TiVo 2009 Annual Report Download - page 31

Table of Contents
The nature of some of our business relationships may restrict our ability to operate freely in the future.
From time to time, we have engaged and may engage in the future in discussions with other parties concerning business relationships, which have and
may include equity investments by such parties in our Company or may include exclusivity provisions. While we believe that such business relationships have
historically enhanced our ability to finance and develop our business model or otherwise were justified by the terms of the particular relationship, the terms
and conditions of such business relationships may place some restrictions on the operation of our business, including where we operate, and who we work
with, in the future.
Entertainment companies and other content owners may claim that some of the features of our DVRs violate copyright or trademark laws,
which could force us to incur significant costs in defending such actions and affect our ability to market the TiVo service and the products that
enable the TiVo service.
Although we have not been the subject of such actions to date, a past competitor's digital video recorders were the subject of several copyright
infringement lawsuits by a number of major entertainment companies, including the major television networks. These lawsuits alleged that the competitor's
digital video recorders violate copyright laws by allowing users to skip commercials, delete recordings only when instructed and use the Internet to send
recorded materials to other users. TiVo-enabled DVRs have some similar features, including the ability to fast-forward through commercials, the ability to
delete recordings only when instructed and the ability to transfer recordings from a TiVo-enabled DVR to a PC and/or portable media devices via TiVoToGo
transfers. Based on market or consumer pressures, we may decide in the future to add additional features that may be objectionable to entertainment
companies. If similar actions are filed against us based on current or future features of our DVRs, entertainment companies may seek injunctions to prevent us
from including these features and/or damages. Such litigation can be costly and may divert the efforts of our management. Furthermore, if we were ordered to
remove features from our DVRs, we may experience increased difficulty in marketing the TiVo service and related TiVo-enabled DVRs and may suffer
reduced revenues as a result.
Entertainment companies, networks, or video distributors may claim that our advertising products or features may unintentionally violate
copyright or trademark laws or otherwise unfairly compete with them, which could result in the blocking, stripping or failure to carry out our
advertising products or features or force us to incur significant costs in defending such actions and affect our ability to generate advertising
revenues.
Entertainment companies, networks, or video distributors may claim that our advertising products or features may unintentionally violate copyright or
trademark laws, or otherwise unfairly compete with them, by being placed within, adjacent to, or on top of, existing video programming or advertising.
Entertainment companies or video distributors may seek injunctions to prevent us from offering these products or features, seek damages and/or take other
measures, such as blocking, stripping or refusing carriage to prevent us from selling or distributing our advertising products. If we were unable to sell or
distribute our advertising products or features on our DVRs, we may suffer reduced revenues as a result.
Our success depends on our ability to secure and protect our patents, trademarks, and other proprietary rights.
Our success and ability to compete are substantially dependent upon our internally developed technology. We rely on patent, trademark and copyright
law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property
rights. However, the steps we take to protect our proprietary rights may be inadequate. We have filed patent applications and provisional patent applications
covering substantially all of the technology used to deliver the TiVo service and its features and functionality. To date, several of these patents have been
granted, but we cannot assure you that any additional patents will ever be granted, that any issued patents will protect our intellectual property or that third
parties will not challenge any issued patents. In addition, other parties may independently develop similar or competing technologies designed around any
patents that may be issued to us. Our failure to secure and protect our proprietary rights could have a material adverse effect on our business.
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