intangible assets on our consolidated balance sheet, and if a future impairment were to occur based on a
decline in our stock price or otherwise, we may be required to record a significant charge against earnings.
As of December 31, 2007, we had goodwill and indefinite-lived intangible assets of $1,494 million, which represented approximately 78% of our total
consolidated assets. Under generally accepted accounting principles, goodwill and indefinite-lived intangible assets are not amortized, but are tested for
impairment annually or more often if events or changes in circumstances indicate a potential impairment may exist. Factors that could indicate that our goodwill
or indefinite-lived intangible assets may be impaired include a protracted decline in stock price and market capitalization, lower than projected operating results
and cash flows and slower growth rates in our industry. We may be required to record a significant charge to earnings during the period in which any impairment
of our goodwill or other intangible assets is determined, which could adversely impact our results of operations.
We have granted Travelport perpetual licenses to use certain of our intellectual property, which could facilitate Travelport's ability to compete with us.
At the time of our initial public offering, we entered into a master license agreement with Travelport which governs each of our and Travelport's rights to
use certain of the other's intellectual property. The master license agreement permits Travelport and its affiliates to use and, in some cases, to sublicense to third
parties certain of our intellectual property, including:
•
our supplier link technology;
•
portions of ebookers' booking, search and dynamic packaging technologies;
•
certain of our products and online booking tools for corporate travel;
•
portions of our white label dynamic packaging technology; and
•
our extranet supplier connectivity function currently being developed as part of our global technology platform.
15
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008