eBay 2001 Annual Report Download - page 16

Our inability to secure our trademarks or domain names could adversely aÅect us in any jurisdiction in
which we are not able to register.
EÅective trademark, copyright, patent, trade dress, trade secret and domain name protection is very
expensive to maintain and may require litigation.
Third parties have from time to time claimed, and others may claim in the future, that we have
infringed their past, current or future intellectual property rights. We have in the past been forced to
litigate such claims. See also the information under ""Legal Proceedings'' and ""Risk Factors Ì We are
subject to intellectual property and other litigation and Ì We may be unable to protect or enforce our own
intellectual property rights adequately.''
Other Matters Impacting Our Business
Issues Related to the Listing or Sale by Users of Unlawful Items
We have received in the past, and we anticipate we will receive in the future, communications
alleging that certain items listed or sold through our service by our users infringe third-party copyrights,
trademarks and tradenames or other intellectual property rights. Although we have actively sought to work
with the content community to eliminate infringing listings on our websites, some content owners have
expressed the view that our eÅorts are insuÇcient. Content owners have been active in defending their
rights against online companies, including us. An allegation of infringement of third-party intellectual
property rights may result in litigation against us. Any such litigation could be costly for us, could result in
increased costs of doing business through adverse judgment or settlement, could require us to change our
business practices in expensive ways or could otherwise harm our business. Litigation against other online
companies could result in interpretations of the law that could also require us to change our business
practices or otherwise increase our costs. See ""Legal Proceedings'' and ""Risk Factors Ì We are subject to
intellectual property and other litigation.''
Fraudulent Activities on Our Website
Our future success will depend largely upon sellers reliably delivering and accurately representing their
listed goods and buyers paying the agreed purchase price. We have received in the past, and anticipate
that we will receive in the future, communications from users who did not receive the purchase price or
the goods that were to have been exchanged. In some cases individuals have been arrested and convicted
for fraudulent activities using our websites. While we can suspend the accounts of users who fail to fulÑll
their delivery obligations to other users, we do not have the ability to require users to make payments or
deliver goods or otherwise make users whole other than through our limited buyer protection programs.
Other than through these programs, we do not compensate users who believe they have been defrauded by
other users. We also periodically receive complaints from buyers as to the quality of the goods purchased.
Negative publicity generated as a result of fraudulent or deceptive conduct by users of our service could
damage our reputation and diminish the value of our brand name. We expect to continue to receive
requests from users requesting reimbursement or threatening or commencing legal action against us if no
reimbursement is made. This sort of litigation could be costly for us, divert management attention, result
in increased costs of doing business, lead to adverse judgments or could otherwise harm our business. See
""Risk Factors Ì Our business may be harmed by fraudulent activities on our websites.''
Government Inquiries
On January 29, 1999, we received initial requests to produce certain records and information to the
federal government relating to an investigation of possible illegal transactions in connection with our
website. We were informed that the inquiry includes an examination of our practices with respect to these
transactions. We have provided further information in connection with this ongoing inquiry. In order to
protect the investigation, the court has ordered that no further public disclosures be made with respect to
the matter.
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