America Online 2014 Annual Report Download - page 38

These claims, whether meritorious or not, may result in litigation, may be time-consuming and costly to resolve,
and may require expensive changes in our methods of doing business and/or our content, products and services.
These intellectual property infringement claims may require us to enter into royalty or licensing agreements on
unfavorable terms or to incur substantial monetary liability. Additionally, these claims may result in our being
enjoined preliminarily or permanently from further use of certain intellectual property and/or our content,
products and services, or may require us to cease or significantly alter certain of our operations. The occurrence
of any of these events as a result of these claims could result in substantially increased costs, could limit or
reduce the number of our offerings to consumers, advertisers, publishers and AOL subscribers, could stifle
innovation or otherwise adversely affect our business.
Some of our commercial agreements may require us to indemnify third parties against intellectual property
infringement claims, which may require us to use substantial resources to defend against or settle such claims or,
potentially, to pay damages. These third parties may also discontinue the use of our products, services, and
technologies, as a result of injunctions or otherwise, which could result in loss of revenues and adversely impact
our business. Additionally, we may be exposed to liability or substantially increased costs if a commercial
partner does not honor its contractual obligation to indemnify us for intellectual property infringement claims
made by third parties or if any amounts received are not adequate to cover our liabilities or the costs associated
with defense of such claims. The occurrence of any of these events could adversely affect our business.
As a publisher of original content and aggregator of third party content, we also face risks of periodic tort
claims such as defamation or improper use of publicity rights, as well as infringement claims such as plagiarism.
Whether or not they have merit, these claims may be time-consuming or costly to resolve.
The misappropriation, release, loss or misuse of AOL, consumer or other data could adversely affect our
business.
Our operations utilize significant amounts of data about our business, consumers, AOL subscribers and our
advertising and publishing partners in order to deliver our content, products and services and our advertising
solutions. Although we take measures to protect against unauthorized intrusion into such data, the
misappropriation, release, loss or misuse of this data, whether by accident, omission or as the result of criminal
activity, sabotage or espionage, hacking, computer viruses, natural disasters, terrorism, equipment failure or other
events, could lead to negative publicity, harm to our reputation, customer dissatisfaction, regulatory enforcement
actions or individual or class-action lawsuits or significant expenditures to recover the data or protect data from
similar releases in the future, and may otherwise adversely affect our business. With respect to our AOL
subscribers, if we or other companies experience any unauthorized intrusion into subscribers’ or customers’ data,
our subscribers may not be willing to provide the information necessary for them to continue their subscription,
and our business could be adversely affected. Additionally, many of our subscribers pay by credit or debit card.
Data breaches at other companies have resulted and could in the future result in card cancellations of some of our
subscribers. To the extent we do not receive updated payment information for these subscribers, the rate of our
subscriber base decline could increase. Furthermore, as not all of our systems are fully redundant, some data or
systems might not be recoverable in a catastrophic event or other significant service disruption.
New or existing federal, state or international laws or regulations or industry self-regulatory principles
applicable to our business or the lack of regulations could subject us to claims or otherwise adversely affect
our business.
Our business is subject to a variety of federal, state and international laws and regulations and industry self-
regulatory principles, including those with respect to consumer privacy, advertising generally, consumer
protection, content regulation, network neutrality, cyber security, data protection, intellectual property (including
copyright, patent, trademark and trade secret laws), defamation, child protection, advertising to and collecting
information from children, taxation, employment classification, billing, subpoena and warrant processes and
others. These laws, regulations and principles and the interpretation or application of these laws, regulations and
principles could change. In addition, new laws, regulations or principles affecting our business could be enacted.
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