Support.com 2011 Annual Report Download - page 19

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Our business relies on the use and licensing of technology. Other parties may assert intellectual property infringement claims against us or our
customers, and our products may infringe the intellectual property rights of third parties. For example, our products may infringe patents issued to
third parties. In addition, as is increasingly common in the technology sector, we may be confronted with the aggressive enforcement of patents by
companies whose primary business activity is to acquire patents for the purpose of offensively asserting them against other companies. From time to
time, we have received allegations of intellectual property infringement, and we may receive more claims in the future. We may also be required to
pursue litigation to protect our intellectual property rights or defend against allegations of infringement. Intellectual property litigation is expensive and
time-consuming and could divert management’s attention from our business. The outcome of any litigation is uncertain and could significantly impact
our financial results. If there is a successful claim of infringement, we may be required to develop non-infringing technology or enter into royalty or
license agreements, which may not be available on acceptable terms, if at all. Our failure to develop non-infringing technologies or license proprietary
rights on a timely basis would harm our business.
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Goodwill and identifiable intangible assets were recorded in part due to our acquisition of substantially all of the assets and liabilities of
YourTechOnline.com (“YTO”) in May 2008, our acquisition of substantially all of the assets of Xeriton Corporation in December 2009, and our
acquisition of certain assets and assumed liabilities of SUPERAntiSpyware (“SAS”) in June 2011. We also have certain intangible assets with
indefinite lives. We assess the impairment of goodwill and indefinite lived intangible assets annually or more often if events or changes in
circumstances indicate that the carrying value may not be recoverable. We assess the impairment of acquired product rights and other finite lived
intangible assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Our results of operations
would be adversely affected if impairment of our goodwill or intangible assets occurred.
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Not applicable.
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Our corporate headquarters lease covers approximately 37,449 square feet at Redwood City, California. During the third quarter of 2009, we
ceased using approximately 17,048 square feet in order to align our facilities usage with our current size. This lease expires on July 31, 2012. The
Company is in the process of locating a new headquarters facility. We lease an office of approximately 2,117 square feet at Sammamish, Washington
for our software operations. This lease expires on June 30, 2013. We also lease an office of approximately 2,113 square feet at Eugene, Oregon for
our software operations. This lease expires on December 31, 2014. In addition, we have an office in India with 6,838 square feet. This lease expires
on August 31, 2012. We believe our facilities are adequate to meet our current business requirements.
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In November 2001, a class action lawsuit was filed against us, two of our former officers and certain underwriters in the United States District
Court for the Southern District of New York. Similar complaints were filed against 55 underwriters and more than 300 other companies and other
individual officers and directors of those companies; the consolidated case is , No. 21 MC 92 (SAS)
(S.D.N.Y.). The lawsuit, which sought unspecified damages, fees and costs, alleged that our registration statement and prospectus dated July 18, 2000
for the issuance and initial public offering of 4,250,000 shares of our common stock contained material misrepresentations and/or omissions related to
alleged inflated commissions received by the underwriters of the offering. On April 1, 2009, all parties entered into a Stipulation and Agreement of
Settlement that would resolve all claims and dismiss the case against us and our former officers, without any payment by us or our former officers. On
October 5, 2009, the court issued an order approving the settlement. Certain other parties appealed the settlement, and the appeal was subsequently
dismissed by stipulation of the other parties on January 9, 2012. This concludes the litigation.
On February 7, 2012, a lawsuit seeking class-action certification was filed against the Company in the United States District Court for the
Northern District of California, No. 12-CV-00609, alleging that the design of one the Company’s software products and the method of promotion to
consumers constitute fraudulent inducement, breach of contract, breach of express and implied warranties, and unjust enrichment. On the same day the
same plaintiffs’ law firm filed another action in the United States District Court for the Southern District of New York, No. 12-CV-0963, involving
similar allegations against a subsidiary of the Company and one of the Company’s channel partners who distributes our software products, and that
channel partner has requested indemnification under contract terms with the Company. The law firm representing the plaintiffs in both cases has filed
unrelated class actions in the past year against a number of major software providers with similar allegations about those providers’ products. At this
time, the Company believes a loss is neither probable nor estimable and based on available information regarding this litigation, the Company is unable
to determine an estimate, or a range of estimates, of potential losses.
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