Enom 2010 Annual Report Download - page 29

Table of Contents
characterized by rapid changes in technology and in new and growing illegal activity, these bodies of laws are constantly evolving. Some of the laws that
apply to us with respect to customer activity include the following:
The Communications Decency Act of 1996, or CDA, generally protects online service providers, such as Demand Media, from liability for
certain activities of their customers, such as posting of defamatory or obscene content, unless the online service provider is participating in the
unlawful conduct. Notwithstanding the general protections from liability under the CDA, we may nonetheless be forced to defend ourselves from
claims of liability covered by the CDA, resulting in an increased cost of doing business.
The Digital Millennium Copyright Act of 1998, or DMCA, provides recourse for owners of copyrighted material who believe that their rights
under U.S. copyright law have been infringed on the Internet. Under this statute, we generally are not liable for infringing content posted by third
parties. However, if we receive a proper notice from a copyright owner alleging infringement of its protected works by web pages for which we
provide hosting services, and we fail to expeditiously remove or disable access to the allegedly infringing material, fail to post and enforce a
digital rights management policy or a policy to terminate accounts of repeat infringers, or otherwise fail to meet the requirements of the safe
harbor under the statute, the owner may seek to impose liability on us.
Although established statutory law and case law in these areas to date generally have shielded us from liability for customer activities, court rulings in
pending or future litigation may serve to narrow the scope of protection afforded us under these laws. In addition, laws governing these activities are unsettled
in many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions. Also, notwithstanding the
exculpatory language of these bodies of law, we may be embroiled in complaints and lawsuits which, even if ultimately resolved in our favor, add cost to our
doing business and may divert management's time and attention. Finally, other existing bodies of law, including the criminal laws of various states, may be
deemed to apply or new statutes or regulations may be adopted in the future, any of which could expose us to further liability and increase our costs of doing
business.
We may face liability or become involved in disputes over registration of domain names and control over websites.
As a domain name registrar, we regularly become involved in disputes over registration of domain names. Most of these disputes arise as a result of a
third party registering a domain name that is identical or similar to another party's trademark or the name of a living person. These disputes are typically
resolved through the Uniform Domain-Name Dispute-Resolution Policy, or UDRP, ICANN's administrative process for domain name dispute resolution, or
less frequently through litigation under the Anticybersquatting Consumer Protection Act, or ACPA, or under general theories of trademark infringement or
dilution. The UDRP generally does not impose liability on registrars, and the ACPA provides that registrars may not be held liable for registering or
maintaining a domain name absent a showing of bad faith intent to profit or reckless disregard of a court order by the registrars. However, we may face
liability if we fail to comply in a timely manner with procedural requirements under these rules. In addition, these processes typically require at least limited
involvement by us, and therefore increase our cost of doing business. The volume of domain name registration disputes may increase in the future as the
overall number of registered domain names increases.
Domain name registrars also face potential tort law liability for their role in wrongful transfers of domain names. The safeguards and procedures we have
adopted may not be successful in insulating us against liability from such claims in the future. In addition, we face potential liability for other forms of
"domain name hijacking," including misappropriation by third parties of our network of customer
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