eBay 2004 Annual Report Download - page 15

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Intellectual Property
We regard the protection of our trademarks, copyrights, patents, domain names, trade dress and trade
secrets as critical to our success. We have entered into conÑdentiality and invention assignment agreements
with our employees and contractors, and nondisclosure agreements with parties with whom we conduct
business in order to limit access to and disclosure of our proprietary information.
We aggressively protect our intellectual property rights by relying on a combination of trademark,
copyright, patent, trade dress and trade secret laws and by using the domain name dispute resolution system.
As a result, we actively pursue the registration of our trademarks, copyrights, patents and domain names in the
U.S. and other major countries. We must also protect our trademarks, patents and domain names in an
increasing number of jurisdictions, a process that is expensive, may require litigation, and may not be
successful in every location. We have registered or applied for our ""eBay'' trademark in the U.S. and over 50
non-U.S. jurisdictions and have in place an active program to continue securing the ""eBay'' and ""PayPal''
domain names in major non-U.S. jurisdictions. We have Ñled to protect our rights to the ""eBay'' and ""PayPal''
names in certain new top-level domains such as "".biz'', "".info'' and "".us'' that have become operational more
recently. Our inability to secure our trademarks or domain names could adversely aÅect us in any jurisdiction
in which we are not able to register.
Third parties have from time to time claimed, and others may claim in the future, that we have infringed
their intellectual property rights. We currently are involved in several such legal proceedings. Please see the
information in ""Item 3: Legal Proceedings'' and in Item 7 under ""Risk Factors That May AÅect Results of
Operations and Financial Condition 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.''
Employees
As of December 31, 2004, eBay Inc. and its consolidated subsidiaries employed approximately 8,100
people (excluding approximately 600 temporary employees), of whom approximately 5,900 were located in
the United States (excluding approximately 500 temporary employees). Our future success is substantially
dependent on the performance of our executive and senior management and key technical personnel, and on
our continuing ability to Ñnd and retain highly qualiÑed technical and managerial personnel.
Segments
Reporting segments are based upon our internal organizational structure, the manner in which our
operations are managed, the criteria used by our chief operating decision-maker to evaluate segment
performance, the availability of separate Ñnancial information and overall materiality considerations.
The U.S. Marketplace segment includes U.S. online marketplace trading platforms other than our PayPal
subsidiary. The International Marketplace segment includes our international online marketplace trading
platforms other than our PayPal subsidiary. The Payments segment includes our global payments platform
consisting of our PayPal subsidiary. The Payments amounts reÖect the historical operations of our former
Billpoint subsidiary and PayPal's operations for the post-acquisition period from October 4, 2002 through
December 31, 2004. We completed our planned wind-down of Billpoint in the Ñrst half of 2003.
The Ñnancial information used by our chief operating decision-maker is focused on revenues and direct
costs of the particular segment. Direct contribution consists of net revenues less direct costs. Direct costs
include speciÑc costs of net revenues, sales and marketing expenses, and general and administrative expenses
over which segment managers have direct discretionary control, such as advertising and marketing programs,
customer support expenses, bank charges, provisions for doubtful accounts, authorized credits and transaction
losses. Expenses over which segment managers do not currently have discretionary control, such as site
operations costs, product development expenses, and certain other general and administrative costs, are
monitored by management through shared cost centers and are not evaluated in the measurement of segment
performance.
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