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In addition, the stock market has from time to time experienced significant price and volume fluctuations that have affected the market
prices for the common stocks of technology and other companies, particularly communications and Internet companies. These broad market
fluctuations have previously resulted in a material decline in the market price of our common stock. In the past, following periods of volatility in
the market price of a particular company’
s securities, securities class action litigation has often been brought against that company. We may
become involved in this type of litigation in the future. Litigation is often expensive and diverts management’
s attention and resources, which
could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2010, we were leasing approximately 40,000 square feet of office space for our headquarters in Los Angeles,
California under a lease that expires on January 31, 2020. We lease this space from an entity indirectly controlled by our Chairman of the Board.
Additionally, we have smaller leased office facilities in Ontario, British Columbia, Quebec,
California, Florida, Illinois, Hong Kong, Japan and
Ireland.
All of our network equipment is housed either at our leased properties or at one of our multiple co-location facilities around the world.
Item 3. Legal Proceedings
From time-to-
time, we are involved in litigation and other disputes or regulatory inquiries that arise in the ordinary course of our
business. Many of these actions involve or are filed in response to patent actions filed by us against others. The number and significance of these
disputes and inquiries has increased as our business has expanded and j2 Global has grown. Any claims or regulatory actions against us, whether
meritorious or not, could be time-
consuming, result in costly litigation, require significant management time and result in diversion of significant
operational resources.
As part of our continuing effort to prevent the unauthorized use of our intellectual property, we have initiated litigation against the
following companies, among others, for infringing our patents relating to Internet fax and other messaging technologies: Open Text Corporation
and its Captaris business (“Open Text”) and EasyLink Services International Corp. (“EasyLink”).
Three of our patents at issue in some of these
lawsuits have been reaffirmed through reexamination proceedings with the USPTO.
Open Text and EasyLink have each filed counterclaims against us, including seeking declaratory judgments of non-
infringement,
invalidity and unenforceability of our patents. Open Text also asserted counterclaims purporting to allege antitrust violations of Section 2 of the
Sherman Act and California’
s Business and Professions Code §§ 16720 and 17200. Open Text is seeking dismissal of our patent infringement
claims, damages, including treble and punitive damages, injunctions against further violations and attorneys’
fees and costs. These cases are
being litigated in the United States District Court for the Central District of California before the same judge, who has indicated that the cases
will be handled in a coordinated fashion. Discovery in the cases is underway. The Court partially completed a Markman hearing in all of these
cases on October 15, 2010. Trial is currently scheduled to begin March 1, 2011, but we anticipate that the trial date will be continued.
•
Variations between our actual results and investor expectations;
•
Regulatory or competitive developments affecting our markets;
•
Investor perceptions of us and comparable public companies;
•
Conditions and trends in the communications, messaging and Internet-related industries;
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Announcements of technological innovations and acquisitions;
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Introduction of new services by us or our competitors;
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Developments with respect to intellectual property rights;
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Conditions and trends in the Internet and other technology industries;
•
Rumors, gossip or speculation published on public chat or bulletin boards;
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General market conditions; and
•
Geopolitical events such as war, threat of war or terrorist actions.
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