Incredimail 2008 Annual Report Download - page 25

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In 2003, we submitted national phase patent applications in the United States, the European Community and Israel with respect to these
processes that we employ in our products.
In July 2006, a patent was awarded in the US for the first invention; a patent has not yet been issued for the second invention.
In 2007 an international application was filed for the invention “interactive message editing system and method”.
We enter into licensing arrangements with third parties for the use of graphic, sound and multimedia content integrated into our products.
We have registered INCREDIMAIL as a trademark in the United States. All other trademarks, trade names and service marks appearing in
this annual report are the property of their respective owners.
All professional employees and technical consultants are required to execute confidentiality covenants in connection with their employment
and consulting relationships with us. We also require them to agree to disclose and assign to us all inventions conceived in connection with their
services to us. However, there can be no assurance that these arrangements will be enforceable or that they will provide us with adequate
protection.
JunkFilter Plus was developed using an anti-spam software development kit developed by Commtouch Ltd. Under our December 2004
agreement with Commtouch, Commtouch granted us a nonexclusive right and license to copy the software development kit and related software
and documentation for purposes of further development or modification in connection with the design, development and sale of products that
integrate the spam identification and classification services of Commtouch’s Detection Center, and to sell products incorporating such software
and documentation. Under the agreement, we pay Commtouch an annual fee for each customer who purchases JunkFilter Plus based on the
number of purchasers. The agreement had a one-year initial term, beginning with the commercial launch date of the JunkFilter Plus in July 2005
and was extended most recently for another two years, ending July 2010. Commtouch will continue to provide customers with accessibility to its
software and our integrated products following termination of the agreement, and the licenses granted to our customers will also survive such
termination.
25
Competition
Our industry is subject to intense competition. Our products compete in the specialized market for email software products and services that
aim to offer a personalized and entertaining email experience for consumers. IncrediMail was among the first companies to offer to the consumer
email market a solution that combines an email product with an online gallery of creative content. Compiling content is a lengthy process and we
have been doing it since 1999. We consider ourselves a pioneer in this market and we believe that we have an “early mover”
advantage over many
of our competitors. We believe that IncrediMail has one of the largest collections of creative and diverse graphics, sound and multimedia content
available online for email communications.
Our ability to compete effectively depends upon our ability to distinguish our Company and our products from our competitors and their
products, and includes the following factors:
Our main competitors among specialized providers of email services offer the following products: Arcsoft Multimedia Email™ 3,
LetterMark™ email, FunWeb Products™, Hotbar
®
and WikMail 2005. In addition, our products also face competition from general email
software programs offered to the private market by large Internet and software companies, such as AOL9 by America Online, Inc., Eudora
®
by
QUALCOMM Incorporated (Nasdaq: QCOM), Thunderbird
®
by Mozilla Foundation and Outlook Express and MSN9 by Microsoft Corporation
—
the creativity, variety and volume of content accessible through our software;
—
product quality;
—
product pricing;
—
success and timing of new product development and introductions;
—
quality of customer support;
—
maintaining our reputation for fighting spam and offering spyware
-
free products;
—
intellectual property protection; and
—
development of successful marketing channels.