Vistaprint 2007 Annual Report Download - page 35

Our business is dependent on the Internet, and unfavorable changes in government regulation
of the Internet and e-commerce could substantially harm our business and results of
operations.
Due to our dependence on the Internet for most of our sales, regulations and laws specifically
governing the Internet and e-commerce may have a greater impact on our operations than other more
traditional businesses. Existing and future laws and regulations, including the taxation of sales through
the Internet, may impede the growth of e-commerce and our ability to compete with traditional graphic
designers and printers, as well as desktop printing products. These regulations and laws may cover
taxation, as well as restrictions on imports and exports, customs, tariffs, user privacy, data protection,
pricing, content, copyrights, distribution, electronic contracts and other communications, consumer
protection, the provision of online payment services, broadband residential Internet access and the
characteristics and quality of products and services. It is not clear how existing laws governing issues
such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet and
e-commerce as the vast majority of applicable laws were adopted prior to the advent of the Internet
and do not contemplate or address the unique issues raised by the Internet or e-commerce. Those
laws that do reference the Internet, such as the Bermuda Electronic Transactions Act 1999, the U.S.
Digital Millennium Copyright Act and the U.S. CAN-SPAM Act of 2003, are only beginning to be
interpreted by the courts and their applicability and reach are therefore uncertain. Those current and
future laws and regulations or unfavorable resolution of these issues may substantially harm our
business and results of operations.
If we were required to review the content that a customer incorporates into a product and
interdict the shipment of products that violate copyright protections or other laws, our costs
would significantly increase, which would harm our results of operations.
Because of our focus on automation and high volumes, our operations do not involve, for the vast
majority of our sales, any human-based review of content. Although our websites’ terms of use
specifically require customers to represent that they have the right and authority to reproduce a given
content and that the content is in full compliance with all relevant laws and regulations, we do not have
the ability to determine the accuracy of these representations on a case-by-case basis. There is a risk
that a customer may supply an image or other content that is the property of another party used
without permission, that infringes the copyright or trademark of another party, or that would be
considered to be defamatory, hateful, racist, scandalous, obscene, or otherwise offensive,
objectionable or illegal under the laws or court decisions of the jurisdiction where that customer lives.
There is, therefore, a risk that customers may intentionally or inadvertently order and receive products
from us that are in violation of the rights of another party or a law or regulation of a particular
jurisdiction. If we should become legally obligated in the future to perform manual screening and review
for all orders destined for a jurisdiction, we will encounter increased production costs or may cease
accepting orders for shipment to that jurisdiction which could substantially harm our business and
results of operations.
We derive a portion of our revenues from offers made to customers by third parties who have
had their business practices challenged in the past, and if the business practices of these third
parties are challenged in the future, our reputation could be adversely affected and we may lose
revenue.
For the fiscal year ended June 30, 2007, we derived less than 10% of our revenues from order
referral fees paid to us by third party merchants for customer click-throughs, order fulfillment and other
forms of co-marketing arrangements. Some of these third parties offers are for memberships in
discount programs or similar promotions to customers who have purchased products from us and we
receive a payment from the third party for every customer that accepts the promotion. Certain of these
Form 10-K
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