Omron 2007 Annual Report Download - page 52

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tribution ratio by reflecting such considerations as market needs
in its R&D themes and goals. However, factors such as delays in
R&D or insufficient technological capabilities that result in a
decrease in the R&D new product contribution ratio could have a
negative impact on the Omron Group’s operating results and
financial condition.
(6) Information Leakage
The Omron Group acquires personal information and classified
information of customers through its business processes and
acquires important information in the course of business. The
Omron Group is taking steps to reinforce control over the infor-
mation the Group handles and to further improve employees’
information literacy, with the goal of preventing external entry
into its internal information systems and misappropriation by
third parties resulting from theft or loss of that information.
Unanticipated leakage of internal information, however, due
for example to invasion of internal information systems using
technology exceeding implemented security levels, could exert
a negative impact on the Omron Group’s operating results and
financial condition.
(7) Risks Associated with Patent Rights and Other
Intellectual Property Rights
The Omron Group has accumulated technology and expertise
allowing it to differentiate its products from those of its com-
petitors. However, it is impossible to completely protect all of
the Group’s intellectual property consisting of proprietary tech-
nology and expertise, due to legal restrictions in specific regions,
including China, and conditions that allow only limited protec-
tion. At present, the Omron Group is working on intellectual
property protection against imitation products, through such
measures as the placement of full-time personnel (including local
staff) in Shanghai. However, it is possible that the Group will
not be able to completely prevent third parties from using its
intellectual property in the manufacture of imitation products.
In China, skills in the methods needed to manufacture and
sell imitations of the Omron Group’s products improve each year,
and organizations that manufacture and market counterfeit prod-
ucts have become extremely troublesome. The circulation of low-
quality counterfeits that fraudulently use the Omron Group brand
in Asia, including China, could damage trust in the Omron Group’s
products and the Group’s brand image, and could exert a negative
impact on the Omron Group’s operating activities.
Omron has always focused on managing its brands. Recently,
however, it has discovered that several overseas businesses
and organizations are using domain names similar to Omron’s.
Omron has identified some of these and is responding with
measures including issuing warning notices.
However, although Omron is monitoring the registration of
illegal domain names on a global level and on a daily basis, it is dif-
ficult to identify and deal with all businesses and organizations
registering and using similar domain names, and there is a danger
that such entities will resort to unethical business practices such
as the use of identical or similar domain names which could dam-
age the Group’s reputation. This is not limited to the problem of
imitation products and domain names; when exercising our intel-
lectual property rights, including the granting or assigning of licens-
es for the intellectual property of the Omron Group, disputes
could arise with third parties, such as oppositional tactics from
the party which is subject to the exercise of rights.
For its R&D and design, the Omron Group uses a dedicated
system to conduct surveys of technologies in the public domain
and those of other companies. However, because Group prod-
ucts cover a diverse range of fields in which there are many
patents and other intellectual property rights, and in which the
number of new patents and intellectual property rights is con-
stantly growing, the possibility exists that a third party could make
a claim against the Group with respect to a specific product or
part. The Omron Group is working to improve employee morale
through measures such as revising its employee invention com-
pensation policy in line with revisions to Japan’s Patent Law and
introducing a new award system. However, disputes could arise
with respect to the value of an invention with inventors who have
retired from the Group, and this could exert a negative impact
on the Omron Group’s operating results and financial condition.
(8) Natural Disasters
Because of the possibility of reduction of production capability,
temporary disruption of distribution and sales routes, or other con-
sequences of a natural disaster, fire or other calamity, including a
large-scale earthquake in areas such as Tokai and Tonankai or
directly below the Tokyo area, the Omron Group has identified
risks and implemented the necessary safety measures and meas-
ures for continuation and early recovery of its businesses.
However, the Omron Group’s operating bases are located in
Japan and around the world, and it is impossible to avoid all risks
due to a natural disaster, fire or other calamity. As a result, a nat-
ural disaster, fire or other calamity could exert a negative impact
on the Omron Group’s operating results and financial condition.