Capital One 2003 Annual Report Download - page 29

Intellectual Property
As part of our overall and ongoing strategy to protect and enhance our intellectual property, we rely on a variety
of protections, including copyrights, trademarks, trade secrets, patents and certain restrictions on disclosure. We
also undertake other measures to control access to and distribution of our other proprietary information. Despite
these precautions, it may be possible for a third party to copy or otherwise obtain and use certain intellectual
property or proprietary information without authorization. Our precautions may not prevent misappropriation or
infringement of our intellectual property or proprietary information. In addition, our competitors also file patent
applications for innovations that are used in our industry. The ability of our competitors to obtain such patents
may adversely affect our ability to compete. Conversely, our ability to obtain such patents may increase our
competitive advantage. There can be no assurance that we will be successful in such efforts, or that the ability of
our competitors to obtain such patents may not adversely impact our financial results.
Employees
As of December 31, 2003, we employed 17,760 employees whom we refer to as “associates.” A central part of
our philosophy is to attract and maintain a highly capable staff. We view current associate relations to be
satisfactory. None of our associates is covered under a collective bargaining agreement.
Supervision and Regulation
General
The Bank is a banking corporation chartered under Virginia law and a member of the Federal Reserve System,
the deposits of which are insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation (the
“FDIC”). In addition to regulatory requirements imposed as a result of the Bank’s international operations
(discussed below), the Bank is subject to comprehensive regulation and periodic examination by the Bureau of
Financial Institutions of the Virginia State Corporation Commission (the “Bureau of Financial Institutions”), the
Federal Reserve Board (the “Federal Reserve”), the Federal Reserve Bank of Richmond and the FDIC. The Bank
is not currently a “bank” under the Bank Holding Company Act of 1956, as amended (the “BHCA”), because it
(i) engages only in credit card operations, (ii) does not accept demand deposits or deposits that the depositor may
withdraw by check or similar means for payment to third parties or others, (iii) does not accept any savings or
time deposits of less than $100,000, other than as permitted as collateral for extensions of credit, (iv) maintains
only one office that accepts deposits and (v) does not engage in the business of making commercial loans. Due to
the Bank’s status as a limited purpose credit card bank, our non-credit card operations must be conducted in our
other operating subsidiaries, except as relates to our U.K. operations.
The Savings Bank is a federal savings bank chartered by the Office of Thrift Supervision (the “OTS”) and is a
member of the Federal Home Loan Bank System. Its deposits are insured by the Savings Association Insurance
Fund of the FDIC. The Savings Bank is subject to comprehensive regulation and periodic examination by the
OTS and the FDIC.
The Corporation is not currently a bank holding company under the BHCA as a result of its ownership of the
Bank because the Bank is not a “bank” as defined under the BHCA. If the Bank failed to meet the credit card
bank exemption criteria described above, its status as an insured depository institution would make the
Corporation subject to the provisions of the BHCA, including certain restrictions as to the types of business
activities in which a bank holding company and its affiliates may engage. Becoming a bank holding company
under the BHCA would affect the Corporation’s ability to engage in certain non-banking businesses. In addition,
for purposes of the BHCA, if the Bank failed to qualify for the credit card bank exemption, any entity that
acquired direct or indirect control of the Bank and also engaged in activities not permitted for bank holding
companies could be required either to discontinue the impermissible activities or to divest itself of control of the
Bank.
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