Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 31

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1A
Chunk 31
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 and service offerings become more technologically advanced, and with heightened regulatory expectations for third-party service provider oversight, additional portions of our business could become subject to direct federal regulation and/or examination. This would increase our costs and could slow our ability to introduce new products and services, thereby hindering our ability to adapt to a rapidly changing business environment.

Third-party claims can lead to expensive and distracting litigation, and an unfavorable outcome could negatively impact our business, financial condition, and results of operations.

At times, we face claims, litigation, and other proceedings related to our business activities, including purported class action lawsuits. These legal proceedings may involve various issues such as employment practices, alleged breaches of contractual obligations, assertions of deceptive, unfair, or illegal business practices, violations of consumer protection laws, legacy distributor account protection rights, or environmental matters. Additionally, third parties may bring patent and other intellectual property infringement claims against us and/or our clients, which could include aggressive enforcement of patents by non-practicing entities. Such claims could lead to litigation against us and may also result in proceedings initiated by various federal and state regulatory agencies overseeing our business operations. As our business has grown and diversified, the number and significance of these claims and proceedings has increased.

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These claims, regardless of their merit, could divert management's attention and result in costly and time-consuming litigation. We establish accruals for identified claims or lawsuits based on our best estimate of the probable liability. However,  due to the inherent uncertainties of litigation and other dispute resolution processes, we cannot accurately predict the ultimate outcomes. An unfavorable resolution of a material claim or litigation could necessitate the payment of monetary damages, fines, or attorneys' fees, or force us to make costly and undesirable changes to our products, features, or business practices. Such outcomes would adversely affect our business, financial condition, and results of operations.

We may face challenges in protecting our intellectual property rights, which could negatively impact our business and competitive position.

Our strategy to safeguard our trademarks, software, and other intellectual property involves a combination of trademark and copyright laws, trade secret and patent protections, as well as confidentiality and license agreements. However, these measures provide only limited protection. Despite our efforts, third parties may still infringe upon or misappropriate our intellectual property, or independently develop products or services that are substantially similar and do not violate our intellectual property rights.

Enforcing our intellectual property rights and preventing unauthorized use is both complex and resource-intensive. We may need to dedicate substantial resources to protect our trade secrets and to monitor and