Expedia 2005 Annual Report Download - page 27

Our websites rely on intellectual property, and we cannot be sure that this intellectual property is
protected from copying or use by others, including potential competitors.
We regard much of our content and technology as proprietary and try to protect our proprietary
technology by relying on trademarks, copyrights, trade secret laws and confidentiality agreements. In
connection with our license agreements with third parties, we seek to control access to and distribution of
our technology, documentation and other proprietary information. Even with all of these precautions, it is
possible for someone else to copy or otherwise obtain and use our proprietary technology without our
authorization or to develop similar technology independently. Effective trademark, copyright and trade
secret protection may not be available in every country in which our services are made available through
the internet, and policing unauthorized use of our proprietary information is difficult and expensive. We
cannot be sure that the steps we have taken will prevent misappropriation of our proprietary information.
This misappropriation could have a material adverse effect on our business. In the future, we may need to
go to court to enforce our intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. This litigation might result in substantial costs and
diversion of resources and management attention.
We currently license from third parties some of the technologies incorporated into our websites. As
we continue to introduce new services that incorporate new technologies, we may be required to license
additional technology. We cannot be sure that such technology licenses will be available on commercially
reasonable terms, if at all.
Part I. Item 1B. Unresolved Staff Comments
We did not have any unresolved staff comments through February 28, 2006.
Part I. Item 2. Properties
We lease approximately 1.0 million square feet of office space worldwide, pursuant to leases with
expiration dates through May 2014.
We lease approximately 340,000 square feet for our headquarters in Bellevue, Washington, pursuant to
leases with expiration dates through February 2010. In addition, we lease approximately 380,000 square
feet of office space for our domestic operations in various cities and locations in California, Florida,
Hawaii, Idaho, Illinois, Massachusetts, Michigan, Missouri, Nevada, New York, Texas and Washington,
pursuant to leases with expiration dates through December 2010.
We also lease approximately 280,000 square feet of office space for our international operations in
various cities and locations in Australia, Belgium, Canada, China, France, Germany, Italy, Japan, Mexico,
the Netherlands, Spain and the United Kingdom, pursuant to leases with expiration dates through May
2014.
Part I. Item 3. Legal Proceedings
In the ordinary course of business, Expedia and its subsidiaries are parties to legal proceedings and
claims involving property, personal injury, contract, alleged infringement of third party intellectual property
rights and other claims. The amounts that may be recovered in such matters may be subject to insurance
coverage.
Rules of the Securities and Exchange Commission require the description of material pending legal
proceedings, other than ordinary, routine litigation incident to the registrant's business, and advise that
proceedings ordinarily need not be described if they primarily involve damages claims for amounts
(exclusive of interest and costs) not individually exceeding 10% of the current assets of the registrant and
its subsidiaries on a consolidated basis. In the judgment of management, none of the pending litigation
matters which the Company and its subsidiaries are defending, including those described below, involves or
is likely to involve amounts of that magnitude. The litigation matters described below are as of March 1,
2006, and involve issues or claims that may be of particular interest to our stockholders, regardless of
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