Stamps.com 2015 Annual Report Download - page 22

TABLE OF CONTENTS
Weestablishlossprovisionsonlyformattersinwhichlossesareprobableandcanbereasonablyestimated.Ifeitherorbothofthe
criteriaarenotmet,weassesswhetherthereisatleastareasonablepossibilitythataloss,oradditionallosses,mayhavebeenincurred.
Ifthereisareasonablepossibilitythatalossoradditionallossmayhavebeenincurredforsuchproceedings,wedisclosetheestimate
oftheamountoflossorpossiblerangeofloss,ordisclosethatanestimateoflosscannotbemade,asapplicable.Futurelitigationcould
involvepotentialcompensatoryorpunitivedamageclaims,orsanctions,that,ifawardedcouldrequireustopaydamagesormake
otherexpendituresinamountsthatcouldexceedanylossprovisionswemayhaveestablishedorotherwisecouldhaveamaterial
adverseeffectonourfinancialpositionorresultsofoperations.Futurelitigationcouldalsoinvolveinjunctiverelief,whereacourt
couldprohibit,ormateriallyrestrict,ourabilitytocompeteincertainbusinessesoropportunities,anyofwhichcouldhaveamaterial
adverseeffectonourbusinessoperationsorfinancialresults.
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,thecostsofenforcingourpatentscanbematerial,
and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.
System and online security failures could harm our business and operating results.
Ourservicesdependontheefficientanduninterruptedoperationofourcomputerandcommunicationshardwaresystems.In
addition,wemustprovideahighlevelofsecurityforthetransactionsweexecute.Werelyoninternally-developedandthird-party
technologytoprovidesecuretransmissionofpostageandotherconfidentialinformation.Anybreachofthesesecuritymeasureswould
severelyimpactourbusinessandreputationandwouldlikelyresultinthelossofcustomersandrevenues.Furthermore,ifwefailto
provideadequatesecurity,theUSPScouldprohibitusfromsellingpostageovertheInternet.
Oursystemsandoperationsarevulnerabletodamageorinterruptionfromanumberofsources,includingfire,flood,powerloss,
telecommunicationsfailure,break-ins,earthquakesandsimilarevents.OurInternethostproviderdoesnotguaranteethatourInternet
accesswillbeuninterrupted,error-freeorsecure.Ourserversarealsovulnerabletocomputerviruses,physical,electricalorelectronic
break-insandsimilardisruptions.Wehaveexperiencedminorsysteminterruptionsinthepastandmayexperiencesimilarorlarger
systeminterruptionsagaininthefuture.Inaddition,wearesusceptibletosystemandoperationaldisruptionscausedbysubstantial
changestothedemandforourservicesandsurgesintheuseofourservicebycustomers.Anysubstantialsysteminterruptionsinthe
future,whateverthecause,couldresultinthelossofdataandcouldcompletelyimpairourabilitytogeneraterevenuesfromour
service.Ourserversalsoperiodicallyexperiencedirectedattacksintendedtocauseadisruptioninservice.Anyattemptsbyhackersto
disruptourserviceorourinternalsystems,ifsuccessful,couldharmourbusiness,beexpensivetoremedyanddamageourreputation.
OurinsurancemaynotbesufficienttocoverexpensesrelatedtosystemandoperationaldisruptionsorattacksonourWebsite,
serversorinternalsystems.Wedonotpresentlyhaveafulldisasterrecoveryplanineffecttocoverthelossofallfacilitiesand
equipment.Wedo,however,haveasecondarylocationthatmirrorsourcoresysteminfrastructuretoallowustooperatefromasecond
location.Wehavebusinessinterruptioninsurance;however,wecannotbecertainthatourcoveragewillbesufficienttocompensateus
forlossesthatmayoccurasaresultofbusinessinterruptions.
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