Motorola 2012 Annual Report Download - page 23

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be certain that any such licenses, if available at all, will be available to us on commercially reasonable terms. In some cases, we
might be forced to stop delivering certain products if we or our customer or supplier are subject to a final injunction.
We attempt to negotiate favorable intellectual property indemnities with our suppliers for infringement of third-party
intellectual property rights. However, there is no assurance that we will be successful in our negotiations or that a supplier's
indemnity will cover all damages and losses suffered by us and our customers due to the infringing products or that a supplier
will choose to accept a license or modify or replace its products with non-infringing products which would otherwise mitigate
such damages and losses. Further, we may not be able to participate in intellectual property litigation involving a supplier and
may not be able to influence any ultimate resolution or outcome that may negatively impact our sales if a court enters an
injunction that enjoins the supplier's products or if the International Trade Commission issues an exclusionary order that blocks
our products from importation into the U.S. Intellectual property disputes involving our suppliers have resulted in our
involvement in International Trade Commission proceedings from time to time. These proceedings are costly and entail the risk
that we will be subjected to a ban on the importation of our products into the U.S. solely as a result of our use of a supplier's
components.
In addition, our customers increasingly demand that we indemnify them broadly from all damages and losses resulting
from intellectual property litigation against them. These demands stem from the increasing trend of the non-practicing entities
that engage in patent enforcement and litigation targeting the end users of our products. End users are targeted so the non-
practicing entities can seek royalties and litigation judgments in proportion to the value of the use of our products, rather than
in proportion to the cost of our products. Such demands can amount to many times the selling price of our products.
Our patent and other intellectual property rights are important competitive tools and may generate income under license
agreements. We regard our intellectual property as proprietary and attempt to protect it with patents, copyrights, trademarks,
trade secret laws, confidentiality agreements and other methods. We also generally restrict access to and distribution of our
proprietary information. Despite these precautions, it may be possible for a third-party to obtain and use our proprietary
information or develop similar technology independently. In addition, effective patent, copyright, trademark and trade secret
protection may be unavailable or limited in certain foreign countries. Unauthorized use of our intellectual property rights by
third-parties and the cost of any litigation necessary to enforce our intellectual property rights could have a negative impact on
our financial results.
As we expand our business, including through acquisitions, and compete with new competitors in new markets, the
breadth and strength of our intellectual property portfolio in those new areas may not be as developed as in our longer-standing
businesses. This may expose us to a heightened risk of litigation and other challenges from competitors in these new markets.
Further, competitors may be able to negotiate significantly more favorable terms for licensed intellectual property than we are
able to, which puts them at a competitive advantage. As our products become more like commercial products, through the
adoption of industry-standard technologies, for instance, our intellectual property-related risks may increase.
We no longer own certain logos and other trademarks, trade names and service marks, including MOTOROLA, MOTO,
MOTOROLA SOLUTIONS and the Stylized M logo and all derivatives and formatives thereof (“Motorola Marks”) and we
license the Motorola Marks from Motorola Mobility, which is currently owned by Google. Our joint use of the Motorola Marks
could result in product and market confusion and negatively impact our ability to expand our business under the Motorola
brand. In addition, if we do not comply with the terms of the license agreement we could lose our rights to the Motorola Marks.
A further change of control of or bankruptcy of Motorola Mobility could result in an incompatible third-party owning the
Motorola Marks.
We have a worldwide, perpetual and royalty-free license from Motorola Mobility to use the Motorola Marks as part of our
corporate name and in connection with the manufacture, sale, and marketing of our current products and services. The license
of the Motorola Marks is important to us because of the reputation of the Motorola brand for our products and services. There
are risks associated with both Motorola Mobility and the Company using the Motorola Marks and with this loss of ownership.
As both Motorola Mobility and the Company will be using the Motorola Marks, confusion could arise in the market, including
customer and investor confusion regarding the products offered by and the actions of the two companies. This risk could
increase as both Motorola Mobility's and our products continue to converge. Also, any negative publicity associated with either
company in the future could adversely affect the public image of the other. In addition because our license of the Motorola
Marks will be limited to products and services within our specified fields of use, we will not be permitted to use the Motorola
Marks in other fields of use without the approval of Motorola Mobility. In the event that we desire to expand our business into
any other fields of use, we may need to do so with a brand other than Motorola. Developing a brand as well-known and with as
much brand equity as Motorola could take considerable time and expense. The risk of needing to develop a second brand
increases as Motorola Mobility's and our products continue to converge and as our business expands into other fields of use. In
addition, we could lose our rights to use the Motorola Marks if we do not comply with the terms of the license agreement. Such
a loss could negatively affect our business, results of operations and financial condition. Furthermore, Motorola Mobility has
the right to license the brand to third-parties and either Motorola Mobility or licensed third parties may use the brand in ways
that make the brand less attractive for customers of Motorola Solutions, creating increased risk that Motorola Solutions may