Yahoo 2014 Annual Report Download - page 24

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.
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 12—“Commitments and Contingencies” in the Notes to our consolidated financial statements.
On May 15, 2013, the Superior Court of Justice for the Federal District of Mexico reversed a judgment
of U.S. $2.75 billion that had been entered against us 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. On
January 14, 2015, the plaintiffs’ appeal of that decision was denied. On February 16, 2015, the plaintiffs
filed a petition for review by the Supreme Court of Mexico, where review is limited to constitutional
questions under Mexican law. We believe there is no basis for such review in the matter; however, we
cannot assure the ultimate outcome of the matter. If we are ultimately 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.
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
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