Risks and Uncertainties

3 Months Ended

Mar. 31, 2013

Risks and Uncertainties [Abstract]

Risks and Uncertainties

Note 9—Risks and Uncertainties

(a)	New legislation, regulations or rulings that impact the patent enforcement process or the rights of patent holders, could negatively affect the Company’s current business model. For example, limitations on the ability to bring patent enforcement claims, limitations on potential liability for patent infringement, lower evidentiary standards for invalidating patents, increases in the cost to resolve patent disputes and other similar developments could negatively affect the Company’s ability to assert its patent or other intellectual property rights.
(b)	As part of the Company’s ongoing legal proceedings, the validity and/or enforceability of the patents is often challenged in a court or administrative proceeding. Several of the Company’s patents are being challenged in several jurisdictions. In particular, on March 15, 2012, Google submitted a request to the USPTO for ex parte reexamination of U.S. Patent No. 6,314,420. On July 18, 2012, the USPTO issued a determination ordering a reexamination. On September 25, 2012, the USPTO issued a first, non-final office action where it adopted the rejections proposed by Google. The Company's response was filed on November 26, 2012. A final, appealable office action maintaining the rejections was mailed on May 3, 2013. The Company has until July 3, 2013 to file a response or a notice of appeal to the Patent Trial and Appeal Board. On November 28, 2012, Google submitted a request to the USPTO for ex parte reexamination of U.S. Patent No. 6,775,664. On January 17, 2013, the USPTO issued a determination ordering a reexamination, but found that three of the prior art references identified by Google were not considered prior art to the 6,775,664 patent. Google filed a second reexamination request of that patent on February 8, 2013. On March 7, 2013, the USPTO issued a determination ordering a reexamination based on the three additional references. The Company believes its patents are both valid and enforceable.
(c)	Financial instruments which potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable. The Company maintains its cash, cash equivalents and short-term investments with various major financial institutions. These major financial institutions are located in the United States, Germany and Israel, and the Company’s policy is designed to limit exposure to any one institution.
(d)	A portion of the Company’s expenses are denominated in NIS, British Pound and Euro. If the value of the U.S. dollar weakens against the value of these currencies, there will be a negative impact on the Company’s operating costs. In addition, the Company is subject to the risk of exchange rate fluctuations to the extent it holds monetary assets and liabilities in these currencies.