Motorola 2012 Annual Report Download - page 22

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Our ability to meet customers' demands depends, in part, on our ability to obtain timely and adequate delivery of quality
materials, parts and components from our suppliers. If demand for our products increases from our current expectations or if
suppliers are unable to meet our demand for other reasons, including as a result of natural disasters or financial issues, we could
experience shortages. We have experienced shortages in the past that have negatively impacted our results of operations and
may experience such shortages in the future.
Furthermore, certain of our components are available only from a single source or limited sources. We may not be able to
diversify sources in a timely manner. A reduction or interruption in supplies or a significant increase in the price of supplies
could have a negative impact on our business. In addition, our current contractual arrangements with certain suppliers may be
cancelled or not extended by such suppliers and, therefore, not afford us with sufficient protection against a reduction or
interruption in supplies. Moreover, in the event any of these single source or limited source suppliers breach their contracts with
us, our legal remedies associated with such a breach may be insufficient to compensate us for any damages we may suffer.
We rely on complex information technology systems and networks to operate our business. Any significant system or network
disruption, including as a result of third-party attacks, could have a negative impact on our operations, sales and operating
results.
We rely on the efficient and uninterrupted operation of complex information technology systems and networks, some of
which are within the Company and some of which are outsourced, including to India. All information technology systems are
potentially vulnerable to damage or interruption from a variety of sources, including but not limited to computer viruses,
security breach, energy blackouts, natural disasters, terrorism, war and telecommunication failures. As a provider of high
technology emergency response systems, we face additional risk as a target of sophisticated attacks aimed at compromising our
intellectual property and our customer information, referred to as advanced persistent threats. We implemented a number of
significant business systems upgrades in 2012 and plan to implement a number of additional significant business systems
upgrades in 2013 which, if defective or improperly installed or implemented may result in a business disruption. In addition,
we currently rely on a number of older legacy information systems that are harder to maintain. A system failure or security
breach could negatively impact our operations and financial results. We may incur additional costs to remedy the damages
caused by these disruptions or security breaches.
There has been a sharp increase in laws in Europe, the U.S. and elsewhere imposing requirements for the handling of
personal data, including data of employees, consumers and business contacts. There is a risk that failures in systems designed to
protect private, personal or proprietary data held by us will allow such data to be disclosed to or seen by others, resulting in
application of regulatory penalties, enforcement actions, remediation obligations and/or private litigation by parties whose data
were improperly disclosed. There is also a risk that our Company (directly or as the result of some third-party service provider
we use) could be found to have failed to comply with the laws or regulations of some country regarding the collection, consent,
handling, transfer, or disposal of such personal data, and therefore subject the Company to fines or other sanctions, as well as
adverse reputational impact.
We face many risks relating to intellectual property rights.
Our business will be harmed if: (i) we, our customers and/or our suppliers are found to have infringed intellectual
property rights of third-parties, (ii) the intellectual property indemnities in our supplier agreements are inadequate to cover
damages and losses due to infringement of third-party intellectual property rights by supplier products, (iii) we are required to
provide broad intellectual property indemnities to our customers, (iv) our intellectual property protection is inadequate to
protect against threats of misappropriation from internal or external sources or otherwise inadequate to protect our proprietary
rights, or (v) our competitors negotiate significantly more favorable terms for licensed intellectual property. We may be harmed
if we are forced to make publicly available, under the relevant open-source licenses, certain internally developed software-
related intellectual property as a result of either our use of open-source software code or the use of third-party software that
contains open-source code.
Since our products are comprised of complex technology, much of which we acquire from suppliers through the purchase
of components or licensing of software, we are often involved in or impacted by assertions, including both requests for licenses
and litigation, regarding patent and other intellectual property rights. Third-parties have asserted, and in the future may assert,
intellectual property infringement claims against us and against our customers and suppliers. These assertions against us, and
our customers and suppliers have been increasing as the complexity of our products has increased. Many of these assertions are
brought by non-practicing entities whose principle business model is to secure patent licensing-based revenue from product
manufacturing companies. The patent holders often make broad and sweeping claims regarding the applicability of their patents
to our products, seeking a percentage of sales as licenses fees, seeking injunctions to pressure us into taking a license, or a
combination thereof. Defending claims may be expensive and divert the time and efforts of our management and employees.
Increasingly, third-parties have sought broad injunctive relief which could limit our ability to sell our products in the U.S. or
elsewhere with intellectual property subject to the claims. If we do not succeed in any such litigation, we could be required to
expend significant resources to pay damages, develop non-infringing products or to obtain licenses to the intellectual property
that is the subject of such litigation, each of which could have a negative impact on our financial results. However, we cannot