Amazon.com 2005 Annual Report Download - page 30

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In May 2004, Toysrus.com LLC filed a complaint against us for breach of contract in the Superior Court of
New Jersey. The complaint alleges that we breached our commercial agreement with Toysrus.com LLC by
selling, and by permitting other third parties to sell, products that Toysrus.com LLC alleges it has an exclusive
right to sell on our website. The complaint seeks injunctive relief, declaratory judgment, termination of the
agreement, and monetary damages in excess of $65 million. We dispute the allegations of wrongdoing in this
complaint and have brought counterclaims alleging breach of contract and seeking damages and declaratory
relief. The trial of both parties’ claims concluded in November 2005, and a decision by the Court is pending.
In September 2004, BTG International Inc. filed a complaint against us for patent infringement in the United
States District Court for the District of Delaware. The complaint alleges that our website technology, including
our Associates program, infringes two patents obtained by BTG purporting to cover methods and apparatuses for
“Attaching Navigational History Information to Universal Resource Locator Links on a World Wide Web Page”
(U.S. Patent No. 5,712,979) and for “Tracking the Navigation Path of a User on the World Wide Web” (U.S.
Patent No. 5,717,860) and seeks injunctive relief, monetary damages in an amount no less than a reasonable
royalty, treble damages for alleged willful infringement, prejudgment interest, costs, and attorneys’ fees. We
dispute the allegations of wrongdoing in this complaint and intend to vigorously defend ourselves in this matter.
In October 2004 Cendant Publishing, Inc. filed a complaint against us for patent infringement in the United
States District Court for the District of Delaware. The complaint alleged that our website technology, including
our recommendations features, infringes a patent obtained by Cendant purporting to cover a “System and Method
for Providing Recommendation of Goods or Services Based on Recorded Purchasing History” (U.S. Patent
No. 6,782,370) and sought injunctive relief, monetary damages in an amount no less than a reasonable royalty,
prejudgment interest, costs, and attorneys’ fees. In February 2005, Cendant voluntarily withdrew the complaint
without prejudice. In June 2005, however, Cendant re-filed a new complaint containing substantially the same
claims. In response, we filed a countersuit in the United States District Court for the Western District of
Washington (since transferred to the District of Delaware) alleging that Cendant’s parent, Cendant Corporation,
and its affiliates Orbitz, Inc., Budget Rent A Car System, Inc., Avis Rent A Car System, Inc., and Trilegiant
Corporation infringe certain patents owned by us and our subsidiary, A9.com. We dispute Cendant’s allegations
of wrongdoing in its complaint and intend to vigorously defend ourselves in these matters.
In December 2005, Registrar Systems LLC filed a complaint against us and Target Corporation for patent
infringement in the United States District Court for the District of Colorado. The complaint alleges that our website
technology, including the method by which Amazon.com enables customers to use Amazon.com account
information on websites that Amazon.com operates for third parties, such as Target.com, infringes two patents
obtained by Registrar Systems purporting to cover methods and apparatuses for a “World Wide Web Registration
Information Processing System” (U.S. Patent Nos. 5,790,785 and 6,823,327) and seeks injunctive relief, monetary
damages in an amount no less than a reasonable royalty, prejudgment interest, costs, and attorneys’ fees. We dispute
the allegations of wrongdoing in this complaint and intend to vigorously defend ourselves in this matter.
Depending on the amount and the timing, an unfavorable resolution of some or all of these matters could
materially affect our business, results of operations, financial position, or cash flows in a particular period.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of our shareholders during the fourth quarter of 2005.
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