Vistaprint 2008 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, printers and small business marketing companies, 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. In addition, if we were held liable for actions of our customers, we could be
required to pay substantial penalties, fines or monetary damages.
Purported Federal class action lawsuits have been filed asserting substantially identical claims
alleging that certain of our customers were, without their knowledge or consent, enrolled in and
billed for membership discount programs offered by third party merchants on our
vistaprint.com website; and our reputation, revenues and results of operations could be
adversely affected if we or the third party merchants are unable to successfully resolve these
lawsuits or similar claims that may be brought in the future.
During each of the last three fiscal years, we generated a portion of our revenue from order
referral fees, revenue share and other fees paid to us by third party merchants for customer
click-throughs, distribution of third-party promotional materials, and referrals arising from products and
Form 10-K
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