eBay 2009 Annual Report Download - page 119

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In July 2009, the U.S. Second Circuit Court of Appeals heard arguments in the Tiffany v. eBay matter
which is on appeal following a decision by the trial court in favor of eBay in July 2008. In June 2004, Tiffany
(NJ) Inc. and Tiffany & Co. filed a lawsuit in the U.S. District Court for the Southern District of New York
(No. 04 Civ. 4607 (NRB)) claiming that eBay was liable for contributory trademark infringement, false
advertising, unfair competition and various related claims based on the listing of alleged counterfeit Tiffany
silver jewelry on the eBay website by third parties. The suit sought an injunction, lost profits, punitive damages
and attorneys’ fees. A bench trial took place in November 2007 and in a ruling in July 2008, the trial court
rejected Tiffany’s claims, finding that the burden of enforcing trademarks is on the trademark owner and that
eBay’s anti-counterfeiting efforts are sufficient under the law. In an appeal filed in August 2008, Tiffany argued
that generalized knowledge of alleged counterfeiting should suffice to hold eBay liable for counterfeit Tiffany
items sold by third parties on its website. The Second Circuit’s opinion is expected in the first half of 2010.
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
infringement, 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 and trial dates have not yet been set. The U.S. Patent and Trademark Office has
accepted reexamination on all five Net2Phone patents that are the subject of the lawsuit. The case is currently
subject to a limited stay. 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 anticompetitive acts and tying arrangements. The plaintiff alleged claims under sections 1 and 2 of the
Sherman Act, as well as related state law claims. 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.
The complaint seeks treble damages and an injunction. In 2007, the case was consolidated with other similar
lawsuits (No. 07-CV-01882JF). In June 2007, we filed a motion to dismiss the 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 plaintiffs’ motion
on class certification and our motion for summary judgment were heard by the court in December 2009. We
believe that we have meritorious defenses and intend to defend ourselves vigorously.
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 U.S. District Court for the Eastern District of Texas has granted defendants’ motion to transfer
venue and moved the case to the U.S. District Court for the Northern District of California. In August 2009, the
District Court granted our motion for summary judgment and ruled that the PartsRiver patent was invalid based
on a finding that it was “on sale” more than a year before the filing date of the patent. PartsRiver has appealed
the District Court’s decision. We intend to vigorously oppose PartsRiver’s appeal.
eBay’s Korean subsidiary, IAC, has notified a majority of its approximately 20 million users of a January
2008 data breach involving personally identifiable information including name, address, resident registration
number and some transaction and refund data (but not including credit card information or real time banking
information). Approximately 146,000 users have sued IAC over this breach in several lawsuits in Korean courts
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