Orbitz 2011 Annual Report Download - page 22

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losses and corruption of data, and similar events;
• computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information and other
physical or electronic breaches of security; and
• the failure of third-party systems or services that we rely upon to maintain our own operations.
We do not have backup systems for certain critical aspects of our operations. For example, if we were unable to connect
to certain third-party systems, such as GDSs, due to failure of our systems, our ability to process bookings could be
significantly or completely impaired. Many other systems are not fully redundant, and our disaster recovery planning may not
be sufficient. In addition, we may have inadequate insurance coverage or insurance limits to compensate for losses from a
major interruption, and remediation may be costly and have a material adverse effect on our operating results and financial
condition. Any extended interruption in our technologies or systems could significantly curtail our ability to conduct our
businesses and generate revenue.
We are involved in various legal proceedings and may experience unfavorable outcomes, which could harm us.
We are involved in various legal proceedings, including, but not limited to, actions relating to intellectual property, in
particular patent infringement claims against us, tax matters, employment law and other 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 could be adversely impacted.
We may not be effectively protecting our intellectual property, 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 United States. 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.
Our business and financial performance could be negatively impacted by adverse tax events.
New sales, use, occupancy or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Such
enactments could adversely affect our domestic and international business operations and our business and financial
performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or
applied adversely to us. These events could require us to pay additional tax amounts on a prospective or retroactive basis, as
well as require us to pay fees, penalties and/or interest for past amounts deemed to be due. In addition, our revenue may decline
because we may have to charge more for our products and services.
New, changed, modified or newly interpreted or applied tax laws could also increase our compliance, operating and
other costs, as well as the costs of our products or services. Further, these events could decrease the capital we have available to
operate our business. Any or all of these events could adversely impact our business and financial performance.