Apple 2008 Annual Report Download - page 14

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Table of Contents
Patents, Trademarks, Copyrights and Licenses
The Company currently holds rights to patents and copyrights relating to certain aspects of its computer systems, iPods, iPhone, peripherals,
software, and services. In addition, the Company has registered, and/or has applied to register, trademarks and service marks in the U.S. and a
number of foreign countries for “Apple,” the Apple logo, “Macintosh,” “Mac,” “iPod,” “iTunes,” “iTunes Store,” “iPhone,” “Apple TV,”
“MobileMe” and numerous other trademarks and service marks. Although the Company believes the ownership of such patents, copyrights,
trademarks and service marks is an important factor in its business and that its success does depend in part on the ownership thereof, the
Company relies primarily on the innovative skills, technical competence, and marketing abilities of its personnel.
The Company regularly files patent applications to protect inventions arising from its research and development, and is currently pursuing
thousands of patent applications around the world. Over time, the Company has accumulated a portfolio of several thousand issued patents in the
U.S. and worldwide. In addition, the Company currently holds copyrights relating to certain aspects of its products and services. No single patent
or copyright is solely responsible for protecting the Company’s products. The Company believes the duration of the applicable patents that it has
been granted is adequate relative to the expected lives of its products. Due to the fast pace of innovation and product development, the
Company’s products are often obsolete before the patents related to them expire, and sometimes are obsolete before the patents related to them
are even granted.
Many of the Company’s products are designed to include intellectual property obtained from third parties. While it may be necessary in the
future to seek or renew licenses relating to various aspects of its products and business methods, the Company believes, based upon past
experience and industry practice, such licenses generally could be obtained on commercially reasonable terms; however, there is no guarantee
that such licenses could be obtained at all. Because of technological changes in the computer, digital music player and mobile communications
industries, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of the Company’s
products and business methods may unknowingly infringe existing patents or intellectual property rights of others. From time to time, the
Company has been notified that it may be infringing certain patents or other intellectual property rights of third parties.
Foreign and Domestic Operations and Geographic Data
The U.S. represents the Company’s largest geographic marketplace. Approximately 57% of the Company’s net sales in 2008 came from sales to
customers inside the U.S. Final assembly of the Company’s products is currently performed in the Company’s manufacturing facility in Ireland,
and by external vendors in California, the Republic of Korea (“Korea”), the People’s Republic of China (“China”) and the Czech Republic.
Currently, the supply and manufacture of many critical components is performed by sole-sourced third-party vendors in the U.S., China, Japan,
Korea, Malaysia, Philippines, Taiwan, Thailand, and Singapore. Sole-sourced third-party vendors in China perform final assembly of
substantially all of the Company’s portable products, including MacBook Pro, MacBook, MacBook Air, iPods, iPhone, and most of the
Company’s iMacs. Margins on sales of the Company’s products in foreign countries, and on sales of products that include components obtained
from foreign suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade regulations, including
tariffs and antidumping penalties.
Information regarding financial data by geographic segment is set forth in Part II, Item 8 of this Form 10-K and in Notes to Consolidated
Financial Statements at Note 9, “Segment Information and Geographic Data.”
Seasonal Business
The Company has historically experienced increased net sales in its first and fourth fiscal quarters compared to other quarters in its fiscal year
due to seasonal demand related to the holiday season and the beginning of the school year. This historical pattern should not be considered a
reliable indicator of the Company’s future net sales or financial performance.
Warranty
The Company offers a basic limited parts and labor warranty on most of its hardware products, including Mac computers, iPods and iPhones.
The basic warranty period is typically one year from the date of purchase by the
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