Overstock.com 2005 Annual Report Download - page 33

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business operations. The uncertainty of litigation increases these risks. In connection with such litigation, we may be subject to
significant damages or equitable remedies relating to the operation of our business and the sale of products on our websites. Any such
litigation may materially harm our business, prospects, results of operations, financial condition and cash flows. However, we do not
currently believe that any of our outstanding litigation will have a material impact on our financial statements.
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 and February 2005, Tiffany (NJ) Inc. and Tiffany and Company filed five
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. These complaints also seek statutory and other damages in an unspecified amount and injunctive relief. Although we have
filed answers to these complaints and 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 alleged in these suits.
In September 2004, we received a letter from BTG International Inc. claiming that certain of our business practices and online
marketing information technology systems infringe patents owned by BTG. On September 14, 2004, without engaging in any
meaningful discussion or negotiation with us, BTG filed a complaint in the United States District Court of Delaware alleging that
certain of our business practices and online marketing information technology systems infringe a single patent owned by BTG. On
October 21, 2004, we filed an answer denying the material allegations in BTG's claims. We have recently reached a confidential
agreement in principle which will settle and dismiss the case. We are currently working on a definitive settlement agreement with
BTG.
In December 2003, we received a letter from Furnace Brook claiming that certain of our business practices and our on-line
ordering system infringe a patent owned by Furnace Brook. After diligent efforts to show that we do not infringe these patents and
Furnace Brook's continual assertions that it would vigorously protect its intellectual property rights if we did not agree to enter into
licensing arrangements with respect to the asserted patents, on August 12, 2005, we filed a complaint in the United States District
Court of Utah, Central Division, seeking declaratory judgment that we do not infringe any valid claim of the Furnace Brook patent.
Furnace Brook filed a motion to dismiss our complaint for lack of personal jurisdiction over Furnace Brook in Utah. On October 31,
2005, the United States District Court of Utah, Central Division, issued a decision to dismiss our complaint for lack of personal
jurisdiction over Furnace Brook. On December 14, 2005, we filed an appeal of the Utah decision with the United States Court of
Appeals for the Federal Circuit. On August 18, 2005, shortly after we filed the complaint in Utah, Furnace Brook filed a complaint in
the United States District Court for the Southern District of New York, alleging that certain of our business practices and our on-line
ordering system infringe a single patent owned by Furnace Brook. On September 9, 2005 we filed an answer denying the material
allegations in Furnance Brook's claims. Although we have filed an answer and believe we have defenses to the allegations and intend
to pursue them vigorously, the Furnace Brook lawsuit is in the discovery stage, and we do not have sufficient information to assess the
validity of the claims or the amount of potential damages.
On August 11, 2005, along with a shareholder plaintiff, we filed a complaint against Gradient Analytics, Inc.; Rocker Partners,
LP; Rocker Management, LLC; Rocker Offshore Management Company, Inc. and their respective principals. We, along with a second
shareholder plaintiff, filed the complaint in the Superior Court of California, County of Marin. On October 12, 2005, we filed an
amended complaint against the same entities alleging libel, intentional interference with prospective economic advantage and
violations of California's unfair business practices act. On March 7, 2006, the
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