Priceline 2010 Annual Report Download - page 102

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We face risks related to our intellectual property.
We regard our intellectual property as critical to our success, and we rely on trademark, copyright and
patent law, trade secret protection and confidentiality and/or license agreements with our employees, customers,
partners and others to protect our proprietary rights. If we are not successful in protecting our intellectual property, it
could have a material adverse effect on our business, results of operations and financial condition.
While we believe that our issued patents and pending patent applications help to protect our business, there
can be no assurance that:
x a third party will not have or obtain one or more patents that can prevent us from practicing features of
our business or that will require us to pay for a license to use those features;
x our operations do not or will not infringe valid, enforceable patents of third parties;
x any patent can be successfully defended against challenges by third parties;
x the pending patent applications will result in the issuance of patents;
x competitors or potential competitors will not devise new methods of competing with us that are not
covered by our patents or patent applications;
x because of variations in the application of our business model to each of our services, our patents will
be effective in preventing one or more third parties from utilizing a copycat business model to offer the
same service in one or more categories;
x new prior art will not be discovered that may diminish the value of or invalidate an issued patent; or
x legislative or judicial action will not directly or indirectly affect the scope and validity of any of our
patent rights.
There has been recent discussion in the press regarding the examination and issuance of so called “business
method” patents. As a result, the United States Patent and Trademark Office has indicated that it intends to intensify
the review process applicable to such patent applications. The new procedures are not expected to have a direct
effect on patents already granted. We cannot anticipate what effect, if any, the new review process will have on our
pending patent applications. In addition, there has been recent discussion in various federal court proceedings
regarding the patentability and validity of so called “business method” patents. The U.S. Supreme Court, in a recent
decision in Bilski v. Kappos, partially addressed the patentability of so-called business method patents. We cannot
anticipate what effect, if any, any new federal court decision or new legislation will have on our issued patents or
pending patent applications.
We pursue the registration of our trademarks and service marks in the U.S. and internationally. However,
effective trademark, service mark, copyright and trade secret protection may not be available in every country in
which our services are made available online. We have licensed in the past, and expect to license in the future,
certain of our proprietary rights, such as trademarks or copyrighted material, to third parties. These licensees may
take actions that might diminish the value of our proprietary rights or harm our reputation.
From time to time, in the ordinary course of our business, we have been subject to, and are currently
subject to, legal proceedings and claims relating to the intellectual property rights of others, and we expect that third
parties will continue to assert intellectual property claims, in particular patent claims, against us, particularly as we
expand the complexity and scope of our business. We endeavor to defend our intellectual property rights diligently,
but intellectual property litigation is extremely expensive and time consuming, and has and is likely to continue to
divert managerial attention and resources from our business objectives. Successful infringement claims against us
could result in significant monetary liability or prevent us from operating our business, or portions of our business.
In addition, resolution of claims may require us to obtain licenses to use intellectual property rights belonging to
third parties, which may be expensive to procure, or possibly to cease using those rights altogether. Any of these
events could have a material adverse effect on our business, results of operations or financial condition.