Chegg 2013 Annual Report Download - page 56

Intellectual Property
We use proprietary technology to operate our business and our success depends, in part, on our ability to
protect our technology and intellectual property. We rely on a combination of patent, copyright, trademark and
trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property. We
maintain a policy requiring our employees, contractors, consultants and other third parties to enter into
confidentiality and proprietary rights agreements to control access to our proprietary information. These laws,
procedures and restrictions provide only limited protection and any of our intellectual property rights may be
challenged, invalidated, circumvented, infringed or misappropriated. Further, the laws of certain countries do not
protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain
jurisdictions, we may be unable to protect our proprietary technology.
As of December 31, 2013, we had two patents which will expire in 2032, 30 patent applications pending in
the United States and eight patents pending internationally. We own four U.S. registered copyrights and have
unregistered copyrights in our eTextbook Reader software, software documentation, marketing materials and
website content that we develop. We own the registered U.S. trademarks “Chegg,” “Chegg.com,” “Chegg for
Good,” “CourseRank,” “Cramster,” “Zinch” and “#1 In Textbook Rentals,” among others as well as a variety of
service marks. We own over 350 registered domain names. We also have a number of pending trademark
applications in the United States and foreign jurisdictions and unregistered marks that we use to promote our
brand. From time to time we expect to file additional patent, copyright and trademark applications in the United
States and abroad.
Government Regulation
We are subject to a number of laws and regulations that affect companies conducting business on the
Internet and in the education industry, many of which are still evolving and could be interpreted in ways that
could harm our business. The manner in which existing laws and regulations will be applied to the Internet and
students in general and how they will relate to our business in particular, are often unclear. For example, we often
cannot be certain how existing laws will apply in the e-commerce and online context, including with respect to
such topics as privacy, defamation, pricing, credit card fraud, advertising, taxation, sweepstakes, promotions,
content regulation, financial aid, scholarships, student matriculation and recruitment, quality of products and
services and intellectual property ownership and infringement.
Numerous laws and regulatory schemes have been adopted at the national and state level in the United
States, and in some cases internationally, that have a direct impact on our business and operations. For example:
• The CAN-SPAM Act of 2003 and similar laws adopted by a number of states, which regulate unsolicited
commercial emails, create criminal penalties for emails containing fraudulent headers and control other
abusive online marketing practices. Similarly, the Federal Trade Commission, or FTC, has guidelines that
impose responsibilities on us with respect to communications with consumers and impose fines and liability
for failure to comply with rules with respect to advertising or marketing practices they may deem
misleading or deceptive.
• The Telephone Consumer Protection Act of 1991, or TCPA, which restricts telemarketing and the use of
automated telephone equipment. The TCPA limits the use of automatic dialing systems, artificial or
prerecorded voice messages, SMS text messages and fax machines. It also applies to unsolicited text
messages advertising the commercial availability of goods or services. Additionally, a number of states have
enacted statutes that address telemarketing. For example, some states, such as California, Illinois and New
York, have created do-not-call lists. Other states, such as Oregon and Washington, have enacted “no rebuttal
statutes” that require the telemarketer to end the call when the consumer indicates that he or she is not
interested in the product being sold. Restrictions on telephone marketing, including calls and text messages,
are enforced by the FTC, the Federal Communications Commission, states and through the availability of
statutory damages and class action lawsuits for violations of the TCPA.
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