Invacare 2006 Annual Report Download - page 26

these precautions offer only limited protection, and the company’s proprietary information may become known to,
or be independently developed by, competitors, or the company’s proprietary rights in intellectual property may be
challenged, any of which could have a material adverse effect on the company’s business, financial condition and
results of operations. Additionally, the company cannot assure that its existing or future patents, if any, will afford
the company adequate protection or any competitive advantage, that any future patent applications will result in
issued patents or that the company’s patents will not be circumvented, invalidated or declared unenforceable.
Any proceedings before the U.S. Patent and Trademark Office could result in adverse decisions as to the
priority of the company’s inventions and the narrowing or invalidation of claims in issued patents. The company
could also incur substantial costs in any proceeding. In addition, the laws of some of the countries in which the
company’s products are or may be sold may not protect the company’s products and intellectual property to the
same extent as U.S. laws, if at all. The company may also be unable to protect the company’s rights in trade secrets
and unpatented proprietary technology in these countries.
In addition, the company holds patent and other intellectual property licenses from third parties for some of its
products and on technologies that are necessary in the design and manufacture of some of the company’s products.
The loss of these licenses could prevent the company from, or could cause additional disruption or expense in,
manufacturing, marketing and selling these products, which could harm the company’s business.
The company’s operating results and financial condition could be adversely affected if the company
becomes involved in litigation regarding its patents or other intellectual property rights.
Litigation involving patents and other intellectual property rights is common in the company’s industry, and
companies in the company’s industry have used intellectual property litigation in an attempt to gain a competitive
advantage. The company currently is, and in the future may become, a party to lawsuits involving patents or other
intellectual property. Litigation is costly and time consuming. If the company loses any of these proceedings, a court
or a similar foreign governing body could invalidate or render unenforceable the company’s owned or licensed
patents, require the company to pay significant damages, seek licenses and/or pay ongoing royalties to third parties,
require the company to redesign its products, or prevent the company from manufacturing, using or selling its
products, any of which would have an adverse effect on the company’s results of operations and financial condition.
The company has brought, and may in the future also bring, actions against third parties for an infringement of the
company’s intellectual property rights. The company may not succeed in these actions. The defense and prosecution
of intellectual property suits, proceedings before the U.S. Patent and Trademark Office or its foreign equivalents and
related legal and administrative proceedings are both costly and time consuming. Protracted litigation to defend or
prosecute the company’s intellectual property rights could seriously detract from the time the company’s man-
agement would otherwise devote to running its business. Intellectual property litigation relating to the company’s
products could cause its customers or potential customers to defer or limit their purchase or use of the affected
products until resolution of the litigation.
The company’s business strategy relies on certain assumptions concerning demographic trends that
impact the market for its products. If these assumptions prove to be incorrect, demand for the company’s
products may be lower than expected.
The company’s ability to achieve its business objectives is subject to a variety of factors, including the relative
increase in the aging of the general population. The company believes that these trends will increase the need for its
products. The projected demand for the company’s products could materially differ from actual demand if the
company’s assumptions regarding these trends and acceptance of its products by health care professionals and
patients prove to be incorrect or do not materialize. If the company’s assumptions regarding these factors prove to be
incorrect, the company may not be able to successfully implement the company’s business strategy, which could
adversely affect the company’s results of operations. In addition, the perceived benefits of these trends may be offset
by competitive or business factors, such as the introduction of new products by the company’s competitors or the
emergence of other countervailing trends.
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