eBay 2008 Annual Report Download - page 50

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
have filed an answer and counterclaims asserting that the patents are invalid, unenforceable, and were not infringed.
The parties have completed claim construction briefing and attended a pre-trial conference hearing. The claim
construction hearing is set for March 2009 and the trial date is not yet set. We believe that we have meritorious
defenses and intend to defend ourselves vigorously.
In March 2007, a plaintiff filed a purported antitrust class action lawsuit against eBay in the Western District of
Texas alleging that eBay and its wholly owned subsidiary PayPal “monopolized” markets through various anticompe-
titive acts and tying arrangements. The plaintiff alleges claims under sections 1 and 2 of the Sherman Act, as well as
related state law claims. The complaint seeks treble damages and an injunction. In April 2007, the plaintiff re-filed the
complaint in the U.S. District Court for the Northern District of California (No. 07-CV-01882-RS), and dismissed the
Texas action. In 2007, the case was consolidated with other similar lawsuits (No. 07-CV-01882JF). In June 2007, we filed
a motion to dismiss the class action complaint. In March 2008, the court granted the motion to dismiss the tying claims
with leave to amend and denied the motion with respect to the monopolization claims. Plaintiffs subsequently decided
not to refile the tying claims. The class certification motion is scheduled for June 2009. We believe that we have
meritorious defenses and intend to defend ourselves vigorously.
In May 2007, Netcraft Corporation filed a lawsuit in the Western District of Wisconsin (No. 07-C-0254C)
alleging that eBay and PayPal infringed two of its patents entitled “Internet billing methods.” The suit seeks an
injunction against continuing infringement, unspecified damages, and interest, costs, and fees. In September 2007,
we filed a motion for summary judgment of noninfringement on both patents. In December 2007, the U.S. District
Court for the Western District of Wisconsin entered a judgment granting our motion for summary judgment of non-
infringement on both of the patents that Netcraft asserted against eBay and PayPal. This judgment was affirmed by
the Court of Appeals for the Federal Circuit in December 2008.
In October 2007, PartsRiver filed a lawsuit in the Eastern District of Texas (No. 2-07CV-440-DF) alleging that
eBay, Microsoft, Yahoo!, Shopzilla, PriceGrabber and PriceRunner infringed its patent relating to search methods.
The suit seeks an injunction against continuing infringement, unspecified damages, and interest, costs, and fees.
The defendants have moved to transfer venue and the parties are conducting discovery. Fact discovery cutoff is
scheduled for July 2009, the claim construction hearing is scheduled for April 2009 and trial is scheduled for
October 2009. We believe that we have meritorious defenses and intend to defend ourselves vigorously.
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