Omron 2009 Annual Report Download - page 61

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contribution ratio by reflecting such considerations as mar-
ket needs in its R&D projects and goals. However, factors
such as delays in R&D or insufficient technological capa-
bilities 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 clas-
sified customer information through its business processes
and acquires important information in the course of busi-
ness. The Omron Group is taking steps to reinforce control
over the information the Group handles and to further
improve employees’ information literacy, with the goal of
preventing external entry into its internal information sys-
tems and misappropriation by third parties resulting from
theft or loss of that information.
Unanticipated leakage of internal information, howev-
er, due for example to invasion of internal information
systems using technology exceeding implemented secu-
rity 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 conducts research on technology devel-
oped by other companies and in the public domain in the
course of its R&D and design activities. A very large num-
ber of intellectual property rights exist within the Group’s
range of business and products, and new intellectual prop-
erty rights are declared on a daily basis. The potential
therefore exists that a third party could present a claim
regarding one of the Group’s specific products or compo-
nents, which could have a negative impact on the Group’s
performance or financial condition.
When exercising our intellectual property rights during
efforts to resolve issues related to the intellectual proper-
ty rights of the Group, disputes with third parties could
arise, such as oppositional tactics from the third party sub-
ject to the exercise of rights. The Omron Group takes
appropriate measures to recognize and compensate
employees for inventions, such as through the Employee
Invention Compensation Program and the Invention
Commendation Program. Disputes regarding the value of
an invention can arise with inventors, including inventors
who have retired from the Group.
The Omron Group has accumulated technology and
expertise allowing it to differentiate its products from those
of its competitors. However, the ever-increasing sophisti-
cation of counterfeit product manufacturing and sales
methods and other factors make it virtually impossible to
completely protect all of the Group’s proprietary technology
and expertise in certain regions, including China. The Group
implements strategic measures to protect its intellectual
property rights, but the circulation of low-quality counterfeit
items fraudulently bearing the Omron brand has the poten-
tial to damage the trust in the Group’s products and the
Group’s brand image and could have a negative impact on
the Group’s operating activities.
Omron has focused on brand management since its
inception and in recent years has initiated prompt and
appropriate countermeasures to the use of domain names
similar to “Omron” that have appeared overseas.
Identifying and taking action against all such fraudulent
domain names that have been registered is virtually impos-
sible. The danger exists that the same or a similar name
to “Omron” could be used in a fraudulent business trans-
action that could damage the trust in the Group.
(8) Natural Disasters
A natural disaster, fire, or other calamity, including a large-
scale earthquake in Japan’s Tokai, Tonankai, or Tokyo
metropolitan areas, could lead to reduced production capa-
bility or temporary disruption of distribution and sales
routes. The Omron Group has implemented the necessary
safety measures and taken steps to facilitate the continu-
ity and early restoration of business operations in the case
of such an event. The Group maintains operating bases in
Japan and around the world, making it virtually impossible
to completely avoid the risks that would arise from an
unforeseen natural disaster or other calamity.
The Omron Group is also formulating action plans,
including establishing policies and business continuity
plans, for the entire Group as preventive measures for a
worldwide flu epidemic. A rapidly spreading influenza virus
that develops into a worldwide pandemic within a short
period could lead to temporary closures of operating facil-
ities and reductions in operations considered unnecessary
and nonessential that could impact the Group’s business
activities.
Events such as the above could have a negative impact
on the Group’s performance or financial condition.