eBay 2015 Annual Report Download - page 30

value of our proprietary rights or harm our reputation. Any failure to adequately protect or enforce our
intellectual property rights, or significant costs incurred in doing so, could materially harm our business.
As the number of products in the software industry increases and the functionality of these products further
overlap, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to
infringement claims, including patent, copyright, and trademark infringement claims. Litigation may be
necessary to determine the validity and scope of the patent and other intellectual property rights of others. The
ultimate outcome of any allegation is uncertain and, regardless of the outcome, any such claim, with or without
merit, may be time-consuming, result in costly litigation, divert management’s time and attention from our
business, require us to stop selling, delay roll-out, or redesign our products, or require us to pay substantial
amounts to satisfy judgments or settle claims or lawsuits or to pay substantial royalty or licensing fees, or to
satisfy indemnification obligations that we have with some of our customers. Our failure to obtain necessary
license or other rights, or litigation or claims arising out of intellectual property matters, may harm our business.
Failure to deal effectively with fraudulent activities on our platforms would increase our loss rate and harm
our business, and could severely diminish merchant and consumer confidence in and use of our services.
We face risks with respect to fraudulent activities on our platforms and periodically receive complaints from
buyers and sellers who may not have received the goods that they had contracted to purchase or payment for the
goods that a buyer had contracted to purchase. In some European and Asian jurisdictions, buyers may also have
the right to withdraw from a sale made by a professional seller within a specified time period. While we can, in
some cases, suspend the accounts of users who fail to fulfill their payment or delivery obligations to other users,
we do not have the ability to require users to make payment or deliver goods, or otherwise make users whole
other than through its buyer protection program, which in the United States we refer to as the eBay Money Back
Guarantee. Although we have implemented measures to detect and reduce the occurrence of fraudulent activities,
combat bad buyer experiences and increase buyer satisfaction, including evaluating sellers on the basis of their
transaction history and restricting or suspending their activity, there can be no assurance that these measures will
be effective in combating fraudulent transactions or improving overall satisfaction among sellers, buyers, and
other participants. Additional measures to address fraud could negatively affect the attractiveness of our services
to buyers or sellers, resulting in a reduction in the ability to attract new users or retain current users, damage to
our reputation, or a diminution in the value of our brand names.
We have substantial indebtedness, and we may incur substantial additional indebtedness in the future, and
we may not generate sufficient cash flow from our business to service our indebtedness. Failure to comply with
the terms of our indebtedness could result in the acceleration of our indebtedness, which could have an adverse
effect on our cash flow and liquidity.
We have a substantial amount of outstanding indebtedness and we may incur substantial additional
indebtedness in the future, including under our commercial paper program and revolving credit facility or
through public or private offerings of debt securities. Our outstanding indebtedness and any additional
indebtedness we incur may have significant consequences, including, without limitation, any of the following:
• requiring us to use a significant portion of our cash flow from operations and other available cash to
service our indebtedness, thereby reducing the amount of cash available for other purposes, including
capital expenditures and acquisitions;
• our indebtedness and leverage may increase our vulnerability to downturns in our business, to
competitive pressures, and to adverse changes in general economic and industry conditions;
• adverse changes in the ratings assigned to our debt securities by credit rating agencies will likely
increase our borrowing costs;
• our ability to obtain additional financing for working capital, capital expenditures, acquisitions, share
repurchases or other general corporate and other purposes may be limited; and
• our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.
18