TeleNav 2014 Annual Report Download - page 36

Table of Contents
navigation services or be required to materially alter our navigation services, which could involve substantial costs and time to develop.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, damages
caused by defective software and other losses.
Our agreements with our customers include indemnification provisions. We agree to indemnify them for losses suffered or incurred in
connection with our navigation services or products, including as a result of intellectual property infringement, damages caused by defects and
damages caused by viruses, worms and other malicious software. The term of these indemnity provisions is generally perpetual after execution
of the corresponding agreement, and the maximum potential amount of future payments we could be required to make under these
indemnification provisions is generally substantial and may be unlimited. In addition, some of these agreements permit our indemnitees to
terminate their agreements with us if they determine that the use of our navigation services or products infringes third party intellectual property
rights.
We have received, and expect to receive in the future, demands for indemnification under these agreements. These demands can be very
expensive to settle or defend, and we have in the past incurred substantial legal fees and settlement costs in connection with certain of these
indemnity demands. Furthermore, we have been notified by several customers that they have been named as defendants in certain patent
infringement cases for which they may seek indemnification from us. See the section entitled “Legal Proceedings.” These indemnity demands
remain outstanding and unresolved as of the date of this Form 10-K. Large future indemnity payments and associated legal fees and expenses,
including potential indemnity payments and legal fees and expenses relating to the current or future notifications, could materially harm our
business, operating results and financial condition.
We may in the future agree to defend and indemnify our customers in connection with the pending notifications or future demands,
irrespective of whether we believe that we have an obligation to indemnify them or whether we believe that our services and products infringe
the asserted intellectual property rights. Alternatively, we may reject certain of our customers’ indemnity demands, which may lead to disputes
with our customers and may negatively impact our relationships with them or result in litigation against us. Our customers may also claim that
any rejection of their indemnity demands constitutes a material breach of our agreements with them, allowing them to terminate such
agreements. Our agreements with certain customers may be terminated in the event an infringement claim is made against us and it is reasonably
determined that there is a possibility our technology or services infringed upon a third party’s rights. If, as a result of indemnity demands, we
make substantial payments, our relationships with our customers are negatively impacted or if any of our customer agreements is terminated, our
business, operating results and financial condition could be materially adversely affected. See Part I, Item 3, “Legal Proceedings.”
The occurrence or perception of a security breach or disclosure of confidential information could harm our business.
Our products and services include the transmission and storage of certain 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 cases and other litigation have 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, the automobile and mobile advertising industries 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, further regulate the automobile industry or impair the mobile advertising 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
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