Autodesk 2011 Annual Report Download - page 86

expect that software piracy will remain a persistent problem. Furthermore, our means of protecting our
proprietary rights may not be adequate.
Additionally, we actively 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 financial performance and
our reputation. 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, it is possible that
our confidential information and trade secrets may be disclosed or published without our authorization. If this
were to occur, it may be difficult and/or costly for us to enforce our rights, and our financial performance and
reputation could be negatively impacted.
We may face intellectual property infringement claims that could be costly to defend and result in our loss of
significant rights.
As more software patents are granted worldwide, the number of products and competitors in our industry
segments grow and the functionality of products in different industry segments overlap, we expect that software
product developers will be increasingly subject to infringement claims. Infringement or misappropriation claims
have in the past been, and may in the future be, asserted against us, and any such assertions could harm our
business. Additionally, certain patent holders without products have become more aggressive in threatening and
pursuing litigation in attempts to obtain fees for licensing the right to use patents. Any such claims or threats,
whether with or without merit, have been and could in the future 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 do not maintain good relationships with the members of our distribution channel, or achieve anticipated
levels of sell-through, our ability to generate revenue will be adversely affected. If our distribution channel
suffers financial losses, becomes financially unstable or insolvent, or is not provided the right mix of incentives
to sell our products, our ability to generate revenue will be adversely affected.
We sell our software products both directly to end-users and through a network of distributors and resellers.
For the fiscal year ended January 31, 2011, approximately 85% of our revenue was derived from indirect channel
sales through distributors and resellers, and we expect that the majority of our revenue will continue to be
derived from indirect channel sales in the future. Our ability to effectively distribute our products depends in part
upon the financial and business condition of our distributor and reseller network. Computer software distributors
and resellers typically are not highly capitalized, have previously experienced difficulties during times of
economic contraction and experienced difficulties during the past several years. We have processes to ensure that
we assess the creditworthiness of distributors and resellers prior to our sales to them. In the past we have taken
steps to support them, and may take additional steps in the future, such as extending credit terms and providing
temporary discounts. These steps, if taken, could harm our financial results. If our distributors and resellers were
to become insolvent, they would not be able to maintain their business and sales, or provide customer support
services, which would negatively impact our business and revenue.
We rely significantly upon major distributors and resellers in both the U.S. and international regions,
including the distributor Tech Data Corporation and its global affiliates (“Tech Data”). Tech Data accounted for
16%, 14% and 14% of our consolidated net revenue for the fiscal years ended January 31, 2011, 2010 and 2009,
respectively.
Over time, we have modified and will continue to modify aspects of our relationship with our distributors
and resellers, such as their incentive programs, pricing to them and our distribution model to motivate and reward
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