TiVo 2009 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2009 TiVo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 159

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159

Table of Contents
We could be prevented from selling or developing our TiVo software if the GNU/Linux operating system is held to infringe third-party
intellectual property rights or if the GNU General Public License governing the GNU/Linux operating system and Linux kernel and similar licenses
under which our product is developed and licensed are not enforceable or are interpreted broadly.
Our TiVo software includes parts of the Linux kernel and the GNU/Linux operating system. The Linux kernel and the GNU/Linux operating system
have been developed and licensed under the GNU General Public License, version 2 and similar open-source licenses. The software we have licensed under
these open-source licenses is provided without warranties or indemnities from the licensor. Uncertainty concerning potential allegations by third parties that
their intellectual property rights are violated by TiVo's use of such open-source software, regardless of their merit, could adversely affect our manufacturing
relationships and other customer and supplier relationships. If any claims of intellectual property infringement are brought against TiVo based on our use of
open-source software, we could be required to seek licenses from third parties in order to continue offering our solutions, to re-engineer our solutions, or to
discontinue the sale of our solutions in the event re-engineering cannot be accomplished on a timely basis, any of which would adversely affect our business.
The GNU General Public License and certain other open-source licenses require that licensees, including TiVo, make the source code of any "derivative
works" of the software licensed under the open-source license available in source code form. Given the ambiguous drafting in many of these open-source
licenses regarding the definition of "derivative work," it is possible that third parties may claim that our proprietary TiVo software, or a portion thereof, that
runs on a GNU/Linux-based operating system is a "derivative work" of the open-source software and should be made available in source code form to all of
our customers. This would reduce the value of our proprietary software and would negatively affect our business. Finally, there is very little case law
interpreting open-source licenses. Any ruling by a court that these licenses are not enforceable, or that GNU/Linux-based operating systems, or significant
portions of them, may not be liberally copied, modified or distributed, would have the effect of preventing us from selling or developing our TiVo software
and would adversely affect our business.
In addition, a version of the GNU General Public License ("the GPL v3") was recently released that contains terms that restrict the manner in which
hardware manufacturers may use software licensed under the GPL v3. If such terms are broadly interpreted and the GPL v3 is widely adopted among the
Linux developer community, we may be unable to incorporate future enhancements to the GNU/Linux operating system into our software, which could
adversely affect our business.
If there is an adverse outcome in the class action litigation that has been filed against us, our business may be harmed.
We are named as defendants in a consolidated securities class action lawsuit filed in the U.S. District Court for the Southern District of New York. This
class action was brought on behalf of a purported class of purchasers of the Company's common stock from October 31, 1999, the time of its initial public
offering, through December 6, 2000. The central allegation in this action is that the underwriters in the initial public offering solicited and received
undisclosed commissions from, and entered into undisclosed arrangements with certain investors who purchased TiVo common stock in the initial public
offering and the after-market. The complaint also alleges that the TiVo defendants violated the federal securities laws by failing to disclose in the initial public
offering prospectus that the underwriters had engaged in these alleged undisclosed arrangements. More than 300 issuers have been named in similar lawsuits.
The Company intends to defend this action vigorously; however, we could be forced to incur material expenses in the litigation, and in the event there is an
adverse outcome, our business could be harmed. For more information on this litigation please see our discussion under Item 3. "Legal Proceedings."
28