Yahoo 2004 Annual Report Download - page 89

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At December 31, 2003 and 2004, the Company did not have any relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited pur-
poses. As such, the Company is not exposed to any financing, liquidity, market or credit risk that could arise if the
Company had engaged in such relationships.
Contingencies. From time to time, third parties assert patent infringement claims against the Company. Currently, the
Company is engaged in several lawsuits regarding patent issues and has been notified of a number of other potential
patent disputes.
In addition, from time to time the Company is subject to other legal proceedings and claims in the ordinary course of
business, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights, and a
variety of claims, including claims alleging defamation or invasion of privacy, arising in connection with its email,
message boards, auction sites, shopping services, and other communications and community features.
In October 2000, 800-JR-Cigar, Inc. filed a complaint in the United States District Court for the District of New Jersey
against Overture, a wholly-owned subsidiary of the Company acquired in October 2003. In October 2002, Robert
Novak, doing business as Pets Warehouse and PetsWarehouse.com, filed a complaint in the United States District Court
for the Eastern District of New York against Overture. In May 2004, Government Employees Insurance Company
(‘‘GEICO’’) filed a complaint in the Eastern District of Virginia against Overture. The plaintiffs in each of these cases
claim, among other things, that they have trademark rights in certain search terms and that Overture violates these rights
by allowing its advertisers to bid on these search terms. The complaints seek injunctive relief and damages. Overture
settled with GEICO in November 2004 and with Robert Novak and Pets Warehouse in February 2005. Overture has
also been named as a defendant in several other trade name infringement actions filed in Los Angeles, California in
which plaintiffs made similar claims. The Company and Overture believe that Overture has meritorious defenses to
liability and damages in each of these lawsuits and are contesting them vigorously. In August 2003, Accor filed a similar
complaint in the Nanterre District Court in France against Overture and Overture S.A.R.L., Overture’s wholly-owned
subsidiary in France. On January 17, 2005, the Nanterre District Court ruled in favor of Accor and found Overture and
Overture S.A.R.L. liable for trademark infringement. Overture S.A.R.L. has appealed, and Overture intends to appeal,
this decision.
On May 24, 2001, Arista Records, Inc., Bad Boy Records, BMG Music d/b/a The RCA Records Label, Capitol
Records, Inc., Virgin Records America, Inc., Sony Music Entertainment Inc., UMG Recordings, Inc., Interscope Records,
Motown Record Company, L.P., and Zomba Recording Corporation filed a lawsuit alleging copyright infringement
against LAUNCH Media, Inc. (‘‘LAUNCH’’) in the United States District Court for the Southern District of New York.
The plaintiffs allege, among other things, that the consumer-influenced portion of LAUNCH’s LAUNCHcast service is
‘‘interactive’’ within the meaning of Section 114 of the Copyright Act and therefore does not qualify for the compulsory
license provided for by the Copyright Act. The Complaint seeks declaratory and injunctive relief and damages for the
alleged infringement. After the lawsuit was commenced, the Company entered into an agreement to acquire LAUNCH.
In June 2001, LAUNCH settled the LAUNCH litigation as to UMG Recordings, Inc. The Company’s acquisition of
LAUNCH closed in August 2001, and since that time LAUNCH has been a wholly owned subsidiary of the Company.
The Company and LAUNCH do not believe that LAUNCH has infringed any rights of plaintiffs and intend to
vigorously contest the lawsuit. In January 2003, LAUNCH settled the LAUNCH litigation as to Sony Music Entertain-
ment, Inc. In October 2003, LAUNCH settled the litigation as to Capitol Records, Inc. and Virgin Records
America, Inc. Accordingly, BMG Music d/b/a/ The RCA Records Label is the sole remaining plaintiff in this proceeding.
On March 16, 2004, plaintiffs filed motions for partial summary judgment on the issues of willful infringement and
whether the consumer-influenced portion of Launch’s LAUNCHcast service is ‘‘interactive’’ within the meaning of
Section 114 of the Copyright Act and therefore does not qualify for the compulsory license provided for by the
Copyright Act. LAUNCH filed its opposition to the motions for partial summary judgment on April 30, 2004, and a
hearing on the motions was held on June 18, 2004. The Court has not yet ruled on the motions for summary
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