Yahoo 2012 Annual Report Download - page 30

Our business depends on a strong brand, and failing to maintain or enhance the Yahoo! brands in a cost-
effective manner could harm our operating results.
Maintaining and enhancing our brands is an important aspect of our efforts to attract and expand our user,
advertiser, and Affiliate base. We believe that the importance of brand recognition will increase due to the
relatively low barriers to entry in certain portions of the Internet market. Maintaining and enhancing our brands
will depend largely on our ability to provide high-quality, innovative products and services, which we might not
do successfully. We have spent and expect to spend considerable money and resources on the establishment and
maintenance of our brands, as well as advertising, marketing, and other brand-building efforts to preserve and
enhance consumer awareness of our brands. Our brands may be negatively impacted by a number of factors such
as service outages, product malfunctions, data protection and security issues, exploitation of our trademarks by
others without permission, and poor presentation or integration of our search marketing offerings by Affiliates on
their sites or in their software and services.
Further, while we attempt to ensure that the quality of our brands is maintained by our licensees, our licensees
might take actions that could impair the value of our brands, our proprietary rights, or the reputation of our
products and media properties. If we are unable to maintain or enhance our brands in a cost-effective manner, or
if we incur excessive expenses in these efforts, our business, operating results and financial condition could be
harmed.
Our intellectual property rights are valuable, and any failure or inability to sufficiently protect them could
harm our business and our operating results.
We create, own, and maintain a wide array of copyrights, patents, trademarks, trade dress, trade secrets, rights to
domain names and other intellectual property assets which we believe are collectively among our most valuable
assets. We seek to protect our intellectual property assets through patent, copyright, trade secret, trademark, and
other laws of the U.S. and other countries of the world, and through contractual provisions. However, the efforts
we have taken to protect our intellectual property and proprietary rights might not be sufficient or effective at
stopping unauthorized use of those rights. Protection of the distinctive elements of Yahoo! might not always be
available under copyright law or trademark law, or we might not discover or determine the full extent of any
unauthorized use of our copyrights and trademarks in order to protect our rights. In addition, effective trademark,
patent, copyright, and trade secret protection might not be available or cost-effective in every country in which
our products and media properties are distributed or made available through the Internet. Changes in patent law,
such as changes in the law regarding patentable subject matter, could also impact our ability to obtain patent
protection for our innovations. In particular, recent amendments to the U.S. patent law may affect our ability to
protect our innovations and defend against claims of patent infringement. Further, given the costs of obtaining
patent protection, we might choose not to protect (or not to protect in some jurisdictions) certain innovations that
later turn out to be important. There is also a risk that the scope of protection under our patents may not be
sufficient in some cases or that existing patents may be deemed invalid or unenforceable. To help maintain our
trade secrets, we have entered into confidentiality agreements with most of our employees and contractors, and
confidentiality agreements with many of the parties with whom we conduct business, in order to limit access to
and disclosure of our proprietary information. If these confidentiality agreements are breached it could
compromise our trade secrets and cause us to lose any competitive advantage provided by those trade secrets.
If we are unable to protect our proprietary rights from unauthorized use, the value of our intellectual property
assets may be reduced. 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.
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