Enom 2012 Annual Report Download - page 32

27
heavily on trade secret protection than patent protection. To protect our trade secrets, we control access to our proprietary
systems and technology and enter into confidentiality and invention assignment agreements with our employees and
consultants and confidentiality agreements with other third parties. Effective trade secret, copyright, trademark and patent
protection may not be available in all countries where we currently operate or in which we may operate in the future. In
addition, because of the relatively high cost we would experience in registering all of our copyrights with the United States
Copyright Office, we generally do not register the copyrights associated with our content. We cannot guarantee that:
• our intellectual property rights will provide competitive advantages to us;
• our ability to assert our intellectual property rights against potential competitors or to settle current or future
disputes will not be limited by our agreements with third parties;
• our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal
protection may be weak;
• any of the patents, trademarks, copyrights, trade secrets or other intellectual property rights that we presently
employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned;
• competitors will not design around our protected systems and technology; or
• we will not lose the ability to assert our intellectual property rights against others.
Policing unauthorized use of our proprietary rights can be difficult and costly. In addition, it may be necessary to enforce
or protect our intellectual property rights through litigation or to defend litigation brought against us, which could result in
substantial costs and diversion of resources and management attention and could adversely affect our business, even if we are
successful on the merits.
We rely on technology infrastructure and a failure to update or maintain this technology infrastructure could adversely
affect our business.
Significant portions of our content, products and services are dependent on technology infrastructure that was developed
over multiple years. Updating and replacing our technology infrastructure may be challenging to implement and manage, may
take time to test and deploy, may cause us to incur substantial costs and may cause us to suffer data loss or delays or
interruptions in service. For example, we have suffered a number of server outages at our data center facilities, which resulted
from certain failures that triggered data center wide outages and disrupted critical technology and infrastructure service
capabilities. These events impacted service to some of our significant media properties, including eHow, as well our proprietary
online content production studio, and eNom customers. As a result of these data center outages, we have recently developed
initiatives to create automatic backup capacity at an alternate facility for our top revenue generating services to address similar
scenarios in the future. However, there can be no assurance that our efforts to develop sufficient backup and redundant services
will be successful or that we can prevent similar outages in the future. Delays or interruptions in our service may cause our
consumers, advertisers, customers and freelance creative professionals to become dissatisfied with our offerings and could
adversely affect our business. Failure to update our technology infrastructure as new technologies become available may also
put us in a weaker position relative to a number of our key competitors. Competitors with newer technology infrastructure may
have greater flexibility and be in a position to respond more quickly than us to new opportunities, which may impact our
competitive position in certain markets and adversely affect our business.
We are currently expanding and improving our information technology systems. If these implementations are not
successful, our business and operations could be disrupted and our operating results could suffer.
In 2010, we deployed the first phase of our enterprise reporting system, Oracle Applications ERP and Platform, to assist
the management of our financial data and reporting, and to automate certain business wide processes and internal controls.
Since then, we have started to implement additional build-outs, customizations and/or applications associated with this system
that require significant management time, support and cost. Moreover, there are inherent risks associated with developing,
improving and expanding information systems. We cannot be sure that the expansion of any of our systems, including our
Oracle system, will be fully or effectively implemented on a timely basis, if at all. If we do not successfully implement
informational systems on a timely basis or at all, our operations may be disrupted and or our operating results could suffer. In
addition, any new information system deployments may not operate as we expect them to, and we may be required to expend
significant resources to correct problems or find alternative sources for performing these functions.