Invacare 2012 Annual Report Download - page 36

The company’s Chairman of the Board of Directors and certain members of management own shares
representing a substantial percentage of the company’s voting power and their interests may differ from other
shareholders.
The company has two classes of common stock. The Common Shares have one vote per share and the
Class B Common Shares have 10 votes per share. As of January 1, 2013, the company’s chairman, Mr. A.
Malachi Mixon, III, and certain members of management beneficially owned (including the right to acquire)
approximately 32% of the combined voting power of the company’s Common Shares and Class B Common
Shares and could influence the outcome of a corporate transaction or other matter submitted to the shareholders
for approval, including mergers, consolidations and the sale of all or substantially all of the company’s assets.
They also will have the power to influence or make more difficult a change in control. The interests of
Mr. Mixon and his relatives may differ from the interests of the other shareholders and they may take actions
with which some shareholders may disagree.
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
other companies within the company’s industry have used intellectual property litigation in an attempt to gain a
competitive advantage. The company in the past has been, and in the future may become, a party to lawsuits
involving patents or other intellectual property. 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 in the past has brought, and may in the future also bring, actions against third
parties for 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 management 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.
If the company is unable to protect its intellectual property rights or resolve successfully claims of
infringement brought against it, the company’s product sales and business could be affected adversely.
The company’s business depends in part on its ability to establish, protect, safeguard and enforce its
intellectual property and contractual rights and to defend against any claims of infringement, both of which
involve complex legal, factual and marketplace uncertainties. The company relies on a combination of patent,
trade secret, copyright and trademark law and security measures to protect its intellectual property, but effective
intellectual property protection may not be available in all places that the company sells its products or services,
particularly in certain foreign jurisdictions. In addition, the company uses nondisclosure, confidentiality
agreements and invention assignment agreements with many of its employees, and nondisclosure and
confidentiality agreements with certain third parties, in an effort to help protect its proprietary technology and
know-how. If these agreements are breached or the company’s intellectual property is otherwise misappropriated,
the company may have to rely on litigation to enforce its intellectual property rights. If any of these measures are
unsuccessful in protecting the company’s intellectual property, the company’s business may be affected
adversely.
In addition, the company may face claims of infringement that could interfere with its ability to use
technology or other intellectual property rights that are material to the company’s business operations. In the
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