Chegg 2014 Annual Report Download - page 46

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providers of eTextbooks such as Apple iTunes, CourseSmart, Blackboard and Google, as well as various private
textbook rental websites. Many students purchase from multiple textbook providers, are highly price sensitive and
can easily shift spending from one provider or format to another. As a consequence, our print textbook business
competes primarily on price. Our eTextbook business competes on price, selection and the functionality and
compatibility of our eTextbook Reader across a wide variety of desktop and mobile devices. With respect to our
other digital offerings, our competitors include companies that offer students study materials and educational
content such as publishers, Web Assign and other tutorial services, job boards, and other online career guidance
services.
Enrollment Marketing Services. With respect to our enrollment marketing services, we compete against
traditional methods of student recruitment, including student data providers such as standardized test providers,
radio, television and Internet advertising and print mail marketing programs. In this area, we compete primarily
on the basis of the number of high-quality connections between prospective students and institutions of higher
learning we are able to provide as well as on price. We are able to create these connections by providing
prospective students with an easy-to-use platform to input their academic information and aspirations, learn about
colleges, locate scholarships and financial aid and facilitate and streamline the application process.
Brands. With respect to brands, we compete with online and offline outlets that generate revenue from advertisers
and marketers, especially those that target high school and college students. In this area, we seek to partner with
brands that have offerings that will interest or delight students and have received very positive comments and
feedback from students on these offerings. We provide these brands with preferential access to our audience,
which we believe represents a highly engaged portion of the target demographic of our brand partners.
We believe that we have competitive strengths, some of which are discussed above, that position us favorably in each
aspect of our business. However, the education industry is evolving rapidly and is becoming increasingly competitive. A variety
of business models are being pursued or may be considered for the provision of print textbooks, some of which may be more
profitable or successful than our business model.
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, 2014, we had four patents which will expire in 2032, 35 patent applications pending in the United
States and ten patents pending internationally. We own five 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,” “InstaEDU,”
“Internships.com,” “Zinch,” and “#1 In Textbook Rentals,” among others as well as a variety of service marks. We own over
550 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.