eBay 2005 Annual Report Download - page 43

dispute resolution system. We also rely on contractual restrictions to protect our proprietary rights in products
and services. We have entered into confidentiality and invention assignment agreements with our employees
and contractors, and confidentiality 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 we
have taken to protect our intellectual property may not prevent misappropriation of our technology or deter
independent development of similar technologies by others. We pursue the registration of our domain names,
trademarks, and service marks in the U.S. and internationally. Effective trademark, copyright, patent, domain
name, trade dress, and trade secret protection is very expensive to maintain and may require litigation. We
must 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. For example, Skype is in the process of applying
to register the Skype name as a trademark worldwide. In the EU, Skype's application is being opposed. If this
opposition to Skype's application were to be successful, Skype might be forced to apply for trademark
registration in each individual EU country, resulting in increased expenditures and damage to its business if its
application were rejected in individual countries. 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 others. These licensees
may take actions that 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 and buildings 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 fixing 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
‚ possible disputes with tenants, neighboring owners, or others.
Some anti-takeover provisions may affect the price of our common stock.
Our Board of Directors has the authority to issue up to 10,000,000 shares of preferred stock and to determine
the preferences, rights and privileges of those shares without any further vote or action by the stockholders. The
rights of the holders of common stock may be harmed by rights granted to the holders of any preferred stock that
may be issued in the future. Some provisions of our certificate of incorporation and bylaws could have the effect of
making it more difficult for a potential acquirer to acquire a majority of our outstanding voting stock. These include
provisions that provide for a classified board of directors, prohibit stockholders from taking action by written
consent and restrict the ability of stockholders to call special meetings. We are also subject to provisions of
Delaware law that prohibit us from engaging in any business combination with any interested stockholder for a
period of three years from the date the person became an interested stockholder, unless certain conditions are met.
This restriction could have the effect of delaying or preventing a change of control.
ITEM 1B: UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2: PROPERTIES
We own and lease various properties in the United States and in 24 other countries around the world. We
use the properties for corporate, administrative, customer support and other general business needs. Our
corporate headquarters are located in San Jose, California. As of December 31, 2005, our owned and leased
properties provided us with aggregate square footage of approximately 1.3 million and 1.4 million, respectively,
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