8x8 2007 Annual Report Download - page 13

Federal, state, local and foreign governmental organizations are considering other legislative and regulatory proposals that
would regulate the Internet. We cannot predict whether new taxes will be imposed on our services, and depending on the type
of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet may decrease
its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet or
otherwise materially adversely affect our business, financial condition and results of operations.
Intellectual Property and Proprietary Rights
Our ability to compete depends, in part, on our ability to obtain and enforce intellectual property protection for our technology
in the United States and internationally. We currently rely primarily on a combination of trade secrets, patents, copyrights,
trademarks and licenses to protect our intellectually property. As of May 30, 2007, we had 68 United States patents that have
been issued and additional United States and foreign patent applications pending. We do not consider any of the pending
patents to be critical to our business. Our patents expire on dates ranging from 2012 to 2024. We cannot predict whether our
pending patent applications will result in issued patents.
To protect our trade secrets and other proprietary information, we require our employees to sign agreements providing for the
maintenance of confidentiality and also the assignment of rights to inventions made by them while in our employ. There can
be no assurance that our means of protecting our proprietary rights in the United States or abroad will be adequate or that
competition will not independently develop technologies that are similar or superior to our technology, duplicate our
technology or design around any of our patents. In addition, the laws of foreign countries in which our products are or may be
sold do not protect our intellectual property rights to the same extent as do the laws of the United States. Our failure to protect
our proprietary information could cause our business and operating results to suffer.
We are also subject to the risks of adverse claims and litigation alleging infringement of the intellectual property rights of
others, such claims and litigation could require us to expend substantial resources and distract key employees from their normal
duties, which could have a material adverse effect on our operating results, cash flows and financial condition. The
communications and software industries are subject to frequent litigation regarding patent and other intellectual property rights.
Moreover, the VoIP service provider community is becoming increasingly a target of patent holders. There is a risk that we
will be a target of assertions of patent rights and that we may be required to expend significant resources to investigate and
defend against such assertions of patent rights.
We rely upon certain technology, including hardware and software, licensed from third parties. There can be no assurance that
the technology licensed by us will continue to provide competitive features and functionality or that licenses for technology
currently utilized by us or other technology which we may seek to license in the future will be available to us on commercially
reasonable terms or at all. The loss of, or inability to maintain existing licenses could result in shipment delays or reductions
until equivalent technology or suitable alternative products could be developed, identified, licensed and integrated, and could
harm our business. These licenses are on standard commercial terms made generally available by the companies providing the
licenses. To date, the cost and terms of these licenses individually has not been material to our business.
Information about Segments and Geographic Areas
We have only one reportable segment. Financial information relating to our product lines and information on revenues
generated in different geographic areas are set forth in Note 9 to our consolidated financial statements contained in Part II, Item
8 of this Report.
Employees
As of March 31, 2007, our workforce consisted of 160 employees and 35 contractors. None of our employees are represented
by a labor union or are subject to a collective bargaining arrangement.
Executive Officers of the Registrant
Our executive officers as of the date of this report are listed below.
Bryan R. Martin, Chairman, Chief Executive Officer and President. Bryan R. Martin, age 39, has served as our
President since March 2007 and Chairman since December 2003. Mr. Martin has served as Chief Executive Officer and as a
director of the Company since February 2002. From February 2001 to February 2002, he served as President and Chief
Operating Officer and a director of the Company. He served as Senior Vice President, Engineering Operations from July 2000
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