Earthlink 2010 Annual Report Download - page 39

Table of Contents
Our business may suffer if third parties used for customer service and technical support and certain billing services are unable to provide
these services or terminate their relationships with us.
Our business and financial results depend, in part, on the availability and quality of our customer service and technical support and certain
billing services, including collection services. Our Consumer Services segment outsources a majority of our customer service and technical
support functions and relies primarily on one customer service and technical support vendor. As a result, we maintain only a small number of
internal customer service and technical support personnel. We are not currently equipped to provide the necessary range of service and support
functions in the event that our service providers become unable or unwilling to offer these services to us. Our outsourced customer support
providers utilize international locations to provide us with customer service and technical support services, and as a result, our customer support
providers may become subject to financial, economic, environmental and political risks beyond our or the providers' control, which could
jeopardize their ability to deliver customer service and technical support services. We also utilize third parties for certain billing and collection
services and for our web hosting services. If one or more of our service providers does not provide us with quality services, or if our relationship
with any of our third party vendors terminates and we are unable to provide those services internally or identify a replacement vendor in an
orderly, cost-effective and timely manner, our business, financial position, results of operations and cash flows could suffer.
We may not be able to protect our intellectual property.
We regard our EarthLink, EarthLink Business and PeoplePC trademarks as valuable assets to our business. In particular, we believe the
strength of the EarthLink, EarthLink Business and PeoplePC brands among existing and potential customers is important to the success of our
business. Additionally, our EarthLink, EarthLink Business and PeoplePC service marks, proprietary technologies, domain names and similar
intellectual property are also important to the success of our business. We principally rely upon trademark law as well as contractual restrictions
to establish and protect our technology and proprietary rights and information. We require employees and consultants and, when possible,
suppliers and distributors to sign confidentiality agreements, and we generally control access to, and distribution of, our technologies,
documentation and other proprietary information. The efforts we have taken to protect our proprietary rights may not be sufficient or effective.
Third parties may infringe or misappropriate our trademarks 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 may be unaware of filed patent
applications and of issued patents that could be related to our products and services. Some of the largest communications providers, such as
AT&T, Sprint and Verizon, have substantial patent holdings. These providers have successfully asserted their claims against some
communications companies, and have filed pending lawsuits against various competitive carriers. 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.
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