eBay 2000 Annual Report Download - page 43

jurisdictions outside the U.S. If we become liable for information provided by our users and carried on our
service in any jurisdiction in which we operate, we could be directly harmed and we may be forced to
implement new measures to reduce our exposure to this liability. This may require us to expend substantial
resources and/or to discontinue certain service oÅerings, which would negatively aÅect our Ñnancial results. In
addition, the increased attention focused upon liability issues as a result of these lawsuits and legislative
proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a
result of this liability or asserted liability could harm our business.
We are subject to intellectual property and other litigation
On September 1, 1999, we were served with a lawsuit Ñled by Randall Stoner, on behalf of the general
public, in San Francisco Superior Court (No. 305666). The lawsuit alleged that we violated Section 17200 of
the California Business & Professions Code, a statute that relates to unfair competition, based upon the listing
of ""bootleg'' or ""pirate'' recordings by eBay's users, allegedly in violation of California penal statutes relating
to the sale of unauthorized audio recordings. The lawsuit sought declaratory and injunctive relief, restitution
and legal fees. We Ñled a general demurrer which was sustained by the court with leave to amend. The
plaintiÅ subsequently Ñled an amended complaint. We Ñled a motion for summary judgement. On Novem-
ber 7, 2000, our motion for summary judgement was granted.
On December 10, 1999, we sued Bidder's Edge, Inc. in the United States District Court for the Northern
District of California alleging trespass, unfair competition, violation of the computer fraud and abuse act,
misappropriation, false advertising, trademark dilution, injury to business reputation, interference with
prospective economic advantage, and unjust enrichment. On February 7, 2000, Bidder's Edge denied these
claims and counterclaimed against us alleging that we violated the antitrust laws by monopolizing or
attempting to monopolize a market, that we competed unfairly, and that we interfered with their contract with
eBay magazine. Bidder's Edge sought treble damages, an injunction and its fees and costs. On May 24, 2000,
the court granted us a preliminary injunction against the use by Bidder's Edge of robotic means to copy our
site. In February 2001, the parties settled this lawsuit. All claims by both parties were dismissed, and Bidder's
Edge paid us an undisclosed amount.
On April 25, 2000, we were served with a lawsuit, Gentry et.al. v. eBay, Inc. et.al, Ñled in Superior Court
in San Diego, California. The lawsuit was Ñled on behalf of a purported class of eBay users who purchased
allegedly forged autographed sports memorabilia on eBay. The lawsuit claims we were negligent in permitting
certain named (and other unnamed) defendants to sell allegedly forged autographed sports memorabilia on
eBay. In addition, the lawsuit claims we violated Section 17200 and a section of the California Civil Code
which prohibits ""dealers'' from selling sports memorabilia without a ""CertiÑcate of Authenticity.'' On
January 26, 2001, the Court issued a ruling dismissing all claims against us in the lawsuit. The Court ruled
that our business falls within the safe harbor provisions of 47 USC 230, which grants internet service providers
such as eBay with immunity from state claims based on the conduct of third parties. The Court also noted that
we were not a ""dealer'' under California law and thus not required to provide certiÑcates of authenticity with
autographs sold over our site by third parties. All counts of the plaintiÅs' suit were dismissed with prejudice as
to eBay. PlaintiÅs have Ñled an appeal of this ruling. We believe we have meritorious defenses and intend to
defend ourselves vigorously.
Other third parties have from time to time claimed and may claim in the future that we have infringed
their past, current or future intellectual property rights. We may become more vulnerable to such claims as
laws such as the Digital Millennium Copyright Act are interpreted by the courts. We expect that we will
increasingly be subject to infringement claims as the number of services and competitors in our segment grow.
These claims whether meritorious or not, could be time-consuming, result in costly litigation, cause service
upgrade delays require expensive changes in our methods of doing business or could require us to enter into
costly royalty or licensing agreements, if available. As a result, these claims could harm our business.
From time to time, we are involved in disputes that have arisen in the ordinary course of business.
Management believes that the ultimate resolution of these disputes will not have a material adverse impact on
our Ñnancial position or results of operations.
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