Kodak 2010 Annual Report Download - page 12

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If we cannot continue to license or enforce the intellectual property rights on which our business depends, or if third
parties assert that we violate their intellectual property rights, our revenue, earnings, expenses and liquidity may be
adversely impacted.
We rely upon patent, copyright, trademark and trade secret laws in the United States and similar laws in other countries, and non-
disclosure, confidentiality and other types of agreements with our employees, customers, suppliers and other parties, to establish,
maintain and enforce our intellectual property rights. Despite these measures, any of our direct or indirect intellectual property rights
could, however, be challenged, invalidated, circumvented, infringed or misappropriated, or such intellectual property rights may not
be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could
result in costly product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of
certain countries do not protect proprietary rights to the same extent as the laws of the United States. Therefore, in certain
jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized third party copying,
infringement or use, which could adversely affect our competitive position. Also, because of the rapid pace of technological change
in the information technology industry, much of our business and many of our products rely on key technologies developed or
licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at
all or on reasonable terms.
We have made substantial investments in new, proprietary technologies and have filed patent applications and obtained patents to
protect our intellectual property rights in these technologies as well as the interests of our licensees. There can be no assurance that
our patent applications will be approved, that any patents issued will adequately protect our intellectual property or that such patents
will not be challenged by third parties.
The execution and enforcement of licensing agreements protects our intellectual property rights and provides a revenue stream in
the form of up-front payments and royalties that enables us to further innovate and provide the marketplace with new products and
services. Our ability to execute our intellectual property licensing strategies, including litigation strategies, such as our legal actions
against Apple Inc. and Research in Motion Limited, could also affect our revenue and earnings. Additionally, the uncertainty around
the timing, outcome and magnitude of our intellectual property-related litigation (including our legal action against Apple Inc. and
Research in Motion Limited before the International Trade Commission), judgments and settlements could have an adverse effect on
our financial results and liquidity. Our failure to develop and properly manage new intellectual property could adversely affect our
market positions and business opportunities. Furthermore, our failure to identify and implement licensing programs, including
identifying appropriate licensees, could adversely affect the profitability of our operations.
In addition, third parties may claim that we, our customers, licensees or other parties indemnified by us are infringing upon their
intellectual property rights. Such claims may be made by competitors seeking to block or limit our access to digital markets.
Additionally, in recent years, individuals and groups have begun purchasing intellectual property assets for the sole purpose of
making claims of infringement and attempting to extract settlements from large companies like ours. Even if we believe that the
claims are without merit, the claims can be time consuming and costly to defend and distract management’s attention and resources.
Claims of intellectual property infringement also might require us to redesign affected products, enter into costly settlement or license
agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling
certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to
uphold its contractual obligations. If we cannot or do not license the infringed technology at all, license the technology on reasonable
terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted. Finally, we use
open source software in connection with our products and services. Companies that incorporate open source software into their
products have, from time to time, faced claims challenging the ownership of open source software and/or compliance with open
source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source
software or noncompliance with open source licensing terms. Some open source software licenses require users who distribute open
source software as part of their software to publicly disclose all or part of the source code to such software and/or make available
any derivative works of the open source code on unfavorable terms or at no cost. Any requirement to disclose our source code or
pay damages for breach of contract could be harmful to our business results of operations and financial condition.
Due to the nature of the products we sell and our worldwide distribution, we are subject to changes in currency exchange
rates, interest rates and commodity costs that may adversely impact our results of operations and financial position.
As a result of our global operating and financing activities, we are exposed to changes in currency exchange rates and interest rates,
which may adversely affect our results of operations and financial position. Exchange rates and interest rates in markets in which we
do business tend to be volatile and at times, our sales can be negatively impacted across all of our segments depending upon the
value of the U.S. dollar, the Euro and other major currencies. In addition, our products contain silver, aluminum, petroleum based or
other commodity-based raw materials, the prices of which have been and may continue to be volatile. If the global economic
situation remains uncertain or worsens, there could be further volatility in changes in currency exchange rates, interest rates and
commodity prices, which could have negative effects on our revenue and earnings.