Vistaprint 2009 Annual Report Download - page 37

If we become involved in intellectual property litigation or other proceedings related to a
determination of rights, we could incur substantial costs, expenses or liability, lose our
exclusive rights or be required to stop certain of our business activities.
A third party may sue us for infringing its intellectual property rights. In addition, a third party may
claim that we have improperly obtained or used its confidential or proprietary information. We have, in
the past, received letters from third parties that state that these third parties have patent rights that
cover aspects of the technology that we use in our business and that the third parties believe we are
obligated to license in order to continue to use such technology. Similarly, companies or individuals
with whom we currently have a business relationship, or have had a past business relationship, may
commence an action seeking rights in one or more of our patents or pending patent applications.
We recently were sued for patent infringement in two unrelated Federal District Court cases in
Texas. In June 2009, Vistaprint Limited, our wholly-owned subsidiary, and VistaPrint USA,
Incorporated, a wholly-owned subsidiary of Vistaprint Limited, together with sixteen other companies
unaffiliated with Vistaprint Limited or VistaPrint USA, Incorporated, were named as defendants in a
complaint for patent infringement by Soverain Software LLC in the United States District Court for the
Eastern District of Texas. The complaint alleges that the defendants are infringing three U.S. Patents,
two of which relate to network-based sales systems employing a customer computer, a shopping cart
computer and a shopping cart database and the third of which relates to the use of session identifiers
in connection with requests transmitted through a network between a client and a server.
In July 2009, Vistaprint Limited and OfficeMax Incorporated were named as defendants in a
complaint for patent infringement filed by ColorQuick LLC, also in the United States District Court for
the Eastern District of Texas. The complaint alleges that Vistaprint Limited and OfficeMax Incorporated
are infringing a U.S. patent relating to systems and methods for processing electronic files stored in a
page description language format, such as PDF. In each of these two lawsuits, the plaintiff is seeking a
declaration that the patents at issue are valid and enforceable, a declaration that the defendants
infringe, the entry of a preliminary and permanent injunction, and damages.
The cost to us of any litigation or other proceeding relating to intellectual property rights, even if
resolved in our favor, could be substantial, and the litigation would divert our management’s efforts
from growing our business. Potential adversaries may be able to sustain the costs of complex
intellectual property litigation more effectively than we can because they have substantially greater
resources. Uncertainties resulting from the initiation and continuation of any litigation could limit our
ability to continue our operations or may prevent or delay our acquisition by a third party. If any parties
successfully claim that our sale, use, manufacturing or importation of technologies infringes upon their
intellectual property rights, we might be forced to pay damages and attorney’s fees. Additionally, if we
are found to have willfully infringed a third party’s patent, we may be liable for treble damages and a
court could enjoin us from performing the infringing activity. Thus, the situation could arise in which our
ability to use certain technologies important to the operation of our business would be restricted by a
court order.
Alternatively, we may be required to, or decide to, enter into a license with a third party that
claims infringement by us. Any license required under any patent may not be made available on
commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and,
therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain
a required license and are unable to design around a third party’s patent, we may be unable to
effectively conduct certain of our business activities, which could limit our ability to generate revenues
or maintain profitability and possibly prevent us from generating revenue sufficient to sustain our
operations.
Form 10-K
31