Trend Micro 2014 Annual Report Download - page 13

possibility that a case brought against a service invention and suit filed by employee. In the case of
losing such a lawsuit, payment to compensate the employee may be incurred.
PRODUCT AND SERVICE LIABILITY CLAIMS ASSERTED AGAINST OUR GROUP IN THE FUTURE COULD HURT OUR BUSINESS.
Our group’s products and services are designed to protect customers’ network systems and personal
computers from damage caused by computer viruses, web threats and data stealing malware. As a result, if a
customer suffers damage from any of these threats or if the actual functions of our group's products and
services differ from the stated, the customers may return those products and also demanded refunds for
services and the customer could sue us on product liability or related grounds, claim damages for data loss
or make other claims. Also, if our online file storage service users suffer loss of data and information
etc., caused by system troubles etc., the customer could sue our group on product liability or related
grounds, claim damages for data loss or make other claims. Additionally, as threats are constantly
evolving, purchasers of our software products must regularly update the software they have purchased from
us with signature protection files that we make available for download from our website. Should we fail to
properly test these protection files and distribute a defective file, these files could cause damage to the
personal computers of our customers who have downloaded a defective file. In addition, our hardware
products as a defective appliance could cause damage to human lives, health, and the personal property of
our customers who have used a defective appliance. As a result, if a customer suffers damage from our
products, the customer could sue us on product liability or related grounds, claim damages for data loss or
make other claims. Our license agreements typically contain provisions, such as disclaimers of warranty and
limitations of liability, which seek to limit our exposure to certain types of product liability claims.
However, in some jurisdictions these provisions may not be enforceable on statutory, public policy or other
grounds. In the case of losing such a law suit, there is a possibility that the case filed by our service
and product users for damages and recovery of pain and suffering damages could have a material adverse
effect on our business.
THE POSSIBILITY OF PRODUCT RECALL.
Although we have a proper test and inspection performed before our virus protection files and products are
shipped, our virus protection files could distribute a defective files and cause damage to the personal
computers of our customers who have downloaded a defective file. In addition, our hardware products as a
defective appliance could cause damage to human lives, health, and the personal property of our customers
who have used a defective appliance. As a result, we could order a recall of products at the discretion of
company. In such a case, this could have a material adverse effect on our financial condition and results
of operations.
OUR BUSINESS FACES THE RISK OF EFFECT FROM VIOLATION OR AMENDMENT OF THE LAW AND THE LEGAL ACT.
All our business would be under various laws and regulations in each country and each region. If we would
fail to comply with those laws and regulations, it would provide more severe administrative guidance and
penal regulations. If officers and employees who are in our group violates the constitution or other laws
or regulations, our group’s business could suffer substantial disruptions in our business and to our
reputation which could result in a loss of customers and other important business relationships until
recovery of confidence.
In such cases, there is the possibility to have a material adverse effect on our operating results. Also,
in the case of the laws and regulations legal amendments, there are the possibilities to be tightening
regulations and restrictions on our products and services and carry a cost in terms of relevant issues. In
such a case, our business may have a material adverse effect on our operating results.
OUR BUSINESS FACES THE RISK OF INTERRUPTION FROM POWER SHORTAGES, EARTHQUAKES AND OTHER DISASTERS, OUTBREAK
OF BIOLOGICAL VIRUSES, GEOPOLITICAL RISK, AND OTHER HAZARDS.
We face a number of potential business interruption risks that are beyond our control. The State of
California experienced intermittent power shortages in 2000, sharp increases in the cost of energy and even
interruptions of service to some business customers. If power shortages continue to be a problem, our
business may be materially adversely affected. Or, in the outbreak of severe acute virus, influenza, or
SARS, there is the possibility that we should stop all our business operations.
Additionally, we may experience natural and biological disasters as like above that could interrupt our
business. The impact of nature disasters as a future major earthquake on our facilities, infrastructure and
overall operations is not known. There is no guarantee that nature disasters would not seriously disturb
our entire business operations. We are largely uninsured for losses and business disruptions caused by an
earthquake and other natural disasters.
In addition, many of the key countries and regions in which we operate have sustained negative economic
impact from events such as the continued fear of future the outbreak of severe virus / acute respiratory
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