We may need to incur significant expenses to enforce our proprietary rights, and if we are unable to protect such rights, our competitive position could be harmed, especially for our online game business. for Sohu.com (SOHU)

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SOHU » Topics » We may need to incur significant expenses to enforce our proprietary rights, and if we are unable to protect such rights, our competitive position could be harmed, especially for our online game business.

These excerpts taken from the SOHU 10-K filed Feb 26, 2009.

We may need to incur significant expenses to enforce our proprietary rights, and if we are unable to protect such rights, our competitive position could be harmed, especially for our online game business.

We regard our proprietary software, domain names, trade names, copyrights, trademarks, trade secrets and other intellectual property as critical to our success. In particular, we have spent significant amounts of time and resources in developing our Sogou Pinyin and our in-house developed online game, TLBB, and our ability to protect our proprietary rights in connection with our products is critical for the success of this game and our overall financial performance. We have registered some of our software in China for copyright protection, including our Sogou Pinyin software and our TLBB software, and we have taken various measures to protect our source codes, including confidentiality agreements and segregation of source codes.

However, we cannot assure you that our measures will be sufficient to protect our proprietary information. Intellectual property rights and confidentiality protection in China may not be as effective as in the United States or other developed countries. Policing unauthorized use of proprietary technology is difficult and expensive. Any steps we have taken to prevent the misappropriation of our proprietary technology may be inadequate. The validity, enforceability and scope of protection of intellectual property in Internet-related industries are uncertain and still evolving. In particular, the laws and enforcement procedures in the PRC are uncertain and do not protect intellectual property rights in Internet-related industries to the same extent as do the laws and enforcement procedures in the United States and other developed countries.

Despite our efforts to protect our intellectual property, we cannot assure you that other companies will not copy our ideas and designs, or that any third party will not infringe our intellectual property rights. For example, certain third parties have misappropriated the source codes of previous versions of TLBB and have set up unauthorized servers in China and elsewhere to operate TLBB to compete with us. As a result, we have taken measures to enforce our intellectual property rights. However, we cannot assure you that such measures will be successful in eliminating these unauthorized servers. The existence of unauthorized servers may attract game players away from our games and may result in a decrease in our online game revenues. Litigation relating to intellectual property right may result in substantial costs to us and diversion of our resources and management attention away from our business, and may not be successful. In addition, as our ideas and designs for our online games and Sogou Pinyin are not protected by patents, other competitors may independently develop ideas and designs that compete with us.

We may need to incur significant expenses to enforce our proprietary rights, and if we are unable to protect such
rights, our competitive position could be harmed, especially for our online game business.

We regard our proprietary software, domain names, trade
names, copyrights, trademarks, trade secrets and other intellectual property as critical to our success. In particular, we have spent significant amounts of time and resources in developing our Sogou Pinyin and our in-house developed online game,
TLBB, and our ability to protect our proprietary rights in connection with our products is critical for the success of this game and our overall financial performance. We have registered some of our software in China for copyright protection,
including our Sogou Pinyin software and our TLBB software, and we have taken various measures to protect our source codes, including confidentiality agreements and segregation of source codes.

STYLE="margin-top:12px;margin-bottom:0px">However, we cannot assure you that our measures will be sufficient to protect our proprietary information. Intellectual property rights and confidentiality protection in
China may not be as effective as in the United States or other developed countries. Policing unauthorized use of proprietary technology is difficult and expensive. Any steps we have taken to prevent the misappropriation of our proprietary technology
may be inadequate. The validity, enforceability and scope of protection of intellectual property in Internet-related industries are uncertain and still evolving. In particular, the laws and enforcement procedures in the PRC are uncertain and do not
protect intellectual property rights in Internet-related industries to the same extent as do the laws and enforcement procedures in the United States and other developed countries.

FACE="Times New Roman" SIZE="2">Despite our efforts to protect our intellectual property, we cannot assure you that other companies will not copy our ideas and designs, or that any third party will not infringe our intellectual property rights. For
example, certain third parties have misappropriated the source codes of previous versions of TLBB and have set up unauthorized servers in China and elsewhere to operate TLBB to compete with us. As a result, we have taken measures to enforce our
intellectual property rights. However, we cannot assure you that such measures will be successful in eliminating these unauthorized servers. The existence of unauthorized servers may attract game players away from our games and may result in a
decrease in our online game revenues. Litigation relating to intellectual property right may result in substantial costs to us and diversion of our resources and management attention away from our business, and may not be successful. In addition, as
our ideas and designs for our online games and Sogou Pinyin are not protected by patents, other competitors may independently develop ideas and designs that compete with us.

FACE="Times New Roman" SIZE="2">We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us, materially disrupt our business.

We cannot be certain that our products, services and intellectual property used in our normal course of business do not or will not infringe valid
patents, copyrights or other intellectual property rights held by third parties. We have in the past been, are currently, and may in the future be, subject to claims and legal proceedings relating to the intellectual property of others in the
ordinary course of our business. In particular, if we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, may be ordered to pay a fine and may incur licensing fees or be
forced to develop alternatives. We may incur substantial expenses in defending against these third party infringement claims, regardless of their merit. Successful infringement claims against us may result in substantial monetary liability or may
materially disrupt the conduct of our business by restricting or prohibiting our use of the intellectual property in question. For example, during 2006 five United States movie companies commenced a lawsuit against us in the PRC alleging that a
movie download service we had been providing infringed their copyrights in the movies. In December 2006, the court decided the case against us, and ordered us to pay damages of approximately $138,000 to the U.S. movie companies. In addition, in 2007
a writer brought a lawsuit against in China claiming that we violated his copyright to 190 SMS messages in 2007. The Chinese court decided the case against us, and we paid damages of approximately $13,000 to the writer. In addition, we provide
search engine facilities capable of locating and accessing links to download MP3 music, movies, images and other multimedia files and/or other content hosted on third party Websites, which may be protected by copyright law. In March 2008, we were
sued by four major record companies, Sony BMG, Warner, Universal and Gold Label, which alleged that we provided music search links and download services that violated copyrights they owned. As of December 31, 2008, the lawsuits with these four
record companies were still in process.

EXCERPTS ON THIS PAGE:

10-K (2 sections)	Feb 26, 2009

Sohu.com (SOHU)

SOHU » Topics » We may need to incur significant expenses to enforce our proprietary rights, and if we are unable to protect such rights, our competitive position could be harmed, especially for our online game business.

EXCERPTS ON THIS PAGE:

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