Overstock.com 2012 Annual Report Download - page 14

Table of Contents
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 we do. Further, any of them may enter into strategic or commercial relationships with larger, more
established and well-financed companies, including exclusive distribution arrangements with our vendors or service suppliers that could deny us access
to key products or needed services, or acquisitions of our suppliers or service providers, having the same effect. Many of them do or could devote
greater resources to marketing and promotional campaigns and devote substantially more resources to their website and systems development than we
do. Many have supply chain operations that decrease product shipping times to their customers, or have options for in-store product pick-up options or
allow in-store returns and offer other delivery and returns options that we do not have. New technologies and the continued enhancement of existing
technologies and developments in related areas, such as same-day product deliveries, also may increase competitive pressures on us. We cannot ensure
that we will be able to compete successfully against current or future competitors or address increased competitive pressures (see Item 1A—"Risk
Factors").
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Our business is affected by seasonality because of the holiday retail season, which historically has resulted in higher sales volume during our
fourth quarter, which ends December 31. We recognized 31.1%, 29.8% and 32.0% of our annual revenue during the fourth quarter of 2012, 2011, and
2010, respectively.
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See Item 15 of Part IV, "Financial Statements"—Note 22—"Business Segments" for information regarding our business segments and
geographical areas.
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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, including the law pertaining to
trade secrets. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our intellectual property or trade secrets
without authorization. In addition, we cannot ensure that others will not independently develop similar intellectual property. Although we have
registered and are pursuing the registration of our key trademarks in the United States and some other countries, some of our trade names may not be
eligible to receive registered trademark protection. In addition, effective trademark protection may not be available or we may not seek protection in
every country in which we market or sell our products and services, including in the United States. Additionally our efforts to protect our trade secrets
may not succeed.
Third parties have in the past recruited 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 and those hiring them will misappropriate and exploit our intellectual
property and trade secrets.
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From time to time, we receive claims and become subject to regulatory investigations or actions, consumer protection, employment, intellectual
property and other commercial litigation related to the conduct of our business. We also prosecute lawsuits to enforce our legal rights. Such litigation is
costly and time consuming and can divert our management and key personnel from our business operations. The uncertainty of litigation increases these
risks. In connection with such litigation, we may be subject
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