eBay 2015 Annual Report Download - page 110

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the potential liability of online intermediaries like ourselves are either unclear or less favorable. We believe that
additional lawsuits alleging that we have violated patent, copyright or trademark laws will be filed against us.
Intellectual property claims, whether meritorious or not, are time consuming and costly to defend and resolve,
could require expensive changes in our methods of doing business or could require us to enter into costly royalty
or licensing agreements on unfavorable terms.
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 our practices, prices, rules, policies or customer/user agreements
violate applicable law or that we have acted unfairly and/or not acted in conformity with such prices, rules,
policies or agreements. Further, the number and significance of these disputes and inquiries are increasing as we
have grown larger, our businesses have expanded in scope (both in terms of the range of products and services
that we offer and our geographical operations) and our products and services have increased in complexity. Any
claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly
litigation, damage awards (including statutory damages for certain causes of action in certain jurisdictions),
injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to
change our business practices in expensive ways, require significant amounts of management time, result in the
diversion of significant operational resources or otherwise harm our business.
Indemnification Provisions
We entered into a separation and distribution agreement and various other agreements with PayPal to govern
the separation and relationship of the two companies going forward. These agreements provide for specific
indemnity and liability obligations and could lead to disputes between us and PayPal, which may be significant.
In addition, the indemnity rights we have against PayPal under the agreements may not be sufficient to protect us
and our indemnity obligations to PayPal may be significant.
In the ordinary course of business, we have included limited indemnification provisions in certain of our
agreements with parties with which we have commercial relations, including our standard marketing, promotions
and application-programming-interface license agreements. Under these contracts, we generally indemnify, hold
harmless and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in
connection with claims by a third party with respect to our domain names, trademarks, logos and other branding
elements to the extent that such marks are applicable to our performance under the subject agreement. In certain
cases, we have agreed to provide indemnification for intellectual property infringement. It is not possible to
determine the maximum potential loss under these indemnification provisions due to our limited history of prior
indemnification claims and the unique facts and circumstances involved in each particular provision. To date,
losses recorded in our consolidated statement of income in connection with our indemnification provisions have
not been significant, either individually or collectively.
Off-Balance Sheet Arrangements
As of December 31, 2015, we had no off-balance sheet arrangements that have, or are reasonably likely to
have, a current or future material effect on our consolidated financial condition, results of operations, liquidity,
capital expenditures or capital resources.
We have a cash pooling arrangement with a financial institution for cash management purposes. This
arrangement allows for cash withdrawals from the financial institution based upon our aggregate operating cash
balances held within the same financial institution (“Aggregate Cash Deposits”). This arrangement also allows us
to withdraw amounts exceeding the Aggregate Cash Deposits up to an agreed-upon limit. The net balance of the
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