Epson 2009 Annual Report Download - page 25

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17. Epson is vulnerable to risks of problems arising relating to the environment
Epson is subject, both in Japan and overseas, to various environmental regulations concerning industrial
waste and emissions into the atmosphere that arise during the manufacturing process. Environmental
conservation activities are one of Epson’ s most important management policies, and it is proactively
engaged in environmental conservation activities on all fronts by developing and manufacturing products
that have less of a burden on the environment, reducing the amount of energy used, promoting the
recovery and recycling of end-of-life products and improving environmental management systems. To
date, Epson has not had any serious environmental issue, but there is a possibility that in the future Epson
might be affected by a compensation claim, incur expenses (such as cleaning expenses), receive a fine, be
ordered to cease production or be otherwise affected as a result of environmental damage or that new
regulations might be brought in requiring Epson to pay considerable expenses, and, if such a situation
should occur, Epson’ s results could be adversely affected.
18. Epson is vulnerable to proceedings relating to antitrust laws and regulations
As it expands its business globally, Epson is subject in Japan and overseas to proceedings relating to
antitrust laws and regulations, such as those prohibiting private monopolies and protecting fair trade.
Overseas authorities sometimes investigate and gather information on certain industries and as part of this,
Epson’ s market conditions and sales methods may come under investigation. In the case that such
investigations and proceedings take place, there is the risk that Epson’ s sales activities could be obstructed
and, if such a situation should occur, Epson’ s results could be adversely affected.
In December 2006 Epson received instructions and notices to respond to inquiries from the Japanese Fair
Trade Commission and competition authorities in the United States, the European Union and elsewhere
relating to allegations concerning a TFT-LCD price-fixing cartel. Epson is presently submitting materials
and taking other measures to respond to these inquiries. It is difficult to forecast the results of these
inquiries, including the possibility of any punitive actions or the timing. Civil lawsuits relating to this
matter have been brought before courts in both the United States and Canada.
19. Epson is at risk of material legal actions being brought against it
Epson conducts its businesses both in Japan and overseas; its primary businesses being the development,
manufacture and sale of information-related equipment, electronic devices and precision equipment.
Given the nature of its businesses, there is a possibility that an action could be brought or legal
proceedings could be started against it regarding, for example, intellectual property rights, product
liability, antitrust laws or environmental regulations. Should that happen, public confidence in Epson
might suffer, and resolving and responding to the issue might entail considerable expense and
management resources. The results of the action or legal proceedings might also adversely affect Epson’ s
results or the development of Epson’ s business in the future. As of the date it submitted its Annual
Securities Report, Epson was contending the following material actions.
In Germany, the organization for collecting copyright fees on behalf of copyright holders,
Verwertungsgesellschaft Wort (“VG Wort”), has brought a series of legal actions seeking payment of
copyright fees against importers and venders of PCs, printers and other digital equipment that is capable
of reproducing copyrighted works.
In January 2004 VG Wort brought a civil action against Epson Deutschland GmbH (“EDG”), a
consolidated subsidiary of the Company, to seek payment of copyright fees on single-function printers.
The initial judgment determined that the aforementioned printer is subject to a copyright fee and decreed
that EDG pay the fee at a rate of between 10 to 256.70 euros per printer depending on the printer’ s
printable pages per minute, however, the claim was dismissed by both appeals court, and then supreme
court judgments. The plaintiff has expressed dissatisfaction with this ruling, and has appealed to the
Federal Constitutional Court of Germany.
For multi-function printers, the BITKOM industry association, of which EDG is a member, and the VG
Wort agreed to settlement terms regarding the payment of certain fees for copyrighted works. EDG
endorsed the terms of the settlement agreement, meaning it has agreed to pay a certain amount in
copyright fees.
Companies in general, including Epson, and industry organizations, are taking a stance opposing the
expansion of the scope of such copyright fees. Although at this point it is difficult to predict the result of
the appeal or even when a decision in the current proceedings will be handed down, if the results of the
legal actions or procedures are unfavorable to Epson, Epson’ s results or future business expansion might
consequently be affected.