Yahoo 2005 Annual Report Download - page 38

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32
is the sole remaining plaintiff in this proceeding. On March 16, 2004, the plaintiff 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. On November 4, 2005, the Court issued an order denying the
plaintiff’s summary judgment motions as to interactivity and willful infringement. A trial date is currently
set for June 2006. We do not believe it is feasible to predict or determine the outcome or resolution of the
remaining LAUNCH litigation at this time. The range of possible resolutions of such LAUNCH litigation
could include judgments against LAUNCH or settlements that could require substantial payments by
LAUNCH.
On July 12, 2001, the first of several purported securities class action lawsuits was filed in the United States
District Court for the Southern District of New York against certain underwriters involved in Overture’s
initial public offering, Overture, and certain of Overture’s current and former officers and directors. The
Court consolidated the cases against Overture. Plaintiffs allege, among other things, violations of the
Securities Act of 1933 and the Securities Exchange Act of 1934 involving undisclosed compensation to the
underwriters, and improper practices by the underwriters, and seek unspecified damages. Similar
complaints were filed in the same court against numerous public companies that conducted initial public
offerings of their common stock since the mid-1990s. All of these lawsuits were consolidated for pretrial
purposes before Judge Shira Scheindlin. On April 19, 2002, plaintiffs filed an amended complaint, alleging
Rule 10b-5 claims of fraud. On July 15, 2002, the issuers filed a motion to dismiss for failure to comply
with applicable pleading standards. On October 8, 2002, the Court entered an Order of Dismissal as to all
of the individual defendants in the Overture IPO litigation, without prejudice. On February 19, 2003, the
Court denied the motion to dismiss the Rule 10b-5 claims against certain defendants, including Overture.
On August 31, 2005, the Court entered an order confirming its preliminary approval of a settlement
proposal made by plaintiffs, which includes settlement of, and release of claims against, the issuer
defendants, including Overture. A hearing on the fairness of the settlement to the shareholder class is
currently set for April 24, 2006. If the settlement does not occur, and litigation against Overture continues,
Yahoo! and Overture believe that Overture has meritorious defenses to liability and damages and will
continue to defend the case vigorously.
We do not believe, based on current knowledge, that any of the foregoing legal proceedings or claims are
likely to have a material adverse effect on our financial position, results of operations or cash flows.
However, we may incur substantial expenses in defending against third party claims. In the event of a
determination adverse to Yahoo! or its subsidiaries, we may incur substantial monetary liability, and be
required to change our business practices. Either of these could have a material adverse effect on our
financial position, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of 2005.