REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

4.4 LEGAL RISKS
4.4.1 Risks relating to the Group’s relations with the incumbent operator
4. RISK FACTORS
4.4 LEGAL RISKS
Despite the legal and regulatory framework requiring the incumbent operator, France Télécom, to permit the
development of local loop unbundling and to grant the Group access to its installations, the Group may be
confronted by situations where there is a conflict of interest with France Télécom as its dominant competitor and
principal supplier. France Télécom could exercise significant influence over the Group’s operations and strategy,
with potentially adverse effects, and could also restrict its capacity for growth.
The Group’s profitability depends in part on the pricing and technical conditions established by France Télécom
in its Reference Interconnect Offer (revised each year) and in its Reference Unbundling Offer (revised from time
to time). Any significant increase in the prices or change in the technical conditions set out in the Reference
Interconnect Offer or the Reference Unbundling Offer, as approved by the French telecommunications regulatory
authority, ARCEP, could have a material adverse effect on the Group’s business, financial position and results of
operations and its ability to meet its objectives.
4.4.2 Risks relating to liability for content
In the past, a number of suits have been filed in France and other countries against Internet service or hosting
providers because of the content of the information transmitted or made available online (in particular for pressrelated
violations, invasion of privacy and trademark infringement). Free, Online and Dedibox may be subject to
similar suits and could incur significant costs in order to defend themselves against such claims. Analysis of the
claims and the preparation of an appropriate defense could prove to be costly even if Free, Online or Dedibox
were not ultimately held liable. Finally, any such proceedings could have an adverse effect on the Group’s
reputation.
According to French rules and regulations as further described in paragraph 6.6.2 hereinafter, the Group has
placed forms on the Free portal home page which can be used to report unlawful content, and has established a
procedure for reporting any violation of human dignity, so that web users can report any illegal content and Free
can respond promptly to any complaints.
4.4.3 Risks relating to intellectual property rights
The Group can provide no assurance that measures taken in France and abroad to protect its intellectual property
rights, particularly its trademarks, logos and domain names, will be effective or that third parties will not infringe
or misappropriate its intellectual property rights. Furthermore, given the worldwide reach of the Internet, the
Group’s trademarks – particularly Iliad, Free, and ANNU – and other forms of intellectual property, could be
distributed in countries offering less intellectual property protection than European countries or the United States.
Given the importance for the Group of the recognition of its trademarks, any infringement or misappropriation of
this kind could adversely affect the Group’s business, results of operations, financial position and its ability to
meet its objectives.
Furthermore, certain of the Group’s trademarks (particularly Free and Online) co-exist with other identical
trademarks registered by third parties for similar telecommunications services.
Due to this situation, it is likely that the Group will be required, in the long-term, to co-exist on its market with
trademarks similar to its own. There is a risk that this co-existence could result in a dilution of these trademarks
on the market, which could adversely affect the Group’s business, results of operations and financial position and
its ability to meet its objectives.
Lastly, given the hi-tech nature of the Group’s business, it can provide no assurance that it is not infringing the
intellectual property rights of third parties. This is an inherent risk for all operators in the telecommunications,
audiovisual and Internet sectors and is typically resolved through licensing agreements with the holders of the
relevant intellectual property rights.
The Group undertakes all necessary measures to ensure that intellectual property rights – particularly concerning
trademarks – are respected, and there are no significant claims or legal proceedings in progress concerning such
rights.
Iliad – Registration Document 2007 - 9