Ubisoft 2007 Annual Report Download - page 49

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THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008
45
1
threats in order to guarantee its confidentiality, integrity
and availability as well as to ensure business continuity.
Thus, Ubisoft has implemented several arrangements,
including security policies in order to bring itself into com-
pliance with legislation, security committees in the various
offices to manage local security issues, secure hosting of
its data in dedicated data centers in order to reduce phy-
sical risks, a centralized anti-virus system ensuring optimal
protection, a secure mobility solution to protect its remote
workers and wireless users, etc.
Legal Risks
1.9.2.1 Lawsuits – Legal proceedings
and arbitration
The lawsuit that pitted the Company against a licensor
since October 2003 was decided in favor of Ubisoft
Entertainment SA. The compensation and late interest
penalties amounted to USD13.2 million.
There are no other governmental, legal or arbitration
proceedings, including any proceedings of which the
Company is aware, that are pending or with which it is
threatened, that are likely to have or which over the past
12 months have had a material impact on the financial
position or profitability of the Company and/or the Group,
other than the one that is recognized in the consolidated
financial statements and mentioned in the notes to the ba-
lance sheet, Note 13 – Provisions.
The Group is occasionally subject to tax audits carried out
by the tax authorities of the countries in which it is located.
1.9.2.2 Regulatory environment
The Company, like all game publishers, must comply with
various national regulations in particular regulating the
content of games and consumer protection. Failure to
comply with these regulations may have a negative impact
on sales (delayed launch or withdrawal of products from
the market, for example).
The Company continues to improve its internal controls in
order to ensure compliance with these directives and the
principles established by professional organizations. In
particular, it is a member of the ESA (Entertainment
Software Association) and SELL (French Association of
Recreational Software Publishers).
1.9.2.3 Risks associated with intellectual
property rights
Given the importance of the prominence of its brands and
the piracy problem faced by all players in the video game
industry, the Company has taken the necessary measures
to protect its portfolio of commercial brands as well as the
other intellectual property rights that it holds:
Registration of trademarks as well as copyright of games
designed at European and international level.
Litigation in copyright infringement and piracy cases in
France and abroad by bringing claims for damages where
necessary or via any other available criminal or civil
avenue, measures against hackers in order to obtain the
removal of games illegally put online, etc.
Ubisoft has not filed any patents and has no dependence on
specific patents.
1.9.2.4 Licensing agreement risks
Every year, Ubisoft signs a series of partnership agree-
ments, particularly with prestigious partners such as film
studios, television channels and celebrities, amongst ot-
hers, enabling the Company to develop its game catalogue
and growing its revenue.
The potential interruption of certain partnerships, for
whatever reason, at the initiative of Ubisoft or of its part-
ners, would likely have a negative impact on the revenue
and future performance of the Company as it would not be
offset by other new licenses.
Ubisoft has established a series of internal controls both at
marketing team and development team level to ensure the
proper implementation of licensing agreements and com-
pliance with the directives of its partners.
Industrial or
environment-related
risks
The Group currently has no knowledge of any industrial or
environmental risk.
Ubisoft did not record any provision, purchase any insu-
rance to cover potential environmental risks, or pay any
indemnities in this regard during the fiscal year.
Nevertheless, the Company remains on the outlook for
changes in regulations in the countries in which it operates.
1.9.3
1.9.2