TeleNav 2013 Annual Report Download - page 35

Table of Contents
The occurrence or perception of a security breach or disclosure of confidential information could harm our business.
Our navigation services include the transmission and storage of personal, private and confidential information primarily related to the location
of our end users. If there is a security breach or if there is an inappropriate disclosure of any of these types of information, we could be exposed to
investigations, litigation, fines and penalties. Remediation of and liability for loss or misappropriation of end user or employee personal information
could have a material adverse effect on our business and financial results. Even if we were not held liable for such event, a security breach or
inappropriate disclosure of personal, private or confidential information could harm our reputation and our relationships with current and potential
end users. Even the perception of a security risk could inhibit market acceptance of our navigation services. In addition, we may be required to invest
additional resources to protect against damages caused by any actual or perceived disruptions of our navigation services or security breaches.
Recent United States Supreme Court and other litigation has addressed issues relating to providing information regarding the location of a
vehicle or mobile device to law enforcement agencies without a warrant. The law related to mobile phones and integrated GPS tracking in a vehicle
remains unsettled and we may be subjected to different standards in different jurisdictions. We may incur substantial costs if we are required to
litigate whether an individual's location can be disclosed without a warrant, which could harm our operating results. We may also be required to
provide information about the location of an end user’s mobile phone to government authorities, which could result in public perception that we are
providing the government with intelligence information and deter some end users from using our services. Any of these developments could harm
our business.
Changes in government regulation of the wireless communications industry and the automobile industry may adversely affect our business.
It is possible that a number of laws and regulations may be adopted in the United States and elsewhere that could restrict the wireless
communications industry or further regulate the automobile industry, including laws and regulations regarding lawful interception of personal data,
hands free use of mobile phones or navigation services within autos or the control of such use, privacy, taxation, content suitability, copyright and
antitrust. Furthermore, the growth and development of electronic storage of personal information may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies such as ours that store personal information. We anticipate that regulation of our
industry will increase and that we will be required to devote legal and other resources to address this regulation. Changes in current laws or
regulations or the imposition of new laws and regulations in the United States or elsewhere regarding the wireless communications or automobile
industries may make operation more costly, and may materially reduce our ability to increase or maintain sales of our navigation services.
We may become subject to significant product liability costs.
If our navigation services or products contain defects, there are errors in the maps supplied by third party map providers or if our end users do
not heed our warnings about the proper use of these products, collisions or accidents could occur resulting in property damage, personal injury or
death. If any of these events occurs, we could be subject to significant liability for personal injury and property damage and under certain
circumstances could be subject to a judgment for punitive damages. We maintain limited insurance against accident related risks involving our
products. However, we cannot assure you that this insurance would be sufficient to cover the cost of damages to others or will continue to be
available at commercially reasonable rates. In addition, we may be named as a defendant in litigation by consumers individually or on behalf of a
class if their handsets or automobiles suffer problems from software downloads from our customers. If we are unable to obtain indemnification from
our customer for any damages or legal fees we may incur in connection with such complaints, our financial position may be adversely impacted. In
addition, insurance coverage generally will not cover awards of punitive damages and may not cover the cost of associated legal fees and defense
costs. If we are unable to maintain sufficient insurance to cover product liability costs or if our insurance coverage does not cover an award, our
business, financial condition and results of operations could be adversely affected.
Government regulation designed to protect end user privacy may make it difficult for us to provide our services or adopt advertising based
revenue models.
We transmit and store a large volume of personal information in the course of providing our navigation services. This information is
increasingly subject to legislation and regulations in numerous jurisdictions around the world. This government action is typically intended to protect
the privacy and security of personal information that is collected, stored and transmitted in or from the governing jurisdiction.
Legislation may also be adopted in various jurisdictions that prohibits use of personal information and search histories to target end users with
tailored advertising, or provide advertising at all. Although our advertising revenue to date is not significant, we anticipate we will continue to grow
advertising revenue in the future to improve average revenue per user in certain markets.
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