Electronic Arts 2016 Annual Report Download - page 103

Annual Report
purchased or otherwise obtained. Although we take steps to avoid knowingly violating the intellectual property
rights of others, it is possible that third parties still may claim infringement. In addition, our products often utilize
complex, cutting-edge technology that may be subject to intellectual property claims.
Existing or future infringement claims against us, whether valid or not, may be time consuming and expensive to
defend. Such claims or litigations could require us to pay damages and other costs, stop selling the affected
products, redesign those products to avoid infringement, or obtain a license, all of which could be costly and
harm our business. In addition, many patents have been issued that may apply to potential new modes of
delivering, playing or monetizing game software products and services, such as those that we produce or would
like to offer in the future. We may discover that future opportunities to provide new and innovative modes of
game play and game delivery to consumers may be precluded by existing patents that we are unable to license on
reasonable terms.
From time to time we may become involved in other legal proceedings, which could adversely affect us.
We are currently, and from time to time in the future may become, subject to legal proceedings, claims, litigation
and government investigations or inquiries, which could be expensive, lengthy, and disruptive to normal business
operations. In addition, the outcome of any legal proceedings, claims, litigation, investigations or inquiries may
be difficult to predict and could have a material adverse effect on our business, operating results, or financial
condition.
Acquisitions, investments, divestitures and other strategic transactions could result in operating difficulties
and other negative consequences.
We may make acquisitions or enter into other strategic transactions including (1) acquisitions of companies,
businesses, intellectual properties, and other assets, (2) minority investments in strategic partners, and
(3) investments in new interactive entertainment businesses as part of our long-term business strategy. These
transactions involve significant challenges and risks including that the transaction does not advance our business
strategy, that we do not realize a satisfactory return on our investment, that we acquire unknown liabilities,
diversion of management’s attention from our other businesses, the incurrence of debt, contingent liabilities or
amortization expenses, write-offs of goodwill, intangibles, or acquired in-process technology, or other increased
cash and non-cash expenses. In addition, we may not integrate these businesses successfully, including
experiencing difficulty in the integration of business systems and technologies, the integration and retention of
new employees, or in the maintenance of key business and customer relationships. These events could harm our
operating results or financial condition. We also may divest or sell assets or a business and we may have
difficulty selling such assets or business on acceptable terms in a timely manner. This could result in a delay in
the achievement of our strategic objectives, cause us to incur additional expense, or the sale of such assets or
business at a price or on terms that are less favorable than we anticipated.
Our products and brands are subject to the threat of piracy, unauthorized copying and other forms of
intellectual property infringement.
We regard our products and brands as proprietary and take measures to protect our products, brands and other
confidential information from infringement. We are aware that some unauthorized copying of our products and
brands occurs, and if a significantly greater amount were to occur, it could negatively impact our business.
Piracy and other forms of unauthorized copying and use of our content and brands are persistent problems for us,
and policing is difficult. Further, the laws of some countries in which our products are or may be distributed
either do not protect our products and intellectual property rights to the same extent as the laws of the United
States, or are poorly enforced. Legal protection of our rights may be ineffective in such countries. In addition,
although we take steps to enforce and police our rights, factors such as the proliferation of technology designed
to circumvent the protection measures used in our products, the availability of broadband access to the Internet,
the refusal of Internet service providers or platform holders to remove infringing content in certain instances, and
the proliferation of online channels through which infringing product is distributed all have contributed to an
expansion in unauthorized copying of our products and brands.
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