TiVo 2006 Annual Report Download - page 29

Table of Contents
Entertainment companies, networks, or video distributors may claim that our advertising products or features violate copyright or trademark laws, or
otherwise unfairly compete with them, by being placed within, adjacent to, or on top of, existing video programming or advertising. Entertainment companies
or video distributors may seek injunctions to prevent us from offering these product or features, seek damages and/or take other measures, such as blocking,
stripping or refusing carriage to prevent us from selling or distributing our advertising products. If we were unable to sell or distribute our advertising products
or features on our DVRs, we may suffer reduced revenues as a result.
Our success depends on our ability to secure and protect our patents, trademarks, and other proprietary rights.
Our success and ability to compete are substantially dependent upon our internally developed technology. We rely on patent, trademark and copyright
law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property
rights. However, the steps we take to protect our proprietary rights may be inadequate. We have filed patent applications and provisional patent applications
covering substantially all of the technology used to deliver the TiVo service and its features and functionality. To date, several of these patents have been
granted, but we cannot assure you that any additional patents will ever be granted, that any issued patents will protect our intellectual property or that third
parties will not challenge any issued patents. In addition, other parties may independently develop similar or competing technologies designed around any
patents that may be issued to us. Our failure to secure and protect our proprietary rights could have a material adverse effect on our business.
We could be prevented from selling or developing our TiVo software if the GNU General Public License governing the GNU/Linux operating
system and Linux kernel and similar licenses under which our product is developed and licensed is not enforceable or changed substantially.
Our TiVo software includes parts of the Linux kernel and the GNU/Linux operating system. The Linux kernel and the GNU/Linux operating system
have been developed and licensed under the GNU General Public License, version 2 and similar open source licenses. These licenses state that any program
licensed under them may be liberally copied, modified, and distributed. The GNU General Public license is a subject of litigation in the case of The SCO
Group, Inc. v. International Business Machines Corp., pending in the United States District Court for the District of Utah. SCO Group, Inc., or SCO, has
publicly alleged that certain versions of the Linux kernel contain unauthorized UNIX code or derivative works of UNIX code. Uncertainty concerning SCO's
allegations, regardless of their merit, could adversely affect our manufacturing and other customer and supplier relationships. It is possible that a court would
hold these open source licenses to be unenforceable in that litigation or that someone could assert a claim for proprietary rights in our TiVo software that runs
on a GNU/Linux-based operating system. Any ruling by a court that these licenses are not enforceable, or that GNU/Linux-based operating systems, or
significant portions of them, may not be liberally copied, modified or distributed, would have the effect of preventing us from selling or developing our TiVo
software and would adversely affect our business.
In addition, the GNU Public License is subject to occasional revision. A proposal for changing the license from its current form (GPLv2) into a newer,
more restrictive version called GPLv3 has been proposed and is currently undergoing community review. If the currently proposed version of GPLv3 is
widely adopted, we may be unable to incorporate future enhancements to the GNU/Linux operating system into our software, which could adversely affect
our business.
If there is an adverse outcome in the class action litigation that has been filed against us, our business may be harmed.
We and certain of our officers and directors were named as defendants in a consolidated securities class action lawsuit filed in the U.S. District Court
for the Southern District of New York. On June 26, 2003, the plaintiffs announced a proposed settlement with the Company and the other
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