Invacare 2007 Annual Report Download - page 28

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In addition, as a result of a product liability claim or if the company’s products are alleged to be defective,
the company may have to recall some of its products, which could result in significant costs to the company and
harm the company’s business reputation.
If the company’s patents and other intellectual property rights do not adequately protect the company’s
products, the company may lose market share to its competitors and may not be able to operate the
company’s business profitably.
The company relies on a combination of patents, trade secrets and trademarks to establish and protect the
company’s intellectual property rights in its products and the processes for the development, manufacture and
marketing of the company’s products.
The company uses non-patented proprietary know-how, trade secrets, undisclosed internal processes and
other proprietary information and currently employs various methods to protect this proprietary information,
including confidentiality agreements, invention assignment agreements and proprietary information agreements
with vendors, employees, independent sales agents, distributors, consultants, and others. However, these
agreements may be breached. The FDA or another governmental agency may require the disclosure of this
information in order for the company to have the right to market a product. Trade secrets, know-how and other
unpatented proprietary technology may also otherwise become known to or independently developed by the
company’s competitors.
In addition, the company also holds U.S. and foreign patents relating to a number of its components and
products and has patent applications pending with respect to other components and products. The company also
applies for additional patents in the ordinary course of its business, as the company deems appropriate. However,
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
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