Enom 2011 Annual Report Download - page 33

third parties and may be subject to claims of infringement or misappropriation if such parties do not possess the necessary intellectual property rights to the
products or services they license to us. We have in the past and may in the future be subject to legal proceedings and claims that we have infringed the patent
or other intellectual property rights of a third party. These claims sometimes involve patent holding companies or other patent owners who have no relevant
product revenue and against whom our own patents may provide little or no deterrence. In addition, third parties may in the future assert intellectual property
infringement claims against our customers, which we have agreed in certain circumstances to indemnify and defend against such claims. Any intellectual
property-related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and could divert management resources
and attention. Moreover, should we be found liable for infringement or misappropriation, we may be required to enter into licensing agreements, if available
on acceptable terms or at all, pay substantial damages or limit or curtail our systems and technologies. Also, any successful lawsuit against us could subject us
to the invalidation of our proprietary rights. Moreover, we may need to redesign some of our systems and technologies to avoid future infringement liability.
Any of the foregoing could prevent us from competing effectively and increase our costs.
Certain U.S. and foreign laws could subject us to claims or otherwise harm our business.
We are subject to a variety of laws in the U.S. and abroad that may subject us to claims or other remedies. Our failure to comply with applicable
laws may subject us to additional liabilities, which could adversely affect our business, financial condition and results of operations. Laws and regulations that
are particularly relevant to our business address:
• privacy;
• freedom of expression;
• information security;
• pricing, fees and taxes;
• content and the distribution of content, including liability for user reliance on such content;
• intellectual property rights, including secondary liability for infringement by others;
• taxation;
• domain name registration; and
• online advertising and marketing, including email marketing and unsolicited commercial email.
Many applicable laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues of the Internet.
Moreover, the applicability and scope of the laws that do address the Internet remain uncertain. For example, the laws relating to the liability of providers of
online services are evolving. Claims have been either threatened or filed against us under both U.S. and foreign laws for defamation, copyright infringement,
patent infringement, privacy violations, cybersquatting and trademark infringement. In the future, claims may also be alleged against us based on tort claims
and other theories based on our content, products and services or content generated by our users.
We receive, process and store large amounts of personal data of users on our owned and operated websites and from our freelance creative
professionals. Our privacy and data security policies govern the collection, use, sharing, disclosure and protection of this data. The storing, sharing, use,
disclosure and protection of personal information and user data are subject to federal, state and international privacy laws, the purpose of which is to protect
the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. If requirements regarding the manner in
which certain personal information and other user data are processed and stored change significantly, our business may be adversely affected, impacting our
financial condition and results of operations. In addition, we may be exposed to potential liabilities as a result of differing views on the level of privacy
required for consumer and other user data we collect. We may also need to expend significant resources to protect against security breaches, including
encrypting personal information, or remedy breaches after they occur, including notifying each person whose personal data may have been compromised. Our
failure or the failure of various third-party vendors and service providers to comply with applicable privacy policies or applicable laws and regulations or any
compromise of security that results in the unauthorized release of personal information or other user data could adversely affect our business, revenue,
financial condition and results of operations.
Our business operations in countries outside the United States are subject to a number of United States federal laws
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