Home Shopping Network 2013 Annual Report Download - page 9

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activities. The FTC may periodically investigate our business and operations on an ongoing basis for purposes of determining
our compliance with the consent order.
Online sales must comply with a variety of federal and state laws dealing with, amongst other things, privacy, intellectual
property, taxation, the provision of online payment services and electronic contracts. While U.S. Supreme Court decisions
generally restrict the imposition of obligations to collect state and local sales and use taxes with respect to sales from out-of-
state retailers, an increasing number of states have adopted or are considering laws that would impose obligations on out-of-
state retailers to collect taxes on their behalf. Congress is also considering legislation allowing states to require out-of-state
sellers to collect sales and use taxes. An unfavorable change in U.S. Supreme Court guidance related to sales tax or a
successful assertion by one or more states may result in material tax liabilities, interest and penalties. A change in state law or
federal laws, our business model, business strategy or marketing initiatives may require us to collect sales tax in states for
which we do not currently collect such tax. These developments, should they occur, may result in a decrease in future sales,
may limit our ability to compete effectively or may otherwise harm our business.
While we believe that the practices of our businesses have been structured in a manner to ensure compliance with these
laws and regulations; federal, state or local regulatory authorities may take a contrary position. Our failure to comply with these
laws and regulations could result in proceedings against us, tax assessments, fines and penalties and/or a diminution of our
reputation, each of which could adversely affect our financial condition, results of operations and businesses.
Intellectual Property
We regard our intellectual property rights, including patents, service marks, trademarks, domain names, copyrights and
trade secrets, as important to our success. Our businesses also rely heavily upon software, informational databases and other
systemic components that are necessary to manage and support our operations. We rely on a combination of laws and
contractual restrictions with employees, customers, suppliers, licensees, affiliates and other third parties to establish and protect
these proprietary rights. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use trade
secrets or copyrighted intellectual property without authorization which, if discovered, might require legal action to correct. In
addition, third parties may independently and lawfully develop substantially similar intellectual properties.
We have generally registered and continue to apply to register, or secure by contract when appropriate, our trademarks
and service marks as they are developed and used, and reserve and register domain names as we deem appropriate. We consider
the protection of our trademarks to be important for purposes of brand maintenance and reputation. While we vigorously
protect our trademarks, service marks and domain names, effective trademark protection may not be available or may not be
sought in every country in which products and services are made available, and contractual disputes may affect the use of
marks governed by private contract. Similarly, not every variation of a domain name may be available or be registered, even if
available. Our failure to protect our intellectual property rights in a meaningful manner or challenges to related contractual
rights could result in dilution of brand names and/or limit our ability to control marketing on or through the internet using our
various domain names either of which could adversely affect our business, financial condition and results of operations.
Some of our businesses have been granted patents and/or have patent applications pending with the United States Patent
and Trademark Office and/or foreign patent authorities for various proprietary technologies and other inventions. We consider
applying for patents or for other appropriate statutory protection when we develop or identify new or improved proprietary
technologies or inventions, and will continue to consider the appropriateness of filing for patents to protect future proprietary
technologies and inventions as circumstances may warrant. The issuance or assessment of the validity of any patent involves
complex legal and factual questions, and the breadth of claims allowed is uncertain. Accordingly, any patent application filed
may not result in a patent being issued or existing or future patents may not be adjudicated valid by a court or be afforded
adequate protection against competitors with similar technology. In addition, third parties may create new products or methods
that achieve similar results without infringing upon patents that we own. Likewise, the issuance of a patent to us does not mean
that our processes or inventions will not be found to infringe upon patents or other rights previously issued to third parties.
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 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.