Amazon.com 2005 Annual Report Download - page 79

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Amazon.com operates Borders.com as a co-branded site violates federal anti-trust laws, California statutory law,
and the common law of unjust enrichment. The complaint seeks injunctive relief, damages, including treble
damages or statutory damages where applicable, attorneys’ fees, costs, and disbursements, disgorgement of all
sums obtained by allegedly wrongful acts, interest, and declaratory relief. In November 2005, the Court
dismissed all of the plaintiff’s claims with prejudice. The plaintiff is appealing that dismissal. We dispute the
allegations of wrongdoing in this complaint, and we will continue to defend ourselves vigorously in this matter.
Beginning in March 2003, we were served with complaints filed in several different states, including Illinois
and Nevada, by a private litigant purportedly on behalf of the state governments under various state False Claims
Acts. The complaints allege that we (along with other companies with which we have commercial agreements)
wrongfully failed to collect and remit sales and use taxes for sales of personal property to customers in those
states and knowingly created records and statements falsely stating we were not required to collect or remit such
taxes. The complaints seek injunctive relief, unpaid taxes, interest, attorneys’ fees, civil penalties of up to
$10,000 per violation, and treble or punitive damages under the various state False Claims Acts. It is possible
that we have been or will be named in similar cases in other states as well. We do not believe that we are liable
under existing laws and regulations for any failure to collect sales or other taxes relating to Internet sales and
intend to vigorously defend ourselves in these matters.
In January 2004, IPXL Holdings, LLC brought an action against us for patent infringement in the United
States District Court for the Eastern District of Virginia. The complaint alleges that aspects of our online ordering
technology, including 1-Click®ordering, infringe a patent obtained by IPXL purporting to cover an “Electronic
Fund Transfer or Transaction System” (U.S. Patent No. 6,149,055) and seeks injunctive relief, monetary
damages in an amount no less than a reasonable royalty, prejudgment interest, and attorneys’ fees. In August
2004, the Court entered a judgment in Amazon.com’s favor on the grounds that the patent claims asserted by the
plaintiff were invalid and that Amazon.com’s technology did not infringe those claims in any event. The
judgment in our favor was affirmed by the Court of Appeals for the Federal Circuit in November 2005.
In April 2004, we learned that the French authorities are investigating our DVD sales practices in France,
and we are cooperating.
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
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