Overstock.com 2004 Annual Report Download - page 15

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In addition, many of our current and potential competitors have greater brand recognition, longer operating histories, larger customer bases and
significantly greater financial, marketing and other resources than us, and may enter into strategic or commercial relationships with larger, more established
and well-financed companies. Some of our competitors could enter into exclusive distribution arrangements with our vendors and deny us access to their
products, devote greater resources to marketing and promotional campaigns and devote substantially more resources to their Website and systems
development than our company. New technologies and the continued enhancement of existing technologies also may increase competitive pressures on our
company. We cannot assure you that we will be able to compete successfully against current and future competitors or address increased competitive
pressures. See "Risk Factors."
Intellectual Property
We regard our domain names and similar intellectual property as critical to our success. We rely on a combination of laws and contractual restrictions
with our employees, customers, suppliers, affiliates and others to establish and protect our proprietary rights. Despite these precautions, it may be possible for
a third party to copy or otherwise obtain and use our intellectual property without authorization. In addition, we cannot assure you that others will not
independently develop similar intellectual property. Although we are pursuing the registration of our key trademarks in the United States, some of our trade
names are not eligible to receive trademark protection. In addition, effective trademark protection may not be available or may not be sought by us in every
country in which our products and services are made available online, including the United States.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of
the trademarks and other intellectual property rights of third parties by our company. For example, in October 2003, Tiffany (NJ) Inc. and Tiffany and
Company filed a complaint against us in the United States District Court for the Southern District of New York alleging that we have distributed counterfeit
and otherwise unauthorized Tiffany product in violation of federal copyright and trademark law and related state laws. The complaint seeks statutory and
other damages in an unspecified amount and injunctive relief. In January 2005, Tiffany (NJ) Inc. and Tiffany and Company filed four additional complaints
against us in the United States District Court for the Southern District of New York alleging that we have distributed counterfeit and otherwise unauthorized
Tiffany product in violation of federal copyright and trademark law and related state laws. Although we believe we have defenses to the allegations and intend
to pursue them vigorously, we do not have sufficient information to assess the validity of the claims or the amount of potential damages. See "Legal
Proceedings" for additional information regarding our lawsuits with Tiffany and other third parties.
These and other types of claims could result in increased costs of doing business through legal expenses, adverse judgments or settlements or require us
to change our business practices in expensive ways. In addition, litigation could result in interpretations of the law that require us to change our business
practices or otherwise increase our costs.
Third parties have in the past, and may in the future, recruit our employees who have had access to our proprietary technologies, processes and
operations. These recruiting efforts expose us to the risk that such employees will misappropriate our intellectual property.
Additional litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and
scope of the proprietary rights of others. Any litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and
technical resources, any of which could materially harm our business. See "Risk Factors."
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