Yahoo 2011 Annual Report Download - page 21

We are, and may in the future be, subject to intellectual property infringement or other third-party 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, 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. In addition, patent holding companies may continue to seek to monetize patents
they have purchased or otherwise obtained. As a result, disputes regarding the ownership of technologies and
rights associated with online businesses 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 a number of 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, violation of federal or state statutes or other claims, including alleged violation of
international statutory and common law. In addition, third parties have made, and may continue to make,
infringement and related claims against us over the display of content or search results triggered by search terms,
including the display of advertising, that include trademark terms. Currently, we are engaged in lawsuits
regarding such intellectual property issues.
As we expand our business and develop new technologies, products and services, we may become increasingly
subject to intellectual property infringement claims, including those that may arise under international laws. 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, or be required to enter into costly royalty or licensing agreements
or be prevented from using such rights, which could require us to change our business practices in the future,
hinder us from offering certain features, functionalities, products or services, require us to develop non-infringing
products or technologies, and limit our ability to compete effectively. We may also incur substantial expenses in
defending against third-party 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 some types of third-party intellectual property
infringement claims, which could increase our costs in defending such claims and our damages. Furthermore,
such customers and Affiliates may discontinue the use of our products, services, and technologies either as a
result of injunctions or otherwise. The occurrence of any of these results could harm our brands or have an
adverse effect on our business, financial position, operating results, and cash flows.
We are subject to a variety of new and existing U.S. and foreign government laws and regulations which could
subject us to claims, judgments, monetary liabilities and other remedies, and to limitations on our business
practices.
We are subject to laws and regulations directly applicable to providers of Internet, mobile, and voice over
Internet protocol, or VOIP, services both domestically and internationally. The application of existing domestic
and international laws and regulations to us relating to issues such as user privacy and data protection, security,
defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, billing, real estate, consumer
protection, accessibility, content regulation, quality of services, law enforcement demands, telecommunications,
mobile, television, 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 us 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
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