Chegg 2015 Annual Report Download - page 48

Table of Contents
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Brands. With respect to brands, we compete with online and offline outlets that generate revenues 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 increasingly competitive. A variety of
business models are being pursued or may be considered for the provision of print textbooks and eTextbooks, 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, 2015, we had nine patents which will expire in 2032, 31 patent applications pending in the United
States and nine patents pending internationally. We own six 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. As of
December 31, 2015, we owned 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.
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, regulate unsolicited commercial
emails, create criminal penalties for emails containing fraudulent headers and control other abusive online
marketing practices. Similarly, the U.S. Federal Trade Commission (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 (TCPA) 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