eBay 2008 Annual Report Download - page 108

Download and view the complete annual report

Please find page 108 of the 2008 eBay annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued.
Our ability to issue debt is subject to market conditions and other factors impacting our borrowing capacity.
Note 11 — Commitments and Contingencies:
Lease Arrangements
We have lease obligations under certain non-cancelable operating leases. Future minimum rental payments
under our non-cancelable operating leases, at December 31, 2008, are as follows (in thousands):
Year Ending December 31,
Operating
Leases
2009 ............................................................... $ 77,975
2010 ............................................................... 63,190
2011 ............................................................... 35,672
2012 ............................................................... 22,834
2013 ............................................................... 16,755
Thereafter ........................................................... 23,109
Total minimum lease payments .......................................... $239,535
Rent expense in the years ended December 31, 2006, 2007 and 2008 totaled $31.9 million, $51.4 million, and
$78.6 million respectively. There were no material capital leases at December 31, 2007 and 2008.
Litigation and Other Legal Matters
In August 2006, Louis Vuitton Malletier and Christian Dior Couture filed two lawsuits in the Paris Court of
Commerce against eBay Inc. and eBay International AG. Among other things, the complaint alleges that we
violated French tort law by negligently broadcasting listings posted by third parties offering counterfeit items
bearing plaintiffs’ trademarks, and by purchasing certain advertising keywords. Around September 2006, Parfums
Christian Dior, Kenzo Parfums, Parfums Givenchy, and Guerlain Société also filed a lawsuit in the Paris Court of
Commerce against eBay Inc. and eBay International AG. The complaint alleges that we have interfered with the
selective distribution network the plaintiffs established in France and the European Union by allowing third parties
to post listings offering genuine perfumes and cosmetics for sale on our websites. In June 2008, the Paris Court of
Commerce ruled that eBay and eBay International AG were liable for failing to prevent the sale of counterfeit items
on its websites that traded on plaintiffs’ brand names and for interfering with the plaintiffs’ selective distribution
network. The court awarded plaintiffs approximately EUR 38.6 million in damages and issued an injunction
prohibiting all sales of perfumes and cosmetics bearing the Dior, Guerlain, Givenchy and Kenzo brands over all
worldwide eBay sites to the extent that they are accessible from France. We have taken measures to comply with the
injunction and have appealed these rulings. However, these and similar suits may force us to modify our business
practices, which could lower our revenue, increase our costs, or make our websites less convenient to our customers.
Any such results could materially harm our business. Other luxury brand owners have also filed suit against us or
have threatened to do so, seeking to hold us liable for, among other things, alleged counterfeit items listed on our
websites by third parties, for “tester” and other not for resale consumer products listed on our websites by third
parties, for the alleged misuse of trademarks in listings, for alleged violations of selective distribution channel laws,
for alleged non-compliance of consumer protection laws or in connection with paid search advertisements. We
continue to believe that we have meritorious defenses to these suits and intend to defend ourselves vigorously.
In June 2006, Net2Phone, Inc. filed a lawsuit in the U.S. District Court for the District of New Jersey
(No. 06-2469) alleging that eBay Inc., Skype Technologies S.A., and Skype Inc. infringed five patents owned by
Net2Phone relating to point-to-point Internet protocol. The suit seeks an injunction against continuing infringe-
ment, unspecified damages, including treble damages for willful infringement, and interest, costs, and fees. We
100
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)