Home Shopping Network 2008 Annual Report Download - page 17

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could also significantly damage our reputation with consumers and third parties with whom we do business. We
may be required to expend significant capital and other resources to protect against and remedy any potential or
existing security breaches and their consequences. We also face risks associated with security breaches affecting
third parties with which we are affiliated or otherwise conduct business online.
The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of
governmental regulation, conflicting legal requirements or differing views of personal privacy rights.
In the processing of consumer transactions, our businesses receive, transmit and store a large volume of
personally identifiable information and other user data. The sharing, use, disclosure and protection of this
information are governed by the privacy and data security policies maintained by us and our businesses. Moreover,
there are federal, state and international laws regarding privacy and the storing, sharing, use, disclosure and
protection of personally identifiable information and user data. Specifically, personally identifiable information is
increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is
to protect the privacy of personal information that is collected, processed and transmitted in or from the governing
jurisdiction. We could be adversely affected if legislation or regulations are expanded to require changes in business
practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in
ways that negatively affect our business, financial condition and results of operations.
We may fail to adequately protect our intellectual property rights or may be accused of infringing
intellectual property rights of third parties.
We regard our intellectual property rights, including patents, service marks, trademarks and domain names,
copyrights, trade secrets and similar intellectual property (as applicable), as critical to our success. Our businesses
also rely heavily upon software codes, informational databases and other components that make up their products
and services.
From time to time, we are subject to legal proceedings and claims in the ordinary course of business,
including claims of alleged infringement of the trademarks, copyrights, patents and other intellectual property rights
of third parties. In addition, litigation may be necessary in the future to enforce our intellectual property rights,
protect trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of
this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and
technical resources, any of which could adversely affect our business, financial condition and results of operations.
Patent litigation tends to be particularly protracted and expensive. Our failure to protect our intellectual property
rights in a meaningful manner or challenges to related contractual rights could result in erosion of brand names and
limit our ability to control marketing on or through the internet using our various domain names or otherwise, which
could adversely affect our business, financial condition and results of operations.
Risks Related to Our Spin-Off from IAC
We have incurred and expect to continue to incur increased costs relating to operating as an
independent public company that could cause our cash flow and results of operations to decline.
The obligations of being a public company, including substantial public reporting and investor relations
obligations, have required new expenditures, placed new demands on our management and required the hiring of
additional personnel. Further increases in these expenditures could adversely affect our business, financial condition
and results of operations.
In addition, prior to the spin-off, IAC's businesses, by virtue of being under the same corporate structure,
shared economies of scope and scale in costs, human capital, vendor relationships and customer relationships with
the businesses that we and the other four publicly-traded companies resulting from the spin-off (the “Spincos”) own
following the spin-offs. The increased costs resulting from the loss of these benefits could have an adverse effect on
us.