Expedia 2006 Annual Report Download - page 15

Our competition, which is strong and increasing, includes online and offline travel companies that target
leisure and corporate travelers including travel agencies, tour operators, travel supplier direct websites and
their call centers, consolidators and wholesalers of travel products and services and other companies offering
travel search engines including meta-search engines. We face these competitors in local, regional, national
and/or international markets.
We believe that maintaining and enhancing our brands is a critical component of our effort to compete.
We differentiate our brands from our competitors primarily based on quality and breadth of travel products,
channel features and usability, price, traveler service and quality of travel planning content and advice. The
emphasis on one or more of these factors varies, depending on the brand or business and the related target
demographic.
Our brands face increasing competition from travel supplier direct websites. In some cases, supplier direct
channels offer advantages to travelers, such as loyalty programs or lower transaction fees. Our websites feature
travel products and services from numerous travel suppliers (as opposed to a single supplier), and allow
travelers to combine products and services from multiple providers in one transaction. We face competition
from airlines, hotels, rental car companies, cruise operators and other travel service providers, whether working
individually or collectively, some of which are suppliers to our websites. Our business is generally sensitive to
changes in the competitive landscape, including the emergence of new competitors.
Intellectual Property Rights
We regard our intellectual property rights, including our patents, service marks, trademarks, domain
names, copyrights, trade secrets and other intellectual property, as critical to our success. For example, we rely
heavily upon the software code, informational databases and other components that make up our travel
planning service.
We rely on a combination of laws, business practices and contractual obligations with employees,
suppliers, affiliates and others to establish and protect our trade secrets. Despite these precautions, it may be
possible for a third-party to copy or otherwise obtain and use our trade secrets or our intellectual property
without authorization which, if discovered, might require the uncertainty of legal action to correct. In addition,
there can be no assurance that others will not independently and lawfully develop substantially similar
properties.
We maintain our trademark portfolio by filing trademark applications with the appropriate international
trademark offices, maintaining our current registrations, securing contractual trademark rights when appropri-
ate, and relying on common law trademark rights when appropriate. We also register domain names as we
deem appropriate. We protect our trademarks and domain names with an enforcement program and use of
trademark licenses. While we seek to protect our trademarks and domain names, effective trademark and
domain name protection may not be available or may not be sought by us for every trademark and domain
name used in every country, and contractual disputes may affect the use of trademarks and domain names
governed by private contract. In addition, our infringement monitoring resources may not locate every
trademark or domain name infringement that exists. Similarly, not every variation of a domain name may be
available, or may be registered by us, even if available. The failure to protect our intellectual property in a
meaningful manner, or challenges to our intellectual property rights, could materially adversely affect our
business, result in erosion of our brand names and/or limit our ability to control marketing on or through the
internet using our various domain names.
We have considered, and will continue to consider, the appropriateness of filing for patents to protect
future inventions, as circumstances may warrant. However, many patents protect only specific inventions and
there can be no assurance that others may not create new products or methods that achieve similar results
without infringing upon patents owned by us.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of our
business, including claims of alleged infringement by us of the trademarks, copyrights, patents and other
intellectual property rights of third-parties. In addition, litigation may be necessary in the future to enforce our
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