Nintendo 2010 Annual Report Download - page 24

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20
(3) Risks around legal regulations and litigation
•Product liability
Nintendo manufactures its products based on quality control standards required in each location throughout the world.
However, large-scale product recalls may occur due mainly to defective products, which may cause Nintendo to incur additional
expenses and Nintendo’s reputation may suffer as well as Nintendo’s performance and financial position.
•Limitations of enforcing intellectual property rights
Although Nintendo continues to accumulate various intellectual properties to produce different products, counterfeit products
already have gone into circulation and violated Nintendo’s intellectual property rights. In the future, it may not be possible to
fully enforce against every infringement of Nintendo’s intellectual property rights.
•Leakage of personal and confidential information
Nintendo possesses personally identifiable information about its customers. If such personally identifiable information or any
confidential information concerning development or business operations were ever breached or otherwise leaked outside of
Nintendo, there would be an adverse affect on Nintendo’s future operating performance, reputation, share price and financial
condition.
•Changes in accounting standards and taxation systems
Unpredicted adoptions or changes in accounting standards or taxation systems could have an effect on Nintendo’s
performance and financial position. Conflict of views between Nintendo and the tax authorities may cause additional tax costs.
•Litigation
Nintendo’s operations in Japan and overseas may be subject to litigation, disputes and other legal procedures. These issues
may adversely affect Nintendo’s performance.
•Other risks
Other than risks set forth above, factors such as uncollectibility of trade accounts receivable and notes receivable, collapse of
financial institutions and environmental regulations may adversely affect Nintendo’s performance and financial position.
Analysis of Operations and Financial Review