eBay 2002 Annual Report Download - page 19

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payments related to the San Jose facilities totaled $7.9 million. At December 31, 2002, settlement of our
two interest rate swaps would have resulted in a loss of $10.9 million.
Our U.S. segment occupies approximately 434,000 square feet of commercial oÇce space in the
United States. We occupy 314,000 square feet of commercial oÇce space in San Jose, California under
the terms of our synthetic lease for our corporate headquarters. We own and occupy approximately 72,000
square feet of commercial oÇce space in Salt Lake City, Utah for our domestic customer support center.
We lease and occupy an additional 48,000 square feet of commercial oÇce space in various domestic
locations for the operations of certain U.S. subsidiaries.
Our International segment leases approximately 210,000 square feet of commercial oÇce space in 12
countries for our international operations, including the operations of our South Korean majority-owned
subsidiary.
Our Payments segment leases approximately 126,000 square feet of commercial oÇce space in the
United States and the United Kingdom. In addition, our Payments segment owns approximately 22 acres
of land near Omaha, Nebraska, on which a 115,000 square foot facility is under construction. Upon
completion, this facility will house the primary customer service operations center for our Payments
segment.
In 2002, we sold commercial real estate properties in California and Indiana totaling approximately
551,000 square feet, primarily in connection with the sales of our ButterÑelds and Kruse subsidiaries. As of
December 31, 2002, we continued to be the majority interest holder in approximately 156,000 square feet
of commercial real estate in California.
In February 2003, we entered into an operating sublease for approximately 110,000 square feet of
commercial oÇce space (oÅset by a sublease back to the prime lessee of approximately 37,000 square feet
of that space) in Vancouver, British Columbia to house a customer support center. For further discussion
of the Vancouver lease, see ""Note 17 Ì Subsequent Events Ì Unaudited'' to our Consolidated Financial
Statements, which is incorporated by reference herein.
We are currently considering various alternatives related to our long-term facilities needs. While we
believe our existing facilities are adequate to meet our immediate needs, it may become necessary to lease
or acquire additional or alternative space to accomodate our future growth.
ITEM 3: LEGAL PROCEEDINGS
On April 25, 2001, our European subsidiaries, eBay GmbH and eBay International AG, were sued by
Montres Rolex S.A. and certain Rolex aÇliates, or Rolex, in the regional court of Cologne, Germany. The
suit subsequently was transferred to the regional court in Dusseldorf, Germany. Rolex alleged that our
subsidiaries were infringing Rolex's trademarks as a result of users selling counterfeit Rolex watches
through our German website. The suit also alleges unfair competition. Rolex sought an order forbidding
the sale of Rolex watches on the website as well as damages. In December 2002, a trial was held in the
matter and the court ruled in favor of eBay on all causes of action. Rolex has appealed the ruling, but the
appeal has not yet been briefed or heard.
On September 26, 2001, a complaint was Ñled by MercExchange LLC against us, our Half.com
subsidiary and ReturnBuy, Inc. in the Eastern District of Virginia (No. 2:01-CV-736) alleging
infringement of three patents (relating to online auction technology, multiple database searching and
electronic consignment systems) and seeking a permanent injunction and damages (including treble
damages for willful infringement). We answered the complaint, denying the allegations. In April 2002, we
Ñled four motions for summary judgment relating to the three patents in suit. The court denied three of
those motions and deferred ruling on the fourth motion. A ""Markman'' hearing was held in July 2002 to
deÑne certain disputed terms in the patents, and in October 2002 the court issued its claim construction
Ñndings. In October 2002, the court gave us leave to amend our answer to include a claim that
MercExchange committed fraud on the patent oÇce during the prosecution of one of the patents. On the
same date, the court granted in part our pending summary judgment motion, eÅectively invalidating the
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