Zynga 2012 Annual Report Download - page 31

competitors, non-practicing entities and former employers of our personnel. Patent and other intellectual property
litigation may be protracted and expensive, and the results are difficult to predict. As the result of any court
judgment or settlement we may be obligated to cancel the launch of a new game, stop offering a game or certain
features of a game, pay royalties or significant settlement costs, purchase licenses or modify our games and
features, or develop substitutes.
In addition, we use open source software in our games and expect to continue to use open source software in
the future. From time to time, we may face claims from companies that incorporate open source software into
their products, claiming ownership of, or demanding release of, the source code, the open source software and/or
derivative works that were developed using such software, or otherwise seeking to enforce the terms of the
applicable open source license. These claims could also result in litigation, require us to purchase a costly license
or require us to devote additional research and development resources to change our games, any of which would
have a negative effect on our business and operating results.
Although we do not believe that the final outcome of intellectual property litigation and claims that we
currently face will have a material adverse effect on our business, our expectations may not prove to be correct.
Even if these matters do not result in litigation or are resolved in our favor or without significant cash
settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our
business, operating results, financial condition, reputation or the market price of our Class A common stock.
We are involved in legal proceedings that may result in adverse outcomes.
We may be involved in claims, suits, government investigations, and proceedings arising in the ordinary
course of our business, including actions with respect to intellectual property claims, privacy, data protection or
law enforcement matters, tax matters, labor and employment claims, commercial claims, as well as stockholder
derivative actions, class action lawsuits, and other matters. Such claims, suits, government investigations, and
proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the
outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion of
management and other personnel, and other factors. In addition, it is possible that a resolution of one or more
such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees, or orders
preventing us from offering certain features, functionalities, products, or services, or requiring a change in our
business practices, products or technologies, which could in the future materially and adversely affect our
business, operating results, and financial condition. See the section titled “Legal Matters” included in Note 13 –
“Commitments and Contingencies” in the notes to the consolidated financial statements included elsewhere in
this Annual Report on Form 10-K.
Programming errors or flaws in our games could harm our reputation or decrease market acceptance of our
games, which would harm our operating results.
Our games may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent
after their launch, particularly as we launch new games and rapidly release new features to existing games under
tight time constraints. We believe that if our players have a negative experience with our games, they may be less
inclined to continue or resume playing our games or recommend our games to other potential players.
Undetected programming errors, game vulnerabilities that may be exploited by cheating programs and other
forms of misappropriation, game defects and data corruption can disrupt our operations, adversely affect the
game experience of our players by allowing players to gain unfair advantage, misappropriate virtual goods, harm
our reputation, cause our players to stop playing our games, divert our resources and delay market acceptance of
our games, any of which could result in legal liability to us or harm our operating results.
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