Tesla 2012 Annual Report Download - page 63

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result in issued patents. Furthermore, even if these patent applications do result in issued patents, some foreign countries provide significantly
less effective patent enforcement than in the United States.
The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot be
certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us in
the near future will afford protection against competitors with similar technology. In addition, patents issued to us may be infringed upon or
designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may
adversely affect our business, prospects, financial condition and operating results.
Three of our trademark applications in the European Union remain subject to three outstanding opposition proceedings.
We currently sell and market our vehicles in the European Union under the Tesla trademark. We have three trademark applications in the
European Union for the Tesla trademark. These are each subject to an outstanding opposition proceeding brought by a prior owner of trademarks
consisting of the word Tesla. If we cannot resolve these remaining oppositions and thereby secure registered rights in the European Union, this
will reduce our ability to challenge third party users of the Tesla trademark and dilute the value of the mark as our exclusive brand name in the
European Union. In addition, there is a risk that the remaining prior rights owner could in the future take action to challenge our use of the Tesla
mark in the European Union. This would have a severe impact on our position in the European Union and may inhibit our ability to use the Tesla
mark in the European Union. If we were prevented from using the Tesla trademark in the European Union, we would need to expend significant
additional financial and marketing resources on establishing an alternative brand identity in these markets.
We may be subject to claims arising from an airplane crash in which three of our employees died.
In February 2010, three of our employees died in a crash of an airplane owned and piloted by one of our employees. The plane crashed in a
neighborhood in East Palo Alto, California. The plane also clipped an electrical tower, causing a power loss and business interruption in parts of
Palo Alto, including Stanford University. The cause of the accident is under investigation by the National Transportation Safety Board.
In November 2010, a case was filed against us relating to the crash in California Superior Court. In that case, plaintiffs allege claims for
negligence, negligent infliction of emotional distress, trespass, and violations of federal and state aviation laws and regulations against all
defendants, and seek compensation for real property damage and loss of use, as well as personal property and emotional distress/bodily injury
claims. In December 2010, the plaintiffs settled claims for real property damage but retained their claims for emotional distress, bodily injury
and personal property damage. We believe that these remaining claims are covered by insurance.
As a result of the accident, other claims, including but not limited to those arising from loss of or damage to personal property, business
interruption losses or damage to the electrical tower and surrounding area, may be asserted against various parties including us. The time and
attention of our management may also be diverted in defending such claims. We may also incur costs both in defending against any claims and
for any judgments if such claims are adversely determined.
Our corporate or manufacturing facilities or operations could be damaged or adversely affected as a result of disasters or unpredictable
events.
Our corporate headquarters in Palo Alto and Tesla Factory in Fremont are located in Northern California, a region known for seismic
activity. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, computer viruses, pandemics or other events
occur, or our information system or communications network breaks down or operates improperly, our headquarters and production facilities
may be seriously
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