Yahoo 2008 Annual Report Download - page 107

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of
the Company’s breach of agreements or representations and warranties made by the Company, services to be
provided by the Company, intellectual property infringement claims made by third parties or, with respect to the
sale of assets or a subsidiary, matters related to the Company’s conduct of the business and tax matters prior to
the sale. In addition, the Company has entered into indemnification agreements with its directors and certain of
its officers that will require the Company, among other things, to indemnify them against certain liabilities that
may arise by reason of their status or service as directors or officers. The Company has also agreed to indemnify
certain former officers, directors, and employees of acquired companies in connection with the acquisition of
such companies. The Company maintains director and officer insurance, which may cover certain liabilities
arising from its obligation to indemnify its directors and officers, and former directors and officers of acquired
companies, in certain circumstances. It is not possible to determine the aggregate maximum potential loss under
these indemnification agreements due to the limited history of prior indemnification claims and the unique facts
and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to
maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under
these agreements and it has not accrued any liabilities related to such indemnification obligations in its
consolidated financial statements.
As of December 31, 2008, 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 purposes. 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. In addition, the Company identified no variable
interests currently held in entities for which it is the primary beneficiary.
Contingencies. Currently, the Company is engaged in lawsuits regarding patent issues and has been notified 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, trade secrets, and other intellectual property rights, claims related to employment matters, and a
variety of other claims, including claims alleging defamation, invasion of privacy, or similar claims arising in
connection with the Company’s e-mail, message boards, photo and video sites, auction sites, shopping services,
and other communications and community features.
On May 24, 2001, Arista Records, Inc., Bad Boy Records, BMG Music d/b/a The RCA Records Label (“BMG”),
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 U.S. District Court for the Southern
District of New York seeking declaratory and injunctive relief and damages. The plaintiffs alleged, 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. Yahoo! acquired LAUNCH in August 2001. This lawsuit was settled with all plaintiffs,
other than BMG. On April 27, 2007, after a two week jury trial, the jury returned a unanimous verdict in favor of
LAUNCH finding no liability. BMG has filed a notice of appeal to the U.S. Court of Appeals for the Second
Circuit and the oral argument is scheduled to be heard on March 17, 2009.
On July 12, 2001, the first of several purported securities class action lawsuits was filed in the U.S. District Court
for the Southern District of New York against certain underwriters involved in Overture Services Inc.’s
(“Overture”) IPO, Overture, and certain of Overture’s 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 (the “Exchange Act”) involving undisclosed compensation to the underwriters,
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