Amazon.com 2007 Annual Report Download - page 74

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
our 1-Click ordering system, infringes a patent obtained by Cordance purporting to cover an “Object-Based
Online Transaction Infrastructure” (U.S. Patent No. 6,757,710) 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. In response, we asserted a declaratory judgment counterclaim in the same
action alleging that a service that Cordance has advertised its intent to launch infringes a patent owned by us
entitled “Networked Personal Contact Manager” (U.S. Patent No. 6,269,369). We dispute Cordance’s allegations
of wrongdoing and intend to vigorously defend ourselves in this matter.
In April 2007, SBJ Holdings 1, LLC filed a complaint against us in the United States District Court for the
Eastern District of Texas. The complaint alleges that our website technology infringes a patent obtained by
SBJ Holdings 1 purporting to cover a “Method, Memory, Product, and Code for Displaying Pre-Customized
Content Associated with Visitor Data” (U.S. Patent No. 6,330,592) and seeks injunctive relief, monetary
damages, treble damages for alleged willful infringement, prejudgment and post-judgment interest, costs and
attorneys’ fees. We dispute the allegations of wrongdoing and intend to vigorously defend ourselves in the
matter.
In August 2007, Polaris IP, LLC filed a complaint against us and others in the United States District Court
for the Eastern District of Texas. The complaint alleges that our website technology infringes a patent obtained
by Polaris purporting to cover an “Automatic Message Interpretation and Routing System” (U.S. Patent
No. 6,411,947) and seeks injunctive relief, monetary damages, prejudgment and post-judgment interest, costs and
attorneys’ fees. In November 2007, we entered into a settlement of the litigation that included, among other
things, a non-exclusive license to the patent in suit.
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.
See also “Note 12—Income Taxes.”
Inventory Suppliers
During 2007, no vendor accounted for 10% or more of our inventory purchases. We do not have long-term
contracts or arrangements with most of our vendors to guarantee the availability of merchandise, particular
payment terms, or the extension of credit limits.
Note 7—STOCKHOLDERS’ EQUITY
Preferred Stock
We have authorized 500 million shares of $0.01 par value Preferred Stock. No preferred stock was
outstanding for any period presented.
Stock Repurchase Activity
In August 2006, our Board of Directors authorized a 24-month program to repurchase up to $500 million of
our common stock, pursuant to which we repurchased $252 million and $248 million of our common stock in
2006 and 2007, respectively. In April 2007, our Board authorized a new 24-month program to repurchase up to
$500 million of our common stock, which was replaced in February 2008 by a 24-month program to repurchase
up to $1 billion of our common stock.
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