ServiceMagic 2010 Annual Report Download - page 24

Table of Contents
Despite these precautions, our intellectual property rights may still not be protected in a meaningful manner, challenges to contractual rights
could arise or third parties could copy or otherwise obtain and use our intellectual property without authorization. The occurrence of any of these
events could result in the erosion of our brand names and limitations on our ability to control marketing on or through the internet using our
various domain names, as well as impede our ability to effectively compete against competitors with similar technologies, any of which could
adversely affect our business, financial conditions and results of operations.
From time to time, we have been subject to legal proceedings and claims in the ordinary course of business, including claims of alleged
infringement of trademarks, copyrights, patents and other intellectual property rights held by third parties. In addition, litigation may be
necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity and scope of proprietary
rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of
management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Patent
litigation tends to be particularly protracted and expensive.
Our success depends, in part, on the integrity of our systems and infrastructure and those of third parties. System interruption and the lack of
integration and redundancy in our and third party information systems may affect our businesses.
To succeed, our systems and infrastructure must perform well on a consistent basis. From time to time, we may experience occasional
system interruptions that make some or all of our systems or data unavailable or that prevent us from providing services, which could adversely
affect our business. Moreover, as traffic to our various websites increases and the number of new (and presumably more complex) products and
services that we introduce continues to grow, we will need to upgrade our systems, infrastructure and technologies generally to facilitate this
growth. If we do not do so or if we experience inefficiencies and/or operational failures in connection with these efforts, users, customers and
third parties with whom we do business may not be able to access our services on an intermittent or prolonged basis and the quality of their
experiences could be adversely affected. Moreover, even if we do not encounter any inefficiencies and/or operational failures in connection with
these efforts, third parties with whom we do business may not make the changes to their systems, infrastructure and technology needed in order
to access our services on a timely basis, if at all. The occurrence of any of these events could adversely affect our business, financial condition
and results of operations.
We also rely on third party computer systems, data centers, broadband and other communications systems and service providers in
connection with the provision of services generally, as well as to facilitate and process certain transactions with customers. Any interruptions,
outages or delays in our systems or those of our third party providers, or deterioration in the performance of these systems, could impair our
ability to provide services and/or process certain transactions with customers. Furthermore, data security breaches (as a result of the actions of
hackers or otherwise), fire, power loss, telecommunications failure, natural disasters, acts of war or terrorism, acts of God and other similar
events or disruptions may damage or interrupt computer, data, broadband or other communications systems at any time. Any event of this nature
could cause system interruption, delays and loss of critical data, and could prevent us from providing services to users and customers. While we
have backup systems for certain aspects of our operations, our systems are not fully redundant and disaster recovery planning is not sufficient for
all eventualities. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.
In particular, our destination search websites may be adversely affected by fraudulent, surreptitious or other unwanted computer programs,
applications and activity that make changes to users' computers and interfere with the overall experience of our services, such as by hijacking
queries to these websites or altering or replacing search results generated. This type of interference often occurs without
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