Orbitz 2010 Annual Report Download - page 23

negligence, breach of contract and fraud claims, that involve claims for substantial amounts of money or for
other relief or that might necessitate changes to our business or operations. The defense of these actions may
be both time consuming and expensive. If any of these legal proceedings were to result in an unfavorable
outcome, it could have a material adverse effect on our business, financial position and results of operations.
In addition, historically, our insurers have reimbursed us for a significant portion of costs we incurred to
defend the hotel occupancy tax cases. If in the future these costs are reimbursed at a lower rate, or not at all,
our results of operations would be adversely impacted.
We may not protect our intellectual property effectively, which would allow competitors to duplicate our
products and services. This could make it more difficult for us to compete with them.
Our success and ability to compete depend, in part, upon our technology and other intellectual property,
including our brands. Among our significant assets are our software and other proprietary information and
intellectual property rights. We rely on a combination of copyright, trademark and patent laws, trade secrets,
confidentiality procedures and contractual provisions to protect these assets. However, we have a limited
number of patents, and our software and related documentation are protected principally under trade secret and
copyright laws, which afford only limited protection, and the laws of some jurisdictions provide less protection
for our proprietary rights than the laws of the U.S. We have granted Travelport an exclusive license to our
supplier link technology, including our patents related to that technology. Under the exclusive license,
Travelport has the first right to enforce those patents, and so we will only be able to bring actions to enforce
those patents if Travelport declines to do so. Unauthorized use and misuse of our intellectual property could
have a material adverse effect on our business, financial condition and results of operations, and the legal
remedies available to us may not adequately compensate us for the damages caused by unauthorized use.
Further, intellectual property challenges have been increasingly brought against members of the travel
industry. These legal actions have in the past and might in the future result in substantial costs and diversion
of resources and management attention. In addition, we may need to take legal action in the future to enforce
our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the
proprietary rights of others, and these enforcement actions could result in the invalidation or other impairment
of intellectual property rights we assert.
Travelport’s controlling holders control us and may have strategic interests that differ from ours or our
other shareholders.
Currently, Travelport and investment funds that own and/or control Travelport’s ultimate parent company
beneficially own approximately 56% of our outstanding common stock and therefore, indirectly control us and
all of our subsidiaries. As a result of this ownership, Travelport’s controlling holders are entitled to nominate
and elect all of our directors and own sufficient shares to determine the outcome of any actions requiring the
approval of our stockholders, including adopting most amendments to our certificate of incorporation and
approving or rejecting proposed mergers, significant new investments or divestments or sales of all or
substantially all of our assets.
The interests of Travelport’s controlling holders may differ from those of our public shareholders in
material respects. Travelport’s controlling holders and their affiliates are in the business of making investments
in companies and maximizing the return on those investments. They currently have, and may from time to
time in the future acquire, interests in businesses that directly or indirectly compete with certain portions of
our business or our suppliers or customers or businesses on which we are substantially dependent, such as the
Travelport GDSs. In an effort to increase its revenues and improve its overall profitability, Travelport could
seek to change the terms of its commercial relationships with its GDS customers. Because we are limited in
our ability to pursue alternative GDS options or direct connections with suppliers during the term of our GDS
agreement with Travelport, any such actions by Travelport could make us a less attractive distribution channel
to our suppliers, who could attempt to terminate or renegotiate their agreements with us, and could place us at
a competitive disadvantage relative to other online travel companies. See “We are dependent on Travelport for
our GDS services” below. In addition, Travelport’s customers, many of which are also major suppliers to us,
have previously sought and may in the future seek to exert commercial leverage over us in an effort to obtain
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