eBay 2003 Annual Report Download - page 119

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
and complexity. In particular, we expect to face additional patent infringement claims involving services we
provide, including various aspects of our Payments business. We have in the past been forced to litigate
such claims. We may also become more vulnerable to intellectual property claims as laws such as the
Digital Millennium Copyright Act are interpreted by the courts and as we expand into jurisdictions where
the underlying laws with respect to the potential liability of online intermediaries like ourselves is less
favorable. We expect that we will increasingly be subject to copyright and trademark infringement claims
as the geographical reach of our services expands. These claims, whether meritorious or not, could be time
consuming, result in costly litigation, cause service upgrade delays, require expensive changes in our
methods of doing business, or could require us to enter into costly royalty or licensing agreements.
From time to time, we are involved in other disputes that arise in the ordinary course of business. The
number and signiÑcance of these disputes is increasing as our business expands and our company grows
larger. Any claims against us, whether meritorious or not, could be time consuming, result in costly
litigation, require signiÑcant amounts of management time, and result in the diversion of signiÑcant
operational resources.
While we currently believe that the ultimate resolution of these unresolved matters will not have a
material adverse impact on our Ñnancial position, cash Öow or results of operations, the litigation and other
claims noted above are subject to inherent uncertainties and our view of these matters may change in the
future. Were an unfavorable Ñnal outcome to occur, there exists the possibility of a material adverse
impact on our Ñnancial position and results of operations for the period in which the eÅect becomes
reasonably estimable. We are unable to determine what potential losses we may incur if these matters
were to have an unfavorable outcome.
IndemniÑcation Provisions
During the ordinary course of business, in certain limited circumstances, we have included
indemniÑcation provisions within certain of our contracts. Pursuant to these agreements, we indemnify,
hold harmless, and agree to reimburse the indemniÑed party for losses suÅered or incurred by the
indemniÑed party, generally parties with which we have commercial relations, in connection with certain
intellectual property infringement claims by any third party with respect to our services. To date, we have
not incurred any costs in connection with such indemniÑcation clauses.
Note 12 Ì Related Party Transactions:
We have entered into indemniÑcation agreements with each of our directors, executive oÇcers and
certain other oÇcers. These agreements require us to indemnify such individuals, to the fullest extent
permitted by Delaware law, for certain liabilities to which they may become subject as a result of their
aÇliation with us.
Commercial agreements
A member of our Board of Directors and the Audit and Compensation Committees of our Board of
Directors, is a general partner of certain venture capital funds that beneÑcially hold in the aggregate a
greater than 10% equity interest in several public and private companies. We engaged in the following
transactions with such companies:
In December 1999, we entered into an Internet marketing agreement with a privately held company
that facilitates buying decisions for consumers. Under this agreement, we paid fees approximating $503,000
in 2001, and none in 2002 or 2003 for the promotion of eBay.
In April 2000, we entered into an advertising and promotions agreement with a privately held
company that provides a marketplace for live advice. Under this agreement, we recognized revenues of
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