Yahoo 2014 Annual Report Download - page 135

Historically, the Company has not incurred material costs as a result of obligations under these
agreements and it has not accrued any material liabilities related to such indemnification obligations
in the Company’s consolidated financial statements.
As of December 31, 2014, 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, established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. Accordingly, the Company is not exposed to any financing,
liquidity, market, or credit risk that could arise if the Company had such relationships. In addition, the
Company identified no variable interests currently held in entities for which it is the primary
beneficiary.
See Note 19—“Search Agreement with Microsoft Corporation” for a description of the Search
Agreement and License Agreement with Microsoft.
Legal Contingencies
Intellectual Property and General Matters. From time to time, third parties assert patent
infringement claims against the Company. 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.
Stockholder and Securities Matters. Since May 31, 2011, several related stockholder derivative suits
were filed in the Santa Clara County Superior Court (“California Derivative Litigation”) and the U.S.
District Court for the Northern District of California (“Federal Derivative Litigation”) purportedly on
behalf of the Company against certain officers and directors of the Company and third parties. The
California Derivative Litigation was filed by plaintiffs Cinotto, Lassoff, Zucker, and Koo, and
consolidated under the caption In re Yahoo! Inc. Derivative Shareholder Litigation on June 24, 2011
and September 12, 2011. The Federal Derivative Litigation was filed by plaintiffs Salzman, Tawila, and
Iron Workers Mid-South Pension Fund and consolidated under the caption In re Yahoo! Inc.
Shareholder Derivative Litigation on October 3, 2011. The plaintiffs allege breaches of fiduciary duties,
corporate waste, mismanagement, abuse of control, unjust enrichment, misappropriation of
corporate assets, or contribution, and seek damages, equitable relief, disgorgement, and corporate
governance changes in connection with Alibaba Group’s restructuring of its subsidiary Alipay.com
Co., Ltd. (“Alipay”) and related disclosures. On June 7, 2012, the courts approved stipulations staying
the California Derivative Litigation pending resolution of the Federal Derivative Litigation, and
deferring the Federal Derivative Litigation pending a ruling on the motion to dismiss filed by the
defendants in the related stockholder class actions, which are discussed below. On December 16,
2013, the U.S. District Court for the Northern District of California granted the Company’s motion to
stay the Federal Derivative Litigation pending resolution of the appeal filed by the plaintiffs in the
related stockholder class actions.
Since June 6, 2011, two purported stockholder class actions were filed in the U.S. District Court for the
Northern District of California against the Company and certain officers and directors of the
Company by plaintiffs Bonato and the Twin Cities Pipe Trades Pension Trust. In October 2011, the
District Court consolidated the two actions under the caption In re Yahoo! Inc. Securities Litigation
and appointed the Pension Trust Fund for Operating Engineers as lead plaintiff. In a consolidated
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