Adobe 2008 Annual Report Download - page 34

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a scalable organization. Many of our competitors may have advantages over us due to their larger presence, larger developer
network, deeper experience in the enterprise, government and mobile and device markets, and greater sales and marketing
resources. In the mobile and device markets, our intent is to partner with device makers, manufacturers and
telecommunications carriers to embed our technology on their platforms, and in the enterprise and government market our
intent is to form strategic alliances with leading enterprise and government solutions and service providers to provide
additional resources to further enable penetration of such markets. If we are unable to successfully enter into strategic
alliances with device makers, manufacturers, telecommunication carriers and leading enterprise and government solutions
and service providers, or if they are not as productive as we anticipate, our market penetration may not proceed as rapidly as
we anticipate and our results of operations could be negatively impacted.
Revenue from our new businesses may be difficult to predict.
As previously discussed, we are devoting significant resources to the development of product and service offerings
where we have a limited operating history. This makes it difficult to predict revenue and revenue may decline quicker than
anticipated. Additionally, we have a limited history of licensing products in certain markets such as the government and
enterprise market and may experience a number of factors that will make our revenue less predictable, including longer than
expected sales and implementation cycles, decision to open source certain of our technology initiatives, potential deferral of
revenue due to multiple-element revenue arrangements and alternate licensing arrangements. If any of our assumptions about
revenue from our new businesses prove incorrect, our actual results may vary materially from those anticipated, estimated or
projected.
We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims
as a result of litigation or other proceedings.
In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual
property rights, or disputes relating to the validity or alleged infringement of third-party intellectual property rights, including
patent rights, we have been, are currently and may in the future be subject to claims, negotiations or complex, protracted
litigation. Intellectual property disputes and litigation are typically very costly and can be disruptive to our business
operations by diverting the attention and energies of management and key technical personnel. Although we have
successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and
disputes. Third party intellectual property disputes could subject us to significant liabilities, require us to enter into royalty
and licensing arrangements on unfavorable terms, prevent us from manufacturing or licensing certain of our products, subject
us to injunctions restricting our sale of products, cause severe disruptions to our operations or the markets in which we
compete, or require us to satisfy indemnification commitments with our customers including contractual provisions under
various license arrangements. In addition, we may incur significant costs in acquiring the necessary third party intellectual
property rights for use in our products. Any of these could seriously harm our business.
We may not be able to protect our intellectual property rights, including our source code, from third-party infringers, or
unauthorized copying, use, disclosure or malicious attack.
Although we defend our intellectual property rights and combat unlicensed copying and use of software and intellectual
property rights through a variety of techniques, preventing unauthorized use or infringement of our rights is inherently
difficult. We actively pursue software pirates as part of our enforcement of our intellectual property rights, but we
nonetheless lose significant revenue due to illegal use of our software. If piracy activities increase, it may further harm our
business.
Additionally, we take significant measures to protect the secrecy of our confidential information and trade secrets,
including our source code. If unauthorized disclosure of our source code occurs, we could potentially lose future trade secret
protection for that source code. The loss of future trade secret protection could make it easier for third parties to compete with
our products by copying functionality, which could adversely affect our revenue and operating margins. We also seek to
protect our confidential information and trade secrets through the use of non-disclosure agreements with our customers,
contractors, vendors, and partners. However there is a risk that our confidential information and trade secrets may be