Xerox 2009 Annual Report Download - page 20

18
Our Business
In the U.S., we own approximately 502 trademarks, either registered
or applied for. These trademarks have a perpetual life, subject to renewal
every 10 years. We vigorously enforce and protect our trademarks.
Marketing and Distribution
We manage our business based on the principal business segments
described earlier. However, we have organized the marketing, selling
and distribution of our products and solutions according to geography
and channel type. We sell our products and solutions directly to
customers through our worldwide sales force and through a network of
independent agents, dealers, value-added resellers, systems integrators
and the Web. In the U.S., GIS continues to expand its network of office
technology suppliers to serve an ever-expanding base of small and
medium-size businesses. We utilize our direct sales force to address
our customers’ more advanced technology, solutions and services
requirements, and use cost-effective indirect distribution channels for
our basic product offerings.
In large enterprises, we follow a services-led approach that enables
us to address two basic challenges facing large enterprises:
• How to optimize infrastructure to be both cost effective and
globally consistent.
• How to improve the value proposition and communication with
their customers.
In response to these needs, we offer a go-to-market approach that
leads with the largest direct sales and service delivery force in the
industry available in a globally consistent manner. This can range
from hardware, software or services in whatever combination is
necessary to meet the needs of that customer.
To ensure our success, we have aligned our R&D investment portfolio
with our growth initiatives of accelerating the transition to color,
enhancing customer value by building on our services leadership
and by strengthening our leadership in digital production printing.
The decrease in RD&E spending for 2009 reflects our successful
integration of the Production and Office development and engineering
infrastructure, which optimizes platform development and time to
market. 2009 R&D spending focused primarily on the development
of high-end communication solutions in digital production printing,
extending our enterprise product portfolio for more-affordable color
and supporting a new generation of workplace solutions, expanding
our services offerings and delivering lower-cost platforms and customer
productivity enablers. With our R&D investments we have continued
to expand the capability of the Xerox® iGen family with both higher
throughput and image quality and high-value solutions to deliver
customized and 1:1 marketing materials. We have also extended
the market reach of our proprietary solid ink technology through the
ColorQube family of products that offer breakthrough running cost
for workgroup color applications. Coupled with our Extensible Interface
Platform, Xerox multifunction devices can now help our customers
streamline document workflows, integrating paper-based documents
into their enterprise applications. Sustaining engineering expenses,
which are the hardware engineering and software development costs
we incur after we launch a product, are included in our RD&E expenses.
Patents, Trademarks and Licenses
Xerox and its subsidiaries were awarded 706 U.S. utility patents in
2009. On that basis, we would have ranked 24th on the list of companies
that were awarded the most U.S. patents during the year. Including
our research partner Fuji Xerox, we were awarded over 1,130 U.S.
utility patents in 2009. Our patent portfolio evolves as new patents are
awarded to us and as older patents expire. As of December 31, 2009,
we held approximately 9,437 design and utility U.S. patents. These
patents expire at various dates up to 20 years or more from their
original filing dates. While we believe that our portfolio of patents and
applications has value, in general no single patent is essential to our
business or any individual segment. In addition, any of our proprietary
rights could be challenged, invalidated or circumvented or may not
provide significant competitive advantages.
In the U.S., we are party to numerous patent-licensing agreements
and, in a majority of them, we license or assign our patents to others,
in return for revenue and/or access to their patents. Most patent licenses
expire concurrently with the expiration of the last patent identified in
the license. In 2009, we added 10 new agreements to our portfolio of
patent-licensing and sale agreements, and Xerox and its subsidiaries
were licensor or seller in seven of the agreements. We are also a party
to a number of cross-licensing agreements with companies that hold
substantial patent portfolios, including Canon, Microsoft, IBM, Hewlett-
Packard, Océ, Sharp, Samsung and Seiko Epson. These agreements
vary in subject matter, scope, compensation, significance and time.
Our brand is a valuable resource and
continues to be ranked among the
top percentile of the most valuable
global brands.