Adobe 2003 Annual Report Download - page 22

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22
new products. We primarily develop our software internally. We occasionally acquire products developed by others
by purchasing the stock or assets of the business entity that held ownership rights to the technology. In other
instances, we have licensed or purchased the intellectual property ownership rights of programs developed by others
with license or technology transfer agreements that may obligate us to pay royalties, typically based on a percentage
of the revenues generated by those programs.
During fiscal years ended November 28, 2003, November 29, 2002 and November 30, 2001, our research and
development expenses, including costs related to contract development, were $277.0 million, $246.1 million and
$224.1 million, respectively.
On May 19, 2003, we purchased the technology assets of Syntrillium Software (“Syntrillium”), a privately held
company which developed, published and marketed digital audio tools including its recording application, Cool Edit
Pro, now renamed Adobe Audition, all of which have been added to our existing line of professional digital imaging
and video products. By adding Adobe Audition and the other tools to our existing line of products, we have
improved the Adobe video workflow and expanded the products and tools available to videographers, DVD authors
and independent filmmakers.
On April 12, 2002, we acquired 100% of the outstanding common stock of Accelio Corporation (“Accelio”).
Accelio was a provider of Web-enabled solutions that helped customers manage business processes driven by
electronic forms. The acquisition of Accelio enhances our ability to broaden our Intelligent Documents solution
business by combining Accelio’s electronic forms solutions with Adobe Acrobat and PDF technologies. Through
this combination we can now further extend Acrobat solutions to enterprise users in Global 2000 businesses,
governments and educational institutions to deliver greater value to our customers.
In December 2001, we acquired Fotiva, Inc (“Fotiva”). Substantially all of Fotiva’s assets were intellectual
property. Fotiva was a development stage software company that created solutions to help consumers manage, store,
enrich, and share digital photographs and other related personal media. Adobe combined Fotiva’s
image management technology with Adobe’s digital imaging and Intelligent Documents technologies to develop a
new product, Adobe Photoshop Album, which was released in the first quarter of fiscal 2003.
For further information regarding these acquisitions, see Note 2 of our Notes to Consolidated Financial
Statements.
PRODUCT PROTECTION
We regard our software as proprietary and protect it under the laws of copyrights, patents, trademarks, and trade
secrets. We protect the source code of our software programs as trade secrets, and make source code available to
third parties only under limited circumstances and specific security and confidentiality constraints.
Our products are generally licensed to end users on a “right to use” basis pursuant to a license that restricts the
use of the products to a designated number of printers or computers. We also rely on copyright laws and on “shrink
wrap” and electronic licenses that are not physically signed by the end user. Copyright protection may be
unavailable under the laws of certain countries, however, and the enforceability of “shrink wrap” and electronic
licenses has not been conclusively determined in all jurisdictions. We have obtained many patents and have
registered numerous copyrights, trademarks, domain names, and logos in the United States and foreign countries.
Policing unauthorized use of computer software is difficult, and software piracy is a persistent problem for the
software industry. This problem is particularly acute in international markets. We conduct vigorous anti-piracy
programs directly and through certain external software associations. Although our products generally do not
contain copy protection or network copy-detection features, we have recently included activation technology in
Photoshop CS and Adobe Creative Suite to guard against illegal use.
EMPLOYEES
As of January 30, 2004, we employed 3,507 people. We have not experienced work stoppages and believe our
employee relations are good. Competition in recruiting personnel in the software industry, especially highly skilled