eBay 2013 Annual Report Download - page 12

To compete effectively, we may need to expend significant resources in technology and marketing. These efforts may be expensive and
could reduce our margins and have a material adverse effect on our business, financial position, operating results and cash flows and reduce the
market price of our common stock. Despite our efforts to preserve and expand the size, diversity and transaction activity of our users and
customers and to enhance the user experience, we may not be able to continue to manage our operating expenses or increase or maintain our
revenue to avoid or reduce a decline in our consolidated net income or avoid a net loss.
Seasonality
We expect transaction activity patterns on our websites to mirror general consumer buying patterns. Our Enterprise segment is highly
seasonal. The fourth calendar quarter typically accounts for a disproportionate amount of Enterprise's total annual revenue because consumers
increase their purchases and businesses increase their advertising to consumers during the fourth quarter holiday season.
Please see the additional
information in “Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations” under the caption
“Seasonality.”
Technology
Our Marketplaces, Payments and Enterprise platforms utilize a combination of proprietary technologies and services as well as
technologies and services provided by others. We have developed intuitive user interfaces, customer tools and transaction processing, database
and network applications that help enable our users to reliably and securely complete transactions on our sites and help eBay Enterprise's clients
to utilize its suite of services. Our technology infrastructure simplifies the storage and processing of large amounts of data, eases the deployment
and operation of large-scale global products and services and automates much of the administration of large-scale clusters of computers. Our
infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences.
We strive to continually improve our technology to enhance the customer experience and to increase efficiency, scalability and security. For
information regarding technology-related risks, see the information in “Item 1A: Risk Factors” under the captions “System failures and resulting
interruptions in the availability of our websites and services could harm our business” and “Our failure to cost-
effectively manage certain aspects
of our business could harm us.”
Intellectual Property
We regard the protection of our intellectual property, including our trademarks (particularly those covering the eBay and PayPal names),
patents, copyrights, domain names, trade dress and trade secrets as critical to our success. We aggressively protect our intellectual property rights
by relying on federal, state and common law rights in the U.S. and internationally, as well as a variety of administrative procedures. We also rely
on contractual restrictions to protect our proprietary rights in products and services. We have entered into confidentiality and invention
assignment agreements with our employees and contractors and nondisclosure agreements with parties with whom we conduct business to limit
access to and disclosure of our proprietary information.
We pursue the registration of our domain names, trademarks and service marks in the U.S. and internationally. Additionally, we have filed
U.S. and international patent applications covering certain aspects of our proprietary technology. Effective trademark, copyright, patent, domain
name, trade dress and trade secret protection is very expensive to maintain and may require litigation. We must protect our intellectual property
rights and other proprietary rights in an increasing number of jurisdictions, a process that is expensive and time consuming and may not be
successful.
We have registered our core brands as trademarks and domain names in the U.S. and a large number of other jurisdictions and have in
place an active program to continue to secure trademarks and domain names that correspond to our brands in markets of interest. If we are
unable to protect our trademarks or domain names, we could be adversely affected in any jurisdiction in which our trademarks or domain names
are not registered or protected. We have licensed in the past, and expect to license in the future, certain of our proprietary rights, such as
trademarks or copyrighted material, to others.
Third parties have from time to time claimed, and others will likely claim in the future, that we have infringed their intellectual property
rights. We are typically involved in a number of such legal proceedings at any time. Please see the information in “Item 3: Legal Proceedings”
and in “Item 1A: Risk Factors” under the captions "The listing or sale by our users of pirated or counterfeit items may harm our business," "We
are subject to patent litigation" and "We may be unable to protect or enforce our own intellectual property rights adequately.”
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