Tucows 2015 Annual Report Download - page 37

These claims and any related litigation could result in significant costs of defense, liability for damages and
diversion of management’s time and attention. Any claims from third parties may also result in limitations on our ability to
use the intellectual property subject to these claims unless we are able to enter into agreements with the third parties
making these claims. If a successful claim of infringement is brought against us and we fail to develop non-infringing
technology or to license the infringed or similar technology on a timely basis, we may have to limit or discontinue the
business operations which used the infringing technology.
We rely on technologies licensed from other parties. These third-party technology licenses may infringe on the
proprietary rights of others and may not continue to be available on commercially reasonable terms, if at all. The loss of
this technology could require us to obtain substitute technology of lower quality or performance standards or at greater
cost, which could increase our costs and make our products and services less attractive to customers.
The law relating to the liability of online services companies for data and content carried on or disseminated through
their networks is currently unsettled and could expose us to unforeseen liabilities.
It is possible that claims could be made against online services companies under U.S., Canadian or foreign law for
defamation, negligence, copyright or trademark infringement, or other theories based on data or content disseminated
through their networks, even if a user independently originated this data or content. Several private lawsuits seeking to
impose liability upon Internet service companies have been filed in U.S. and foreign courts. While the United States has
passed laws protecting ISPs from liability for actions by independent users in limited circumstances, this protection may
not apply in any particular case at issue. Our ability to monitor, censor or otherwise restrict the types of data or content
distributed through our network is limited. Failure to comply with any applicable laws or regulations in particular
jurisdictions could result in fines, penalties or the suspension or termination of our services in these jurisdictions. Our
insurance may not be adequate to compensate or may not cover us at all in the event we incur liability for damages due to
data and content carried on or disseminated through our network. Any costs not covered by insurance that are incurred as a
result of this liability or alleged liability, including any damages awarded and costs of litigation, could harm our business
and prospects.
Privacy concerns relating to our technology could damage our reputation and deter current and potential users from
using our services.
From time to time, concerns have been expressed about whether our services compromise the privacy of our users
and others. Concerns about our practices with regard to the collection, use, disclosure or security of personal information
or other privacy-related matters, even if unfounded, could damage our reputation and operating results and expose us to
litigation and possible liability, including claims for unauthorized purchases with credit card information, impersonation,
or fraud claims and other claims relating to the misuse of personal information and unauthorized marketing purposes.
While we strive to comply with all applicable data protection laws and regulations, as well as our own privacy policies,
any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others,
which could potentially have an adverse effect on our business.
In addition, due to the fact that our services are web based, the amount of data we store for our users on our
servers (including personal information) has been increasing. Any systems failure or compromise of our security that
results in the release of our users’ data could seriously limit the adoption of our services as well as harm our reputation and
brand and, therefore, our business. We may also need to expend significant resources to protect against security breaches.
The risk that these types of events could seriously harm our business is likely to increase as we expand the number of
Internet services we offer.
A large number of legislative proposals are pending before the United States Congress, various state legislative
bodies and foreign governments concern data protection. In addition, the interpretation and application of data protection
laws in Europe and elsewhere are still unsettled. We cannot guarantee that our current information-collection procedures
and disclosure policies will be found to be in compliance with existing or future laws or regulations. If our policies and
procedures are found not to be in compliance, in addition to the possibility of fines, this could result in an order requiring
that we change our data practices, which could in turn have a material effect on our business. Complying with these
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