Enom 2012 Annual Report Download - page 26

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We may experience unforeseen liabilities in connection with our acquisition of Internet domain names or arising out of
third-party domain names included in our distribution network, which could negatively impact our financial results.
We have acquired and intend to continue to acquire in the future additional previously-owned Internet domain names.
While we have a policy against acquiring domain names that infringe on third-party intellectual property rights, including
trademarks or confusingly similar business names, in some cases, these acquired names may have trademark significance that is
not readily apparent to us or is not identified by us in the bulk purchasing process. As a result we may face demands by third-
party trademark owners asserting infringement or dilution of their rights and seeking transfer of acquired Internet domain
names under the UDRP administered by ICANN or actions under the ACPA. Additionally, we display paid listings on third-
party domain names and third-party websites that are part of our distribution network, which also could subject us to a wide
variety of civil claims including intellectual property infringement.
We intend to review each claim or demand which may arise from time to time on a case-by-case basis with the assistance
of counsel and we intend to transfer any rights acquired by us to any party that has demonstrated a valid prior right or claim.
We cannot, however, guarantee that we will be able to resolve these disputes without litigation. The potential violation of third-
party intellectual property rights and potential causes of action under consumer protection laws may subject us to unforeseen
liabilities including injunctions and judgments for money damages.
Our failure to register, maintain, secure, transfer or renew the domain names that we process on behalf of our customers or
to provide our other services to our customers without interruption could subject us to additional expenses, claims of loss or
negative publicity that have a material adverse effect on our business.
Clerical errors and system and process failures made by us may result in inaccurate and incomplete information in our
database of domain names and in our failure to properly register or to maintain, secure, transfer or renew the registration of
domain names that we process on behalf of our customers. In addition, any errors of this type might result in the interruption of
our other services. Our failure to properly register or to maintain, secure, transfer or renew the registration of our customers'
domain names or to provide our other services without interruption, even if we are not at fault, might result in our incurring
significant expenses and might subject us to claims of loss or to negative publicity, which could harm our business, revenue,
financial condition and results of operations.
Governmental and regulatory policies or claims concerning the domain name registration system, and industry reactions to
those policies or claims, may cause instability in the industry, disrupt our domain name registration business and negatively
impact our business.
ICANN is a private sector, not for profit corporation formed in 1998 for the express purposes of overseeing a number of
Internet related tasks previously performed directly on behalf of the U.S. government, including managing the domain name
registration system. ICANN has been subject to strict scrutiny by the public and by the United States government. For example,
in the United States, Congress has held hearings to evaluate ICANN's selection process for new top level domains. In addition,
ICANN faces significant questions regarding its financial viability and efficacy as a private sector entity. ICANN may continue
to evolve both its long term structure and mission to address perceived shortcomings such as a lack of accountability to the
public and a failure to maintain a diverse representation of interests on its board of directors. We continue to face the risks that:
• the U.S. or any other government may reassess its decision to introduce competition into, or ICANN's role in
overseeing, the domain name registration market;
• the Internet community or the U.S. Department of Commerce or U.S. Congress may refuse to recognize ICANN's
authority or support its policies, which could create instability in the domain name registration system;
• some of ICANN's policies and practices, and the policies and practices adopted by registries and registrars, could be
found to conflict with the laws of one or more jurisdictions;
• the terms of the Registrar Accreditation Agreement, under which we are accredited as a registrar, could change in
ways that are disadvantageous to us or under certain circumstances could be terminated by ICANN preventing us from
operating our Registrar service;
• ICANN and, under their registry agreements, VeriSign and other registries may impose increased fees received for
each ICANN accredited registrar and/or domain name registration managed by those registries;