Autodesk 2016 Annual Report Download - page 98

2016 Form 10-K 26
If we are not able to adequately protect our proprietary rights, our business could be harmed.
We rely on a combination of patent, copyright and trademark laws, trade secret protections, 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. We are unable to measure the extent to which piracy of our software products exists and we expect that software
piracy will remain a persistent problem, particularly in emerging economies. 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 the loss of significant
rights.
As more software patents are granted worldwide, the number of products and competitors in our industry segments
grows and the functionality of products in different industry segments overlaps, 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.
From time to time we realign or introduce new business and sales initiatives; if we fail to successfully execute and
manage these initiatives, our results of operations could be negatively impacted.
As part of our effort to accommodate our customers' needs and demands and the rapid evolution of technology, we
from time to time evolve our business and sales initiatives such as realigning our development and marketing
organizations, and expanding our portfolio of suites and our offering of software as a service, and realigning our internal
resources in an effort to improve efficiency. We may take such actions without clear indications that they will prove
successful, and at times, we have been met with short-term challenges in the execution of such initiatives. Market
acceptance of any new business or sales initiative is dependent on our ability to match our customers' needs at the right
time and price. Often we have limited prior experience and operating history in these new areas of emphasis. If any of our
assumptions about expenses, revenue or revenue recognition principles from these initiatives proves incorrect, or our
attempts to improve efficiency are not successful, our actual results may vary materially from those anticipated, and our
financial results will be negatively impacted.
If we fail to remediate the material weakness identified in our internal control over financial reporting under Section 404
of the Sarbanes-Oxley Act of 2002 or are unable to implement and maintain effective internal control over financial
reporting in the future, the accuracy and timeliness of our financial and operating reporting may be adversely affected
and could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.
In connection with the preparation of our Condensed Consolidated Financial Statements for the fiscal quarter ended
October 31, 2015, our management concluded that a material weakness exists in our internal control over financial
reporting related to our controls over the technical review of our reconciliation of our deferred tax accounts and the
effective tax rate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.
2016 Annual Report