Enom 2012 Annual Report Download - page 22

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As a creator and a distributor of Internet content, we face potential liability and expenses for legal claims based on the
nature and content of the materials that we create or distribute, or that are accessible via our owned and operated websites
and our network of customer websites. If we are required to pay damages or expenses in connection with these legal claims,
our operating results and business may be harmed.
We rely on the work product of freelance creative professionals to create original content for our owned and operated
websites and for our network of customer websites and for use in our marketing messages. As a creator and distributor of
original content and third-party provided content, we face potential liability based on a variety of theories, including
defamation, negligence, unlawful practice of a licensed profession, copyright or trademark infringement or other legal theories
based on the nature, creation or distribution of this information, and under various laws, including the Lanham Act and the
Copyright Act. We may also be exposed to similar liability in connection with content that we do not create but that is posted to
our owned and operated websites and to our network of customer websites by users and other third parties through forums,
comments, personas and other social media features. In addition, it is also possible that visitors to our owned and operated
websites and to our network of customer websites could make claims against us for losses incurred in reliance upon
information provided on our owned and operated websites or our network of customer websites. These claims, whether brought
in the United States or abroad, could divert management time and attention away from our business and result in significant
costs to investigate and defend, regardless of the merit of these claims. If we become subject to these or similar types of claims
and are not successful in our defense, we may be forced to pay substantial damages. While we run our content through a
rigorous quality control process, including an automated plagiarism program, there is no guarantee that we will avoid future
liability and potential expenses for legal claims based on the content of the materials that we create or distribute. Should the
content distributed through our owned and operated websites and our network of customer websites violate the intellectual
property rights of others or otherwise give rise to claims against us, we could be subject to substantial liability, which could
have a negative impact on our business, revenue and financial condition.
We may face liability in connection with our undeveloped owned and operated websites and our customers' undeveloped
websites whose domain names may be identical or similar to another party's trademark or the name of a living or deceased
person.
A number of our owned and operated websites and our network of customer websites are undeveloped or minimally
developed properties that primarily contain advertising listings and links. As part of our registration process, we perform
searches, analysis and screenings to determine if the domain names of our owned and operated websites in combination with
the advertisements displayed on those sites violate the trademark or other rights owned by third parties. Despite these efforts,
we may inadvertently register the domain names of properties that are identical or similar to another party's trademark or the
name of a living or deceased person. Moreover, our efforts are inherently limited due to the fact that the advertisements
displayed on our undeveloped websites are delivered by third parties and the advertisements may vary over time or based on
the location of the viewer. We may face primary or secondary liability in the United States under the Anticybersquatting
Consumer Protection Act or under general theories of trademark infringement or dilution, unfair competition or under rights of
publicity with respect to the domain names used for our owned and operated websites. If we fail to comply with these laws and
regulations, we could be exposed to claims for damages, financial penalties and reputational harm, which could increase our
costs of operations, reduce our profits or cause us to forgo opportunities that would otherwise support our growth.
We may not succeed in establishing our businesses internationally, which may limit our future growth.
One potential area of growth for us is in the international markets. We have launched a site in the United Kingdom,
recently launched eHow en Español and eHow Brasil (Spanish and Portuguese language sites that target both the U.S., and the
worldwide Spanish/Portuguese-speaking market) and are exploring launches in certain other countries. We have also been
investing in translation capabilities for our technologies. Operating internationally, where we have limited experience, exposes
us to additional risks and operating costs. We cannot be certain that we will be successful in introducing or marketing our
services internationally or that our services will gain market acceptance or that growth in commercial use of the Internet
internationally will continue. There are risks inherent in conducting business in international markets, including the need to
localize our products and services to foreign customers' preferences and customs, difficulties in managing operations due to
language barriers, distance, staffing and cultural differences, application of foreign laws and regulations to us, tariffs and other
trade barriers, fluctuations in currency exchange rates, establishing management systems and infrastructures, reduced
protection for intellectual property rights in some countries, changes in foreign political and economic conditions, and
potentially adverse tax consequences. Our inability to expand and market our products and services internationally may have a
negative effect on our business, revenue, financial condition and results of operations.