Blackberry 2013 Annual Report Download - page 75

As the Company’s products are integrated into its customers’ networks and equipment, are used with third party applications and are
used to deliver confidential or personal information, the sale and support of these products and services may entail the risk of liability
due to product liability, warranty or other claims tied to the security of data. In addition, the failure of the Company’s products or
services to perform to end user expectations could give rise to product liability claims and warranty claims. The consequences of any
such defects, errors, vulnerabilities and claims could have a material adverse effect on the Company’s business, results of operations
and financial condition.
In some cases, if design defects, errors or vulnerabilities affect a product’s safety or regulatory compliance, then such product may
need to be recalled. Depending on the nature of the defect and the number of products, the Company may be forced to incur
substantial recall costs, in addition to the costs associated with the potential loss of future orders and the damage to the Company’s
reputation. Recalls involving regulatory agencies could also result in fines and additional costs. Finally, recalls could result in third-
party litigation, including class action litigation by persons alleging common harm resulting from the purchase of the Company’s
products.
The Company is subject to general commercial litigation, class action and other litigation claims as part of its operations,
and it could suffer significant litigation expenses in defending these claims and could be subject to significant damage
awards or other remedies.
In the course of its business, the Company receives general commercial claims related to the conduct of its business and the
performance of its products and services, employment claims and other litigation claims, which may potentially include claims
relating to improper use of or access to personal data. For example, as a result of the service interruption that occurred in October
2011, the Company is facing class action suits and has received inquiries from consumer protection agencies. Litigation resulting
from these claims could be costly and time-consuming and could divert the attention of management and key personnel from the
Company’s business operations. The complexity of the technology involved and the inherent uncertainty of commercial, class action,
employment and other litigation increases these risks. In recognition of these considerations, the Company may enter into material
settlements. If the Company is unsuccessful in its defense of material litigation claims or is unable to settle the claims, the Company
may be faced with significant monetary damages or injunctive relief against it that could have a material adverse effect on the
Company’s business, BlackBerry brand, results of operations and financial condition. Administrative or regulatory actions against the
Company or its employees could also have a material adverse effect on the Company’s business, BlackBerry brand, results of
operations and financial condition.
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