Overstock.com 2004 Annual Report Download - page 24

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introduce new products and services using new technologies or if new industry standards and practices emerge, our existing Websites and our proprietary
technology and systems may become obsolete. Our failure to respond to technological change or to adequately maintain, upgrade and develop our computer
network and the systems used to process customers' orders and payments could harm our business, prospects, financial condition and results of operations.
We may not be able to obtain trademark protection for our marks, which could impede our efforts to build brand identity.
We have filed trademark applications with the Patent and Trademark Office seeking registration of certain service marks or trademarks. There can be no
assurance that our applications will be successful or that we will be able to secure significant protection for our service marks or trademarks in the United
States or elsewhere as we expand internationally. Our competitors or others could adopt product or service marks similar to our marks, or try to prevent us
from using our marks, thereby impeding our ability to build brand identity and possibly leading to customer confusion. Any claim by another party against us
or customer confusion related to our trademarks, or our failure to obtain trademark registration, could negatively affect our business.
We may not be able to enforce protection of our intellectual property rights under the laws of other countries.
As we continue to expand internationally, we are subject to risks of doing business internationally as related to our intellectual property, including:
legal uncertainty regarding liability for the listings and other content provided by our users, including uncertainty as a result of less Internet-
friendly legal systems, unique local laws, and lack of clear precedent or applicable law; and
differing intellectual property laws, which may provide insufficient protection for our intellectual property.
Our business and reputation may be harmed by the listing or sale of pirated, counterfeit or illegal items by third parties, and by intellectual property
litigation.
We have received in the past, and we anticipate we will receive in the future, communications alleging that certain items listed or sold through our
Websites infringe third-party copyrights, trademarks and trade names or other intellectual property rights or that we have otherwise infringed third parties'
past, current or future intellectual property rights. For example, in October 2003, Tiffany (NJ) Inc. and Tiffany and Company filed a complaint against us in
the United States District Court for the Southern District of New York alleging that we have distributed counterfeit and otherwise unauthorized Tiffany
product in violation of federal copyright and trademark law and related state laws. In addition, in January 2005, Tiffany filed additional complaints against us
asserting similar claims. See "Legal Proceedings" for additional information regarding our lawsuits with Tiffany and other third parties.
We may be unable to prevent third parties from listing unlawful goods, and we may be subject to allegations of civil or criminal liability for unlawful
activities carried out by third parties through our Websites. In the future, we may implement measures to protect against these potential liabilities that could
require us to spend substantial resources and/or to reduce revenues by discontinuing certain service offerings. Any costs incurred as a result of liability or
asserted liability relating to the sale of unlawful goods or the unlawful sale of goods could harm our revenues, business, prospects, financial condition and
results of operations.
Resolving litigation or claims regarding patents or other intellectual property, whether meritorious or not, could be costly, time-consuming, cause service
delays, divert our management and key personnel from our business operations, require expensive or unwanted changes in our methods of doing business
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