Fujitsu 2007 Annual Report Download - page 49

4) Intellectual Property Rights
The Fujitsu Group has accumulated technologies and expertise
that help distinguish its products from those of other compa-
nies. Legal restrictions in certain regions, however, may impair
our ability to fully protect some of the Group’s proprietary tech-
nologies, with the result that we could be unable to effectively
prevent the manufacture and sale of similar products developed
by third parties using the Group’s own intellectual property.
Moreover, the creation of comparable or superior technologies
by other companies could erode the value of the Group’s intel-
lectual property. The Group has instituted internal policies,
including stringent clearance procedures prior to launching new
products and services, to ensure that no infringement of other
companies’ intellectual property occurs. However, there is the
possibility that the Group’s products or technologies may be
found to infringe on other companies’ intellectual property, and
that earnings may be impacted by such consequences as the need
to pay for usage rights or cover costs associated with having to
modify designs. In addition, the Group has previously instituted
a program to compensate employees for innovations that they
make in the course of their work, and will continue to imple-
ment this program in the future in accordance with the revision
of Japan’s patent laws. Nevertheless, the Group faces potential
risk from lawsuits initiated by employees in regard to compensa-
tion for innovation created in the workplace.
5) Human Resources
The growth and profitability of the Fujitsu Group depends
heavily on human resources. As such, a major issue for the Group
is the ability to recruit and foster talented researchers, system
engineers, managers and other key personnel; the inability to do
so could negatively impact the Group’s growth and profitability.
6) Environmental Pollution
While committed to minimizing environmental burden in accor-
dance with The FUJITSU Way and the Fujitsu Group Environ-
mental Policy, the Group cannot guarantee that environmental
pollution will not occur as a result of its operations. Moreover,
although we monitor soil and wastewater as well as engage in
cleanup activities at former factory sites, this does not mean that
pollution will not be found at such sites in the future. In the event
that environmental pollution were to occur or be identified,
cleanup and other costs could be incurred that adversely affect
the Group’s earnings.
7) Information Management
In order to safeguard the personal and confidential information
of customers and business partners, the Group has taken such
measures as establishing strict regulations, instituting training
programs for employees, and providing consultation to business
subcontractors. Nevertheless, the Group cannot absolutely guar-
antee that information will not be leaked. In the unlikely event
that this should occur, trust in the Fujitsu Group could decline
and the Group may be obligated to pay damages to customers.
8) Credit Ratings and Other Factors that Affect Trust in
the Group
In addition to having a major influence on capital procurement,
credit ratings by outside institutions serve as reliable sources of
information when conducting transactions with business part-
ners. Lower credit ratings caused by failure to meet earnings tar-
gets, deteriorating financial conditions and other reasons could
influence our ability to procure needed funds, and place the
Group at a disadvantage in bidding for projects and in other busi-
ness dealings.
7. Natural Disasters and Unforeseen Incidents
Natural disasters and other unforeseen situations could have a
major impact on the business results and financial standing of
the Fujitsu Group. Examples of the potential risks posed are
found below.
1) Damage from Earthquakes, Other Natural Disasters
and Accidents
The Group has taken measures to make its business sites more
resistant to earthquakes and conducts regular inspections and
disaster readiness drills. Nevertheless, there is a possibility that
the Group may be prevented from continuing operations due to
damage to facilities and equipment or interruptions in the supply
of electricity or water as a result of earthquakes or other natural
disasters and accidents. Such occurrences could interrupt ship-
ments to customers or disrupt shipments of parts for the Group’s
internal use, thereby affecting factory production at other Group
business sites. Semiconductor fabs and other plants where high-
precision processing is carried out are particularly susceptible to
the effects of earthquakes and similar events. In the wake of such
incidents, some time may be required to resume normal opera-
tions due to the array of highly specialized equipment and devices
used at these sites. Damage caused by natural disasters may also
hinder our ability to provide information system support for
Group customers, which could interrupt their business activities.
We have a well-developed system in place to ensure the
integrity and stable operation of critical in-house networks, which
are a key element of our business infrastructure. However, the
Group cannot guarantee its ability to prevent invasive computer
viruses and other disruptions from impeding network operations.
2) Geopolitical Risk
Conflicts, political instability, currency crises, natural disasters,
epidemics or other events in nations or regions where the Fujitsu
Group operates could have a significant impact on its businesses.
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