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business partners and they may not be able to continue honoring their obligations to us. Some of our business
partners are highly-leveraged or small businesses that may be particularly vulnerable. Alternative arrangements
and services may not be available to us on commercially reasonable terms or we may experience business
interruptions upon a transition to an alternative partner or vendor. If we lose one or more significant business
partners, our business could be harmed.
We may be subject to claims of infringement of third-party intellectual property rights, which could harm
our business.
From time to time, third parties may assert claims against us relating to patents, copyrights, trademarks, personal
publicity rights, or other intellectual property rights to technologies, products or delivery/payment methods that
are important to our business. Although we believe that we make reasonable efforts to ensure that our products
do not violate the intellectual property rights of others, it is possible that third parties still may claim
infringement. For example, we may be subject to intellectual property infringement claims from certain
individuals and companies who have acquired patent portfolios for the sole purpose of asserting such claims
against other companies. In addition, many of our products are highly realistic and feature materials that are
based on real world examples, which may be the subject of intellectual property infringement claims of others.
From time to time, we receive communications from third parties regarding such claims. Existing or future
infringement claims against us, whether valid or not, may be time consuming and expensive to defend. Such
claims or litigations could require us to pay damages and other costs, stop selling the affected products, redesign
those products to avoid infringement, or obtain a license, all of which could be costly and harm our business. In
addition, many patents have been issued that may apply to potential new modes of delivering, playing or
monetizing game software products and services, such as those that we produce or would like to offer in the
future. We may discover that future opportunities to provide new and innovative modes of game play and game
delivery to consumers may be precluded by existing patents that we are unable to license on reasonable terms.
From time to time we may become involved in other legal proceedings, which could adversely affect us.
We are currently, and from time to time in the future may become, subject to legal proceedings, claims, litigation
and government investigations or inquiries, which could be expensive, lengthy, and disruptive to normal business
operations. In addition, the outcome of any legal proceedings, claims, litigation, investigations or inquiries may
be difficult to predict and could have a material adverse effect on our business, operating results, or financial
Our products are subject to the threat of piracy and unauthorized copying.
We take measures to protect our pre-release software and other confidential information from unauthorized
access. A security breach that results in the disclosure of pre-release software or other confidential assets could
lead or contribute to piracy of our games or otherwise compromise our product plans.
Further, entertainment software piracy is a persistent problem in our industry. The growth in peer-to-peer
networks and other channels to download pirated copies of our products, the increasing availability of broadband
access to the Internet and the proliferation of technology designed to circumvent the protection measures used
with our products all have contributed to an expansion in piracy. Though we take technical steps to make the
unauthorized copying of our products more difficult, as do the providers of the video game systems, personal
computers and mobile phone/devices on which our games are played, these efforts may not be successful in
controlling the piracy of our products.
While legal protections exist to combat piracy and other forms of unauthorized copying, preventing and curbing
infringement through enforcement of our intellectual property rights may be difficult, costly and time consuming,
particularly in countries where laws are less protective of intellectual property rights. Further, the scope of the
legal protection of copyright and prohibitions against the circumvention of technological protection measures to
protect copyrighted works are often under scrutiny by courts and governing bodies. The repeal or weakening of
laws intended to combat piracy, protect intellectual property and prohibit the circumvention of technological