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Software AG GB 2013. englisch

GroupManagementReport level 1 and are thus not a focus of Software AG’s strategic risk management. Legal risks Patent infringements Patent law, especially in the U.S. due to the large number of software patents granted combined with the peculiarities of U.S. procedural law, favors the bringing of patent lawsuits. This also affects Software AG. Patent litigation in the U.S. entails the risk of higher proce- dural costs to defend ourselves against claims without pro- vision for reimbursement in American procedural law. The Company has an Intellectual Property Rights team to counter patent law suits. In addition to tasks associated with patent law protection, the team handles our own patent applications and coordinates our defense against patent suits. Our own portfolio of patents is the best protection against competitors’ claims, because it offers opportunities for cross-licensing agreements. Not least because of that, Software AG is constantly working to expand its patent port- folio. Software AG owns 170 (2012: 102) patents from 89 (2012: 68) patent families. In addition, 179 (2012: 229) applications from 136 (2012: 125) patent families are pend- ing. Of a total of 28 (2012: 26) filings in 2013, 28 (2012: 26) were for new inventions. These patents could contribute in the future to generating additional licensing revenues. Risks associated with patent lawsuits were rated at risk category 1 and level 2 as of December 31, 2013. Patent law suits In February 2010, a software company in Virginia, USA sued Software AG together with 11 additional defendants, includ- ing IBM and SAP, for infringement of several of its software patents. The lawsuit was filed with a court in Virginia. By order of the court, the proceedings were suspended for Software AG and all other defendants except for one, which was actively pursued. The court dismissed the test case, upon which the plaintiff filed an appeal. The court of appeals rejected the appeal in January 2012. In response to further legal action brought by the plaintiff, the appellate court partially acknowledged the case and partially referred it back to the court of first instance in October 2013. The instruments are used to cover existing foreign currency re- ceivables and payables and anticipated cash flows. Income generated in foreign currencies from individual Group com- panies is also hedged against changes in value due to ex- change rate fluctuations. All exchange rate risks are moni- tored centrally. Risks from financial instruments Liquidity and cash-flow risks concerning derivative financial instruments are eliminated by the fact that we secure ex- isting balance sheet items or highly likely cash flows. Based on the financial instruments open on the balance sheet date, an increase in the market interest rate level by 100 basis points would have increased Group net income in 2013 by €2.3 million (2012: €2.4 million). Provided conditions such as revenue structure and balance sheet relationships re- mained constant and no further hedging transactions took place, this approximate correlation could be applied to future fiscal years as well. Under these conditions, a 10-percent decrease in the euro’s value against the U.S. dollar as of December 31, 2013 would have caused Group net income in 2013 to increase by €1.6 million (2012: €1.2 million). The remaining reserves in equity would have remained un- changed as in the past year. Constantly monitoring the creditworthiness of the affected banks helps us minimize the risk of losing our business partners with whom we con- clude derivative financial instruments. Other financial risks Other financial risks include predominantly the risk of bad debt losses. No cluster risks exist due to Software AG’s diversified markets and customer structure. Due to the long-range average, default risks are quite marginal as a result of the generally high level of creditworthiness on the part of our customers. To reduce the impacts of this risk, we are using an automated approval process for cus- tomer contracts, known as the Global Deal Desk, based on our own technology. To protect our cash holdings, we con- stantly monitor our partner banks’ creditworthiness and adjust our investment decisions accordingly. Due to the described risk-managing measures, financial risks have an overall risk category below 1 and a risk 105 Corporate Governance Report of the Supervisory Board Consolidated Financial Statements Notes Additional Information Group Management Report Business and General Conditions Economic Report Events after the Balance Sheet Date Risk and Opportunity Report Remuneration Report Forecast Takeover-Related Disclosures Statement on Corporate Governance