Yahoo 2012 Annual Report Download - page 31

We are regularly involved in claims, suits, government investigations, and other proceedings that may result in
adverse outcomes.
We are regularly involved in claims, suits, government investigations, and proceedings arising from the ordinary
course of our business, including actions with respect to intellectual property claims, privacy, consumer
protection, information security, data protection or law enforcement matters, tax matters, labor and employment
claims, commercial claims, as well as actions involving content generated by our users, stockholder derivative
actions, purported class action lawsuits, and other matters. Such claims, suits, government investigations, and
proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the
outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion of
management and other personnel, and other factors. In addition, it is possible that a resolution of one or more
such proceedings could result in reputational harm, liability, penalties, or sanctions, as well as judgments,
consent decrees, or orders preventing us from offering certain features, functionalities, products, or services, or
requiring a change in our business practices, products or technologies, which could in the future materially and
adversely affect our business, operating results, and financial condition. See Note 11—“Commitments and
Contingencies” in the Notes to the consolidated financial statements.
On November 28, 2012, the 49th Civil Court of the Federal District of Mexico City entered a non-final judgment
of U.S. $2.75 billion against the Company and our subsidiary, Yahoo! Mexico, in a lawsuit brought by plaintiffs
Worldwide Directories S.A. de C.V. and Ideas Interactivas, S.A. de C.V. We believe the plaintiffs’ claims are
without legal or factual merit and the Company and Yahoo! Mexico have filed appeals from the judgment. We do
not believe that it is probable the judgment will be sustained on appeal, and accordingly, we have not recorded an
accrual for the judgment. The Company cannot predict the timing of a decision or assure the ultimate outcome of
the appeals. The Company intends to vigorously pursue all of its appeals. If all of our appeals are ultimately
unsuccessful, however, and we are required to pay all or a significant portion of the judgment, together with any
potential additional damages, interests and costs, it would have a material adverse effect on our financial
condition, results of operations and cash flows. We will also be required to record an accrual for the judgment if
we should determine in the future that it is probable that we will be required to pay the judgment.
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.
As we expand our business and develop new technologies, products and services, we may become increasingly
subject to intellectual property infringement and other 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
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