Plantronics 2010 Annual Report Download - page 27

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We are subject to various federal, state, local, and foreign environmental laws and regulations on a global basis, including those
governing the use, discharge, and disposal of hazardous substances in the ordinary course of our manufacturing process. Although we
believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations,
it is possible that future environmental legislation may be enacted or current environmental legislation may be interpreted in any given
country to create environmental liability with respect to our facilities, operations, or products. To the extent that we incur claims for
environmental matters exceeding reserves or insurance for environmental liability, our operating results could be negatively impacted.
Our products are subject to various regulatory requirements, and changes in such regulatory requirements may adversely impact
our gross margins as we comply with such changes or reduce our ability to generate revenues if we are unable to comply.
Our products must meet the requirements set by regulatory authorities in the numerous jurisdictions in which we sell them. For
example, certain of our office and contact center products must meet certain standards to work with local phone systems. Certain of
our wireless office and mobile products must work within existing frequency ranges permitted in various jurisdictions. As regulations
and local laws change, we must modify our products to address those changes. Regulatory restrictions may increase the costs to
design, manufacture, and sell our products, resulting in a decrease in our margins or a decrease in demand for our products if the costs
are passed along. Compliance with regulatory restrictions may impact the technical quality and capabilities of our products reducing
their marketability. If we do not comply with these regulations, our products might interfere with other devices that properly use the
frequency ranges in which our products operate, and we may be responsible for the damages that our products cause. This could result
in our having to alter the performance of our products and make payment of substantial monetary damages or penalties.
We have intellectual property rights that could be infringed on by others, and we may infringe on the intellectual property rights of
others. Even if we prevail, claims and lawsuits are costly and time consuming to pursue or defend and may divert management’s
time from our business.
Our success depends in part on our ability to protect our copyrights, patents, trademarks, trade dress, trade secrets, and other
intellectual property, including our rights to certain domain names. We rely primarily on a combination of nondisclosure agreements
and other contractual provisions as well as patent, trademark, trade secret, and copyright laws to protect our proprietary rights.
Effective trademark, patent, copyright, and trade secret protection may not be available in every country in which our products and
media properties are distributed to customers. The process of seeking intellectual property protection can be lengthy and expensive.
Patents may not be issued in response to our applications, and any patents that may be issued may be invalidated, circumvented, or
challenged by others. If we are required to enforce our intellectual property or other proprietary rights through litigation, the costs and
diversion of management's attention could be substantial. In addition, the rights granted under any intellectual property may not
provide us competitive advantages or be adequate to safeguard and maintain our proprietary rights. Moreover, the laws of certain
countries do not protect our proprietary rights to the same extent as do the laws of the U.S. If we do not enforce and protect our
intellectual property rights, it could materially adversely affect our business, financial condition, and results of operations.
Patents, copyrights, trademarks, and trade secrets are owned by individuals or entities that may make claims or commence litigation
based on allegations of infringement or other violations of intellectual property rights. As we have grown, the intellectual property
rights claims against us have increased. There has also been a general trend of increasing intellectual property assertion against
corporations that make and sell products. Our products and technologies may be subject to certain third-party claims and, regardless
of the merits of the claim, intellectual property claims are often time-consuming and expensive to litigate, settle, or otherwise resolve.
In addition, to the extent claims against us are successful, we may have to pay substantial monetary damages or discontinue the
manufacture and distribution of products that are found to be in violation of another party’s rights. We also may have to obtain, or
renew on less favorable terms, licenses to manufacture and distribute our products, which may significantly increase our operating
expenses. In addition, many of our agreements with our distributors and resellers require us to indemnify them for certain third-party
intellectual property infringement claims. Discharging our indemnity obligations may involve time-consuming and expensive
litigation, result in substantial settlements or damages awards, result in our products being enjoined, and result in the loss of a
distribution channel or retail partner.
We are exposed to potential lawsuits alleging defects in our products and/or other claims related to the use of our products.
The sales of our products expose us to the risk of product liability and hearing loss claims. These claims have in the past been, and are
currently being, asserted against us. None of the previously resolved claims have materially affected our business, financial condition,
or results of operations, nor do we believe that any of the pending claims will have such an effect. Although we maintain product
liability insurance, the coverage provided under our policies could be unavailable or insufficient to cover the full amount of any such
claim. Therefore, successful product liability or hearing loss claims brought against us could have a material adverse effect upon our
business, financial condition, and results of operations.