Autodesk 2007 Annual Report Download - page 74

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We believe that our future results depend largely upon our ability to offer new products and
to continue to provide existing product offerings that compete favorably with respect to ease of use,
reliability, performance, range of useful features, continuing product enhancements, reputation, price
and training.
INTELLECTUAL PROPERTY AND LICENSES
We protect our intellectual property through a combination of patents, copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions. Nonetheless, our intellectual
property rights may not be successfully asserted in the future or may be invalidated, circumvented or
challenged. In addition, the laws of various foreign countries where our products are distributed do
not protect our intellectual property rights to the same extent as U.S. laws. Enforcement of intellectual
property rights against alleged infringers can sometimes lead to costly litigation and counterclaims. Our
inability to protect our proprietary information could harm our business.
From time to time, we receive claims alleging infringement of a third party’s intellectual property
rights, including patents. Disputes involving our intellectual property rights or those of another party
have in the past and may in the future lead to, among other things, costly litigation or product shipment
delays, which could harm our business.
We retain ownership of software we develop. All software is licensed to users and provided in object
code pursuant to either shrink-wrap, embedded or on-line licenses, or signed license agreements. These
agreements contain restrictions on duplication, disclosure and transfer.
We believe that because of the limitations of laws protecting our intellectual property and the rapid,
ongoing technological changes in both the computer hardware and software industries, we must rely
principally upon software engineering and marketing skills to maintain and enhance our competitive
market position.
While we have recovered some revenues resulting from the unauthorized use of our software
products, we are unable to measure the full extent to which piracy of our software products exists. We
believe, however, that software piracy is and can be expected to be a persistent problem.
PRODUCTION AND SUPPLIERS
Production of our Design Solutions Segment and certain Media and Entertainment Segment software
products involves duplication of the software media and the printing of user manuals. The purchase of
media and the transfer of the software programs onto media for distribution to customers are performed
by us and by licensed subcontractors. Media for our products include CD-ROMs which are available
from multiple sources. User manuals for our products and packaging materials are produced to our
specifications by outside sources. Production is either performed in leased facilities operated by us or by
independent third-party contractors. To date, we have not experienced any material difficulties or delays
in the production of our software and documentation.
In addition, the Advanced Systems business line has historically relied on third-party vendors for
the supply of hardware components used in its systems. In the past, many of the Advanced Systems
software products ran on workstations manufactured by Silicon Graphics, Inc. (“SGI”). During fiscal 2007,
the majority of our Advanced Systems product revenues migrated to standard, open, PC-based Linux
platforms and away from the SGI platform. We still generate some revenues from SGI hardware platforms
and there is a risk that we may not be able to migrate all customer orders to Linux based systems. See
Item 1A, “Risk Factors,” for further discussion of this risk.