eBay 2010 Annual Report Download - page 120

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 2010, are as follows (in thousands):
Year Ended December 31,
Operating
Leases
2011 ............................................................ $117,795
2012 ............................................................ 56,249
2013 ............................................................ 26,472
2014 ............................................................ 18,705
2015 ............................................................ 13,977
Thereafter ........................................................ 16,004
Total minimum lease payments ................................... $249,202
Rent expense in the years ended December 31, 2008, 2009 and 2010 totaled $78.6 million, $92.3 million
and $112.6 million, respectively. There were no material capital leases at December 31, 2009 and 2010.
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 alleged 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 alleged that we had 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 (enforceable by daily fines of up to EUR 100,000) 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 appealed this decision, and in September 2010, the Paris Court of
Appeal reduced the damages award to EUR 5.7 million and modified the injunction. We have further appealed
this decision to the French Supreme Court. In 2009, plaintiffs filed an action regarding our compliance with the
original injunction, and in November 2009, the court awarded the plaintiffs EUR 1.7 million (the equivalent of
EUR 2,500 per day) and indicated that as a large Internet company we could do a better job of enforcing the
injunction. Parfums Christian Dior has filed another motion relating to our compliance with the injunction. We
have taken measures to comply with the injunction and have appealed these rulings, noting, among other things,
the modification of the initial injunction. 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 in numerous different jurisdictions, seeking to hold us liable for, among
other things, alleged counterfeit items listed on our websites by third parties, “tester” and other not for resale
consumer products listed on our websites by third parties, alleged misuse of trademarks in listings, alleged
violations of selective distribution channel laws, alleged violations of parallel import laws, alleged
non-compliance with consumer protection laws or in connection with paid search advertisements. We have
prevailed in some of these suits, lost in others, and many are in various stages of appeal. We continue to believe
that we have meritorious defenses to these suits and intend to defend ourselves vigorously.
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