Stamps.com 2010 Annual Report Download - page 18

TABLE OF CONTENTS
technologies into new features and services and to anticipate or respond to technological changes could affect our ability to
develop these services and features. Delays in features or upgrade introductions could cause a decline in our revenue, earnings or
stock price. We cannot determine the ultimate effect these delays or the introduction of new features or upgrades will have on
our revenue or results of operations.
Increases in payment processing fees would increase our operating expenses and adversely affect our results of
operations.
Our customers pay for our services predominately using credit cards and debit cards and, to a lesser extent, by use of
automated clearing house payments. Our acceptance of these payment methods requires our payment of certain fees. From time
to time, these fees may increase, either as a result of rate changes by the payment processing companies or as a result of a change
in our business practices that increase the fees on a cost-per-transaction basis. If these fees for accepting payment methods
increase in future periods, it may adversely affect our results of operations.
A decline in our ability to effectively bill our customers by credit card and debit card would adversely affect our results
of operations.
Our ability to effectively charge our customers through credit cards and debit cards is subject to many variables, including
our own billing technology and practices, the practices and rules of payment processing companies, and the practices and rules
of issuing financial institutions. If we do not effectively charge and bill our customers in future periods through credit cards and
debit cards, it would adversely affect our results of operations.
Third party assertions of violations of their intellectual property rights could adversely affect our business.
Substantial litigation regarding intellectual property rights exists in our industry. Third parties may currently have, or may
eventually be issued, patents upon which our products or technology infringe. Any of these third parties might make a claim of
infringement against us. We may become aware of, or we may increasingly receive correspondence claiming, potential
infringement of other parties’ intellectual property rights. We could incur significant costs and diversion of management time
and resources to defend claims against us regardless of their validity. Any associated costs and distractions could have a material
adverse effect on our business, financial condition and results of operations. In addition, litigation in which we are accused of
infringement might cause product development delays, require us to develop non-infringing technology or require us to enter
into royalty or license agreements, which might not be available on acceptable terms, or at all. If a successful claim of
infringement were made against us and we could not develop non-infringing technology or license the infringed or similar
technology on a timely and cost-effective basis, our business could be significantly harmed or fail. Any loss resulting from
intellectual property litigation could severely limit our operations, cause us to pay license fees, or prevent us from doing
business.
A failure to protect our own intellectual property could harm our competitive position.
We rely on a combination of patent, trade secret, copyright and trademark laws and contractual restrictions, such as
confidentiality agreements and licenses, to establish and protect our rights in our products, services, know-how and information.
We have a portfolio of issued and pending US and international patents. We also have a number of registered and unregistered
trademarks. We plan to apply for more patents in the future. We may not receive patents for any of our patent applications. Even
if patents are issued to us, claims issued in these patents may not protect our technology. In addition, a court might hold any of
our patents, trademarks or service marks invalid or unenforceable. Even if our patents are upheld or are not challenged, third
parties may develop alternative technologies or products without infringing our patents. If our patents fail to protect our
technology or our trademarks and service marks are successfully challenged, our competitive position could be harmed. We also
generally enter into confidentiality agreements with our employees, consultants and other third parties to control and limit access
and disclosure of our confidential information. These contractual arrangements or other steps taken to protect our intellectual
property may not prove to be sufficient to prevent misappropriation of technology or deter independent third party development
of similar technologies. Additionally, the laws of foreign countries may not protect our services or intellectual property rights to
the same extent as do the laws of the United States.
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