Earthlink 2007 Annual Report Download - page 22

partners and others to protect our proprietary rights. The efforts we have taken to protect our proprietary rights may not be sufficient or effective.
Third parties may infringe or misappropriate our copyrights, trademarks, patents and similar proprietary rights. If we are unable to protect our
proprietary rights from unauthorized use, our brand image may be harmed and our business may suffer. In addition, protecting our intellectual
property and other proprietary rights is expensive and time consuming. Any increase in the unauthorized use of our intellectual property could
make it more expensive to do business and consequently harm our operating results.
We may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to
use certain technologies in the future.
From time to time, third parties have alleged that we infringe on their intellectual property rights. We have been subject to, and expect to
continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the patents, trademarks and other intellectual
property rights of third parties. None of these claims has had an adverse effect on our ability to market and sell and support our services. Such
claims, whether or not meritorious, are time consuming and costly to resolve, and could require expensive changes in our methods of doing
business, could require us to enter into costly royalty or licensing agreements, or could require us to cease conducting certain operations. Any of
these events could result in increases in operating expenses or could limit or reduce the number of our service offerings.
If we are unable to successfully defend against legal actions, we could face substantial liabilities.
We are currently a party to various legal actions, including consumer class action and patent litigation. Defending against these lawsuits
may involve significant expense and diversion of management's attention and resources from other matters. Due to the inherent uncertainties of
litigation, we may not prevail in these actions. In addition, our ongoing operations may subject us to litigation risks and costs in the future. Both
the costs of defending lawsuits and any settlements or judgments against us could materially and adversely affect our operating expenses and
liquidity.
Our business depends on the continued development of effective business support systems, processes and personnel.
Our business relies on our data, billing and other operational and financial reporting and control systems. All of these systems have become
increasingly complex, largely due to the increased regulation over controls and procedures. To effectively manage our technical support
infrastructure, we will need to continue to upgrade and improve our data, billing, and other operational and financial systems, procedures and
controls. These upgrades and improvements will require additional costs, a dedication of resources and in some cases are likely to be complex. If
we are unable to adapt our systems in a timely manner, our business may be adversely affected.
We may be unable to hire and retain sufficient qualified personnel, and the loss of any of our key executive officers could adversely affect us.
Our business depends on our ability to attract, hire and retain highly skilled and qualified managerial, professional and technical personnel.
Competition for qualified personnel is intense. During 2007, we implemented a corporate restructuring plan, which may harm our ability to hire
and retain key personnel. Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of
knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. Finally, the loss of any of our key
executives could have a material adverse effect on us.
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