Green Dot 2013 Annual Report Download - page 27

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Litigation or investigations could result in significant settlements, fines or penalties.
We are subject to regulatory oversight in the normal course of our business, and have been and from time to time
may be subject to regulatory or judicial proceedings or investigations. The outcome of securities class actions and
other litigation and regulatory or judicial proceedings or investigations is difficult to predict. Plaintiffs or regulatory
agencies or authorities in these matters may seek recovery of very large or indeterminate amounts, seek to have
aspects of our business suspended or modified or seek to impose sanctions, including significant monetary fines. The
monetary and other impact of these actions, litigations, proceedings or investigations may remain unknown for
substantial periods of time. The cost to defend, settle or otherwise resolve these matters may be significant. Further,
an unfavorable resolution of litigation, proceedings or investigations could have a material adverse effect on our
business, operating results, or financial condition. In this regard, such costs could make it more difficult to maintain
the capital, leverage and other financial commitments at levels we have agreed to with the Federal Reserve Board
and the Utah Department of Financial Institutions.
If regulatory or judicial proceedings or investigations were to be initiated against us by private or governmental
entities, adverse publicity that may be associated with these proceedings or investigations could negatively impact our
relationships with retail distributors, network acceptance members and card processors and decrease acceptance and
use of, and loyalty to, our products and related services, and could impact the price of our Class A common stock. In
addition, such proceedings or investigations could increase the risk that we will be involved in litigation. The outcome
of any such litigation is difficult to predict and the cost to defend, settle or otherwise resolve these matters may be
significant. For the foregoing reasons, if regulatory or judicial proceedings or investigations were to be initiated against
us by private or governmental entities, our business, results of operations and financial condition could be adversely
affected or our stock price could decline.
We must adequately protect our brand and our intellectual property rights related to our products and
services and avoid infringing on the proprietary rights of others.
The Green Dot and GoBank brands are important to our business, and we utilize trademark registrations and other
means to protect them. Our business would be harmed if we were unable to protect our brand against infringement
and its value was to decrease as a result.
We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and
license agreements to protect the intellectual property rights related to our products and services. We currently have
four patents outstanding and nine patents pending. Although we generally seek patent protection for inventions and
improvements that we anticipate will be incorporated into our products and services, there is always a chance that our
patents or patent applications could be challenged, invalidated or circumvented, or that an issued patent will not
adequately cover the scope of our inventions or improvements incorporated into our products or services. Additionally,
our patents could be circumvented by third-parties.
Recent and proposed changes to U.S. patent laws and rules may also affect our ability to protect and enforce our
intellectual property rights. For example, the recently passed Leahy-Smith America Invents Act, will transition the
manner in which patents are issued and change the way in which issued patents are challenged. The long-term impact
of these changes are unknown, but this law could cause a certain degree of uncertainty surrounding the enforcement
and defense of our issued patents, as well as greater costs concerning new and existing patent applications.
We may unknowingly violate the intellectual property or other proprietary rights of others and, thus, may be subject
to claims by third parties. These assertions may increase over time as a result of our growth and the general increase
in the pace of patent claims assertions, particularly in the United States. Because of the existence of a large number
of patents in the mobile technology field, the secrecy of some pending patents, and the rapid rate of issuance of new
patents, it is not economically practical or even possible to determine in advance whether a product or any of its
elements infringes or will infringe on the patent rights of others. Regardless of the merit of these claims, we may be
required to devote significant time and resources to defending against these claims or to protecting and enforcing our
own rights. We might also be required to develop a non-infringing technology or enter into license agreements and
there can be no assurance that licenses will be available on acceptable terms and conditions, if at all. Some of our
intellectual property rights may not be protected by intellectual property laws, particularly in foreign jurisdictions. The
loss of our intellectual property or the inability to secure or enforce our intellectual property rights or to defend successfully
against an infringement action could harm our business, results of operations, financial condition and prospects.