Yahoo 2006 Annual Report Download - page 30

We are, and may in the future be, subject to intellectual property infringement claims, which are costly to
defend, could result in significant damage awards, and could limit our ability to provide certain content or
use certain technologies in the future.
Internet, technology, media companies and patent holding companies often possess a significant number of patents.
Further, many of these companies and other parties are actively developing or purchasing search, indexing,
electronic commerce and other Internet-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, third parties have made, and may continue to make, trademark
infringement and related claims against us over the display of search results triggered by search terms that include
trademark terms.
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 increase our costs in defending such claims and our damages. The occurrence of
any of these results could harm our brand and negatively impact our operating results.
We are subject to United States and foreign government regulation of Internet, mobile, and Voice over Inter-
net Protocol services which could subject us to claims and remedies including monetary liabilities and limi-
tations on our business practices.
We are subject to regulations and laws directly applicable to providers of Internet, mobile, and Voice over Internet
Protocol services both domestically and internationally. The application of existing domestic and international laws
and regulations to Yahoo! relating to issues such as user privacy and data protection, defamation, pricing,
advertising, taxation, gambling, sweepstakes, promotions, billing, real estate, consumer protection, content
regulation, quality of services, telecommunications, mobile and intellectual property ownership and infringement
in many instances is unclear or unsettled. In addition, we will also be subject to any new laws and regulations
directly applicable to our domestic and international activities. Further, the application of existing laws to Yahoo!
or our subsidiaries regulating or requiring licenses for certain businesses of our advertisers including, for example,
distribution of pharmaceuticals, alcohol, adult content, tobacco or firearms, as well as insurance and securities
brokerage and legal services, can be unclear. Internationally, we may also be subject to domestic laws regulating
our activities in foreign countries and to foreign laws and regulations that are inconsistent from country to country.
We may incur substantial liabilities for expenses necessary to comply with these laws and regulations or penalties
for any failure to comply. Compliance with these laws and regulations may also cause us to change or limit our
business practices in a manner adverse to our business.
A number of U.S. federal laws, including those referenced below, impact our business. The Digital Millennium
Copyright Act (“DMCA”) is intended, in part, to limit the liability of eligible online service providers for listing or
linking to third-party websites that include materials that infringe copyrights or other rights of others. Portions of
the Communications Decency Act (“CDA”) are intended to provide statutory protections to online service providers
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