Amazon.com 2004 Annual Report Download - page 31

On January 22, 2004, IPXL Holdings, LLC brought an action against us for patent infringement in the
United States District Court for the Eastern District of Virginia. The complaint alleges that aspects of our online
ordering technology, including 1-Click®ordering, infringe a patent obtained by IPXL purporting to cover an
“Electronic Fund Transfer or Transaction System” (U.S. Patent No. 6,149,055) and seeks injunctive relief,
monetary damages in an amount no less than a reasonable royalty, prejudgment interest, and attorneys’ fees. On
August 25, 2004, the Court entered a judgment in Amazon.com’s favor on the grounds that the patent claims
asserted by the plaintiff were invalid and that Amazon.com’s technology did not infringe those claims in any
event. The Court also awarded Amazon.com its attorneys’ fees and costs. Plaintiff is appealing that judgment.
In April 2004, we learned that the French authorities are investigating our DVD sales practices in France,
and we are cooperating.
On May 21, 2004, Toysrus.com LLC filed a complaint against us for breach of contract in the Superior
Court of New Jersey. The complaint alleges that we breached our commercial agreement with Toysrus.com LLC
by selling, and by permitting other third parties to sell, products that Toysrus.com LLC alleges it has an exclusive
right to sell on our website. The complaint seeks injunctive relief, declaratory judgment and either monetary
damages of an unspecified amount or rescission of the commercial agreement and return of specific amounts paid
under the agreement totaling $200 million. We dispute the allegations of wrongdoing in this complaint and have
brought counterclaims alleging breach of contract and seeking damages and declaratory relief. We intend to
vigorously defend ourselves in this matter.
On September 14, 2004, BTG International Inc. filed a complaint against us for patent infringement in the
United States District Court for the District of Delaware. The complaint alleges that our website technology,
including our Associates program, infringes two patents obtained by BTG purporting to cover methods and
apparatuses for “Attaching Navigational History Information to Universal Resource Locator Links on a World
Wide Web Page” (U.S. Patent No. 5,712,979) and for “Tracking the Navigation Path of a User on the World
Wide Web” (U.S. Patent No. 5,717,860) and seeks injunctive relief, monetary damages in an amount no less than
areasonable royalty, treble damages for alleged willful infringement, prejudgment interest, costs, and attorneys’
fees. We dispute the allegations of wrongdoing in this complaint and intend to vigorously defend ourselves in
this matter.
On October 29, 2004 Cendant Publishing, Inc. filed a complaint against us for patent infringement in the
United States District Court for the District of Delaware. The complaint alleges that our website technology,
including our recommendations features, infringes a patent obtained by Cendant purporting to cover a “System
and Method for Providing Recommendation of Goods or Services Based on Recorded Purchasing History” (U.S.
Patent No. 6,782,370) and seeks injunctive relief, monetary damages in an amount no less than a reasonable
royalty, prejudgment interest, costs, and attorneys’ fees. We dispute the allegations of wrongdoing in this
complaint and intend to vigorously defend ourselves in this matter. In February 2005, Cendant voluntarily
withdrew the complaint without prejudice. However, we expect the plaintiff to re-file the claims unless they are
settled or otherwise disposed of.
Depending on the amount and the timing, an unfavorable resolution of some or all of these matters could
materially affect our business, results of operations, financial position, or cash flows in a particular period.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of our shareholders during the fourth quarter of 2004.
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