iRobot 2008 Annual Report Download - page 77

security clearance, we would be unable to continue to participate in the U.S. Army’s Future Combat Systems
program. Classified programs generally will require that we comply with various Executive Orders, federal laws
and regulations and customer security requirements that may include restrictions on how we develop, store, protect
and share information, and may require our employees to obtain government clearances.
Our failure to comply with applicable regulations, rules and approvals could result in the imposition of
penalties, the loss of our government contracts or our suspension or debarment from contracting with the federal
government generally, any of which would harm our business, financial condition and results of operations.
If we fail to protect, or incur significant costs in defending, our intellectual property and other
proprietary rights, our business and results of operations could be materially harmed.
Our success depends on our ability to protect our intellectual property and other proprietary rights. We rely
primarily on patents, trademarks, copyrights, trade secrets and unfair competition laws, as well as license agreements
and other contractual provisions, to protect our intellectual property and other proprietary rights. Significant
technology used in our products, however, is not the subject of any patent protection, and we may be unable to
obtain patent protection on such technology in the future. Moreover, existing U.S. legal standards relating to the
validity, enforceability and scope of protection of intellectual property rights offer only limited protection, may not
provide us with any competitive advantages, and may be challenged by third parties. In addition, the laws of countries
other than the United States in which we market our products may afford little or no effective protection of our
intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon
or misappropriating our intellectual property or otherwise gaining accessto our technology. Unauthorized third parties
may try to copy or reverse engineer our products or portions of our products or otherwise obtain and use our
intellectual property. Some of our contracts with the U.S. federal government allow the federal government to disclose
technical data regarding the products developed on behalf of the government under the contract without constraining
the recipient on how it is used. This ability of the government creates the potential that third parties may be able to use
this data to compete with us in the commercial sector. If we fail to protect our intellectual property and other
proprietary rights, our business, results of operations or financial condition could be materially harmed.
In addition, defending our intellectual property rights may entail significant expense. We believe that certain
products in the marketplace may infringe ourexisting intellectual property rights. We have, from time to time, resorted
to legal proceedings to protect our intellectual property and may continue to do so inthe future. We may be required to
expend significant resources to monitor and protect our intellectual property rights. Any of our intellectual property
rights may be challenged by others or invalidated through administrative processes or litigation. If we resort to legal
proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectual
property or other proprietary rights of others, the proceedings could result in significant expense to us and divert the
attention and efforts of our management and technical employees, even if we were to prevail.
Acquisitions and potential future acquisitions could be difficult to integrate, divert the attention of key
personnel, disrupt our business, dilute stockholder value and impair our financial results.
As part of our business strategy, we have acquired Nekton and intend to consider additional acquisitions of
companies, technologies and products that we believe could accelerate our ability to compete in our core markets or
allow us to enter new markets. Acquisitions involve numerous risks, any of which could harm our business,
including:
• difficulties in integrating the operations, technologies, products, existing contracts, accounting and per-
sonnel of the target company and realizing the anticipated synergies of the combined businesses;
• difficulties in supporting and transitioning customers, if any, of the target company;
• diversion of financial and management resources from existing operations;
• the price we pay or other resources that we devote may exceed the value we realize, or the value we could
have realized if we had allocated the purchase price or other resources to another opportunity;
• risks of entering new markets in which we have limited or no experience;
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Form 10-K