Autodesk 2004 Annual Report Download - page 47

If we are not able to adequately protect our proprietary rights, our business could be harmed.
We rely on a combination of patents, copyright and trademark laws, trade secrets, confidentiality
procedures and contractual provisions to protect our proprietary rights. Despite such efforts to protect our
proprietary rights, unauthorized parties from time to time have copied aspects of our software products or
have obtained and used information that we regard as proprietary. Policing unauthorized use of our
software products is time-consuming and costly. While we have recovered some revenues resulting from
the unauthorized use of our software products, we are unable to measure the extent to which piracy of our
software products exists, and software piracy can be expected to be a persistent problem. Furthermore, our
means of protecting our proprietary rights may not be adequate, and our competitors may independently
develop similar technology.
We may face intellectual property infringement claims that could be costly to defend and result in our loss of
significant rights.
As more and more software patents are granted worldwide and as the number of products and
competitors in our industry segments grows and as the functionality of products in different industry
segments overlap, we expect that software product developers will be increasingly subject to infringement
claims. Infringement, invalid claims or misappropriation claims may be asserted against us, and any such
assertions could harm our business. Litigation often becomes more likely in times of economic downturn.
Additionally, certain patent holders have become more aggressive in threatening litigation in attempts to
obtain fees for licensing the right to use patents. Any such claims or threats, whether with or without merit,
could be time-consuming to defend, result in costly litigation and diversion of resources, cause product
shipment delays, or require us to enter into royalty or licensing agreements. In addition, such royalty or
license agreements, if required, may not be available on acceptable terms, if at all, which would likely harm
our business.
If we are required to expense options granted under our employee stock plans as compensation, our net income
and earnings per share would be significantly reduced and we may be forced to change our business practices
to attract and retain employees.
Historically, we have used stock options as a key component of our employee compensation packages.
We believe that stock options provide an incentive to our employees to maximize long-term stockholder
value and, through the use of vesting, encourage valued employees to remain with us. Certain proposals
related to accounting for the grant of an employee stock option as an expense have been issued for
comment by the Financial Accounting Standards Board. If such proposals are implemented, our net income
and earnings per share will be negatively impacted. As a result, we may decide to reduce the number of
employees who receive stock options or grant fewer options to particular employees. This could adversely
affect our ability to retain existing employees and attract qualified candidates, and also could increase the
cash compensation we would have to pay to them.
Our planned restructuring for fiscal year 2005 could result in disruptions to our business or to our employee base
which could negatively impact anticipated revenues during those periods.
In the fourth quarter of fiscal 2004, we announced a planned restructuring which included workforce
reduction and closure of certain facilities. We expect related restructuring charges to be charged through
the third quarter of fiscal 2005. If we fail to effect all of the planned headcount and facilities reductions, our
results of operations for those periods may be negatively impacted or may result in unanticipated
fluctuations in quarterly results of operations. Additionally, disruptions to our employee base may adversely
impact anticipated revenues during those periods.
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