eBay 2009 Annual Report Download - page 56

District Court for the Northern District of California (No. 07-CV-01882-RS), and dismissed the Texas action.
The complaint seeks treble damages and an injunction. In 2007, the case was consolidated with other similar
lawsuits (No. 07-CV-01882JF). In June 2007, we filed a motion to dismiss the complaint. In March 2008, the
court granted the motion to dismiss the tying claims with leave to amend and denied the motion with respect to
the monopolization claims. Plaintiffs subsequently decided not to refile the tying claims. The plaintiffs’ motion
on class certification and our motion for summary judgment were heard by the court in December 2009. We
believe that we have meritorious defenses and intend to defend ourselves vigorously.
In October 2007, PartsRiver filed a lawsuit in the Eastern District of Texas (No. 2-07CV-440-DF) alleging
that eBay, Microsoft, Yahoo!, Shopzilla, PriceGrabber and PriceRunner infringed its patent relating to search
methods. The suit seeks an injunction against continuing infringement, unspecified damages, and interest, costs,
and fees. The U.S. District Court for the Eastern District of Texas has granted defendants’ motion to transfer
venue and moved the case to the U.S. District Court for the Northern District of California. In August 2009, the
District Court granted our motion for summary judgment and ruled that the PartsRiver patent was invalid based
on a finding that it was “on sale” more than a year before the filing date of the patent. PartsRiver has appealed
the District Court’s decision. We intend to vigorously oppose PartsRiver’s appeal.
eBay’s Korean subsidiary, IAC, has notified a majority of its approximately 20 million users of a January
2008 data breach involving personally identifiable information including name, address, resident registration
number and some transaction and refund data (but not including credit card information or real time banking
information). Approximately 146,000 users have sued IAC over this breach in several lawsuits in Korean courts
and more may do so in the future. Trial for a group of four representative suits began in August 2009, and trial
for a group of 23 other suits began in September 2009. There is some precedent in Korea for a court to grant
“consolation money” for data breaches without a specific finding of harm from the breach. Such precedents have
involved payments of up to approximately $200 per user. On January 14, 2010, the court ruled that IAC had met
its obligations with respect to defending the site from intrusion and, accordingly, had no liability for the breach.
We expect this ruling to be appealed.
Other third parties have from time to time claimed, and others may claim in the future, that we have
infringed their intellectual property rights. We are subject to additional patent disputes, and expect that we will
increasingly be subject to patent infringement claims as our services expand in scope and complexity. In
particular, we expect that we may face additional patent infringement claims involving various aspects of our
Marketplaces and Payments businesses. We have in the past been forced to litigate such claims. We may also
become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act, the Lanham
Act and the Communications Decency Act are interpreted by the courts, and as we become subject to laws in
jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like
ourselves are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated
copyright or trademark laws will be filed against us. Intellectual property claims, whether meritorious or not, are
time consuming and costly to resolve, could require expensive changes in our methods of doing business, or
could require us to enter into costly royalty or licensing agreements.
From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course
of business including suits by our users (individually or as class actions) alleging, among other things, improper
disclosure of our prices, rules or policies, that such prices, rules or policies violate applicable law, or that we
have not acted in conformity with such prices, rules or policies. The number and significance of these disputes
and inquiries are increasing. Any claims or regulatory actions against us, whether meritorious or not, could be
time consuming, result in costly litigation, require significant amounts of management time, and result in the
diversion of significant operational resources.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no submissions of matters to a vote of security holders during the quarter ended December 31,
2009.
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