Adobe 2010 Annual Report Download - page 42

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• incurring significant exit charges if products or services acquired in business combinations are unsuccessful;
• potential inability to assert that internal controls over financial reporting are effective;
• potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could
delay or prevent such acquisitions;
• potential delay in customer and distributor purchasing decisions due to uncertainty about the direction of our
product and service offerings; and
• potential incompatibility of business cultures.
Mergers and acquisitions of high technology companies are inherently risky, and ultimately, if we do not complete an
announced acquisition transaction or integrate an acquired business successfully and in a timely manner, we may not realize
the benefits of the acquisition to the extent anticipated.
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 licensing certain of our products or offering certain of our
services, subject us to injunctions restricting our sale of products or services, 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 and service agreements. 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 or disclosure.
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 piracy 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 through security breach or attack, or
otherwise, 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 disclosed or published without our authorization, and in these
situations it may be difficult and/or costly for us to enforce our rights.
Security vulnerabilities in our products and systems could lead to reduced revenues or to liability claims.
Maintaining the security of computers and computer networks is a critical issue for us and our customers. Hackers may
develop and deploy viruses, worms, and other malicious software programs that are designed to attack our products and
systems, including our internal network. Although this is an industry-wide problem that affects computers and products
across all platforms, it affects our products in particular because hackers tend to focus their efforts on the most popular
operating systems and programs and we expect them to continue to do so. Critical vulnerabilities have been identified in
certain of our products. These vulnerabilities could cause the application to crash and could potentially allow an attacker to
take control of the affected system.