Yahoo 2004 Annual Report Download - page 22

sufficient or effective. In addition, effective trademark, patent, copyright, and trade secret protection may not be available
in every country in which our products and media properties are distributed or made available through the Internet.
Further, while we attempt to ensure that the quality of our brand is maintained by our licensees, our licensees may take
actions that could impair the value of our brand, our proprietary rights or the reputation of our products and media
properties. We are aware that third parties have, from time to time, copied significant content available on Yahoo! for use
in competitive Internet services. Protection of the distinctive elements of Yahoo! may not be available under copyright
law. If we are unable to protect our proprietary rights from unauthorized use, the value of our brand image may be
reduced. Any impairment of our brand could negatively impact our business. In addition, protecting our intellectual
property and other proprietary rights is expensive and time consuming. Any increase in the unauthorized use of our
intellectual property could make it more expensive to do business and consequently harm our operating results.
We rely on the value of the Yahoo! brand, and a failure to maintain or enhance the Yahoo! brand in a cost effective manner could
harm our operating results.
We believe that maintaining and expanding the Yahoo! brand is an important aspect of our efforts to attract and expand
our user and advertiser base. We also believe that the importance of brand recognition will increase due to the relatively
low barriers to entry. We have spent considerable money and resources to date on the establishment and maintenance of
the Yahoo! brands. We will spend increasing amounts of money on, and devote greater resources to advertising, market-
ing and other brand-building efforts to preserve and enhance consumer awareness of the Yahoo! brands. We may not be
able to successfully maintain or enhance consumer awareness of the Yahoo! brands and, even if we are successful in our
branding efforts, such efforts may not be cost-effective. If we are unable to maintain or enhance customer awareness of
the Yahoo! brands in a cost effective manner, our business, operating results and financial condition would be harmed.
We are, and may in the future be, subject to intellectual property infringement claims, which are costly to defend, could result in
damage awards, and could limit our ability to provide certain content or use certain technologies in the future.
Internet, technology and media companies often hold a significant number of patents. Further, many of these companies
and other parties are actively developing search, indexing, electronic commerce and other Web-related technologies, as
well as a variety of online business models and methods. We believe that these parties will continue to take steps to
protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding the
ownership of technologies and rights associated with online business are likely to continue to arise in the future. From
time to time, parties assert patent infringement claims against us. Currently, we are engaged in several lawsuits regarding
patent issues and have been notified of a number of other potential disputes.
In addition to patent claims, third parties have asserted, and are likely in the future to assert, claims against us alleging
infringement of copyrights, trademark rights, trade secret rights or other proprietary rights, or alleging unfair competition
or violations of privacy rights or failure to maintain confidentiality of user data. Currently, our subsidiary LAUNCH
Media, Inc. (‘‘LAUNCH’’) is engaged in a lawsuit regarding copyright issues that commenced prior to our acquisition of
LAUNCH. In addition, Overture Services Inc. (‘‘Overture’’) is in litigation involving claims that allowing advertisers to
bid on certain search terms and Overture’s display of search results triggered by those search terms constitutes trademark
infringement. A court in France recently held Overture SARL and Overture liable for displaying search results triggered
by certain trademarked keywords. Overture SARL has appealed, and Overture intends to appeal, this decision.
As we expand our business and develop new technologies, products and services, we may become increasingly subject to
intellectual property infringement claims. In the event that there is a determination that we have infringed third-party
proprietary rights such as patents, copyrights, trademark rights, trade secret rights or other third party rights such as
publicity and privacy rights, we could incur substantial monetary liability, be required to enter into costly royalty or
licensing agreements or be prevented from using the rights, which could require us to change our business practices in
the future and limit our ability to compete effectively. We may also incur substantial expenses in defending against third-
party infringement claims regardless of the merit of such claims. In addition, many of our agreements with our customers
or affiliates require us to indemnify them for certain third-party intellectual property infringement claims, which could
16