Autodesk 2016 Annual Report Download - page 85

2016 Form 10-K 13
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. Desktop software is licensed to users pursuant to ‘click through’ or signed
license agreements containing restrictions on duplication, disclosure, and transfer. Cloud software and associated services are
provided to users pursuant to on-line or signed terms of service agreements containing restrictions on access and use.
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 continually maintain and enhance our competitive market position.
While we have recovered some revenue 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 that negatively impacts our revenue and financial results. We believe that our transition
from perpetual use software licenses to a subscription-based business model combined with the change from desktop to cloud-
based computing will shift the incentives and means by which software is pirated.
In addition, through various licensing arrangements, we receive certain rights to intellectual property of others. We expect
to maintain current licensing arrangements and to secure licensing arrangements in the future, as needed and to the extent
available on reasonable terms and conditions, to support continued development and sales of our products and services. Some
of these licensing arrangements require or may require royalty payments and other licensing fees. The amount of these
payments and fees may depend on various factors, including but not limited to: the structure of royalty payments, offsetting
considerations, if any, and the degree of use of the licensed technology.
See Item 1A, “Risk Factors,” for further discussion of risks related to protecting our intellectual property.
PRODUCTION AND SUPPLIERS
The production of our AEC, MFG, PSEB, and certain M&E software products and services involves duplication or
hosting of software media. As we progress through our business model transition, the way that we deliver software has evolved.
For certain cloud-based products, we use a combination of co-located hosting facilities as well as infrastructure-as-a-service
providers like Amazon Web Services. For other products, we offer customers an electronic software download option for both
initial product fulfillment as well as product updates for maintenance subscribers. Customers who choose electronic fulfillment
receive the latest version of the software from our vendor’s secure servers. Customers may also obtain our software through
media such as DVDs and USB flash drives available from multiple sources. 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. Packaging
materials are produced to our specifications by outside sources. Production is performed in leased facilities operated by
independent third-party contractors. To date, we have not experienced any material difficulties or delays in the production of
our software and documentation.
EMPLOYEES
As of January 31, 2016, we employed approximately 9,500 people. None of our employees in the United States are
represented by a labor union. In certain foreign countries, our employees are represented by work councils. We have never
experienced any work stoppages and believe our employee relations are good. Reliance upon employees in other countries
entails various risks and changes in these foreign countries, such as government instability or regulation unfavorable to foreign-
owned businesses, which could negatively impact our business in the future. In February 2016, we announced a restructuring
plan that will result in the termination of approximately 10% of the Company’s workforce, or approximately 925 employees, in
fiscal 2017. Through the restructuring, we seek to reduce expenses, streamline the organization, and reallocate resources to
align more closely with the Company’s needs going forward.
2016 Annual Report