Carbonite 2011 Annual Report Download - page 27

Table of Contents
Our success depends in large part on our ability to protect and enforce our intellectual property rights. If we are not able to adequately protect our
intellectual property and proprietary technologies to prevent use or appropriation by our competitors, the value of our brand and other intangible
assets may be diminished, and our business may be adversely affected.
Our future success and competitive position depend in large part on our ability to protect our intellectual property and proprietary technologies.
We rely on a combination of trademark, patent, copyright, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to
establish and protect our proprietary rights, all of which provide only limited protection and may not now or in the future provide us with a competitive
advantage. CARBONITE and the Carbonite logo are registered trademarks in the U.S. and in over 30 other countries, including countries in the
European Union. We have also filed trademark applications for additional marks in the U.S. and other countries, including “Back it up. Get it
Back”, “Because Your Life is On Your Computer”, the Carbonite Green Dot logo and Chinese character representations for Carbonite. We cannot
assure you that any future trademark registrations will be issued for pending or future applications or that any registered trademarks will be enforceable
or provide adequate protection of our proprietary rights. We have one issued patent, 12 patent applications pending, and we are in the process of filing
additional patent applications. We cannot assure you that any patents will issue from any such patent applications, that patents that issue from such
applications will give us the protection that we seek, or that any such patents will not be challenged, invalidated, or circumvented. Any patents that may
issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be enforceable in actions
against alleged infringers.
There can be no assurance that the steps we take will be adequate to protect our technologies and intellectual property, that our trademark and
patent applications will lead to registered trademarks or issued patents, that others will not develop or patent similar or superior technologies, products,
or services, or that our trademarks, patents, and other intellectual property will not be challenged, invalidated, or circumvented by others. Furthermore,
effective trademark, patent, copyright, and trade secret protection may not be available in every country in which our services are available or where we
have employees or independent contractors. In addition, the legal standards relating to the validity, enforceability, and scope of protection of intellectual
property rights in internet-related industries are uncertain and still evolving.
We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming and could materially harm our
business.
The steps we have taken and will take to protect our intellectual property may not prevent unauthorized use, reverse engineering, or
misappropriation of our technologies and we may not be able to detect any of the foregoing. Others may independently develop technologies that are
competitive to ours or infringe our intellectual property. To counter infringement or unauthorized use, we may be required to file patent infringement
claims, which can be expensive and time-consuming to litigate. In addition, in an infringement proceeding, a court may decide that a patent of ours is
not valid or is unenforceable, or may refuse to stop others from using the technology at issue on the grounds that our patent(s) do not cover such
technology. An adverse determination of any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or
interpreted narrowly and could put our patent applications at risk of not being issued. If our efforts to protect our technologies and intellectual property
are inadequate, the value of our brand and other intangible assets may be diminished and competitors may be able to mimic our solutions and methods of
operations. Any of these events could have a material adverse effect on our business, financial condition, and operating results.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of
our confidential information could be compromised by disclosure. In addition, during the course of any such litigation, there could be public
announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results
to be negative, it could have a substantial adverse effect on the price of our common stock.
24