Orbitz 2012 Annual Report Download - page 22

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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 cases related to use or occupancy tax of hotel accommodations that some states and localities impose (“hotel
occupancy tax”). We will not receive any additional insurance reimbursements in future periods as our insurance coverage has
now been exhausted.
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.
We are subject to a U.S. federal income tax examination for the 2010 tax year. While we believe that our tax provisions
are appropriate, there is no assurance that the result of this or any future tax examinations would not result in additional
amounts being due to taxing authorities.
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.
We and other providers of travel in the online travel industry are currently subject to various lawsuits related to hotel
occupancy tax in numerous jurisdictions in the United States, and other jurisdictions may be considering similar lawsuits. An
adverse ruling in the existing hotel occupancy tax cases could require us to pay tax retroactively and prospectively, and possibly
penalties, interest and/or fees. We have also been contacted by several municipalities or other taxing bodies concerning our
possible obligation with respect to local hotel occupancy or related taxes, and certain municipalities have begun audit
proceedings and some have issued assessments against us. If we are found to be subject to the hotel occupancy tax ordinance
by a taxing authority and we appeal the decision in court, certain jurisdictions may attempt to require us to provide financial
security or pay the assessment to the municipality in order to challenge the tax assessment in court. The proliferation of new
hotel occupancy tax cases or audit proceedings could result in substantial additional defense costs. These events could also
adversely impact our business and financial performance. See Item 3, “Legal Proceedings.”