eBay 2002 Annual Report Download - page 74

We are pursuing strategic relationships with third parties to provide many of these services. Because
we use third parties to deliver these services, we may be unable to control the quality of these services,
and our ability to address problems if any of these third parties fails to perform adequately will be reduced.
Expanding our operations in this manner also will require signiÑcant additional expenses and development,
operations and other resources and will strain our management, Ñnancial and operational resources. The
lack of acceptance of any new services could harm our business.
Our growth will depend on our ability to develop our brand.
We believe that eBay's historical growth has been largely attributable to word of mouth. Both eBay
and PayPal have beneÑted from frequent and high visibility media exposure both nationally and locally.
We believe that continuing to strengthen our brand will be critical to achieving widespread acceptance of
our services. Promoting and positioning our brand will depend largely on the success of our marketing
eÅorts and our ability to provide high quality services. In order to promote our brand, we will need to
increase our marketing budget and otherwise increase our Ñnancial commitment to creating and
maintaining brand loyalty among users. Brand promotion activities may not yield increased revenues, and
even if they do, any increased revenues may not oÅset the expenses we incurred in building our brand. If
we do attract new users to our services, they may not conduct transactions over our services on a regular
basis. If we fail to promote and maintain our brand or incur substantial expenses in an unsuccessful
attempt to promote and maintain our brand, our business would be harmed.
We may be unable to protect or enforce our own intellectual property rights adequately.
We regard the protection of our trademarks, copyrights, patents, domain names, trade dress and trade
secrets as critical to our success. We aggressively protect our intellectual property rights by relying on a
combination of trademark, copyright, patent, trade dress and trade secret laws and through the domain
name dispute resolution system. We also rely on contractual restrictions to protect our proprietary rights in
products and services. We have entered into conÑdentiality and invention assignment agreements with our
employees and contractors, and nondisclosure agreements with parties with whom we conduct business in
order to limit access to and disclosure of our proprietary information. These contractual arrangements and
the other steps taken by us to protect our intellectual property may not prevent misappropriation of our
technology or deter independent third-party development of similar technologies. We pursue the
registration of our domain names, trademarks and service marks in the U.S. and internationally. EÅective
trademark, copyright, patent, trade dress, trade secret and domain name protection is very expensive to
maintain and may require litigation. Protection may not be available in every country in which our services
are made available online. Furthermore, we must also protect our trademarks, patents and domain names
in an increasing number of jurisdictions, a process that is expensive and may not be successful in every
location. We have licensed in the past, and expect to license in the future, certain of our proprietary rights,
such as trademarks or copyrighted material, to third parties. These licensees may take actions that might
diminish the value of our proprietary rights or harm our reputation.
We are subject to the risks of owning real property.
We own real property including land, buildings and interests in a partnership holding land and
buildings, primarily related to our operations. We have little experience in managing real property.
Ownership of this property subjects us to risks, including:
‚ the possibility of environmental contamination and the costs associated with Ñxing any
environmental problems;
‚ adverse changes in the value of these properties, due to interest rate changes, changes in the
neighborhoods in which the properties are located, or other factors;
‚ the possible need for structural improvements in order to comply with zoning, seismic, disability act
or other requirements; and
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