Overstock.com 2007 Annual Report Download - page 16

intellectual property. Although we have registered and are pursuing the registration of our key trademarks in the United States and some internationally, some
of our trade names are not eligible to receive trademark protection. In addition, effective trademark protection may not be available or may not be sought by
us in every country in which our products and services are made available online, including the United States.
Legal and Regulatory Matters
From time to time, we receive claims of and become subject to consumer protection, employment, intellectual property and other commercial litigation
related to the conduct of our business. Also, we receive regulatory inquiries from state and federal agencies which might relate to our business practices, our
sales of securities, or the activity of our customers or suppliers. Such regulatory matters and commercial litigation could be costly and time consuming and
could divert our management and key personnel from our business operations. The uncertainty of litigation increases these risks. In connection with such
litigation or regulatory inquiries, we may be subject to significant damages or equitable remedies or fines relating to the operation of our business and the sale
of products on our website. Any such litigation may materially harm our business, prospects, results of operations, financial condition or cash flows.
However, we do not currently believe that any of our outstanding litigation will have a material adverse effect on our financial condition or results of
operation.
On August 11, 2005, along with a shareholder plaintiff, we filed a complaint against Gradient Analytics, Inc.; Rocker Partners, LP; Rocker
Management, LLC; Rocker Offshore Management Company, Inc. and their respective principals in the Superior Court of California, County of Marin. On
October 12, 2005, we filed an amended complaint against the same entities alleging libel, intentional interference with prospective economic advantage and
violations of California's unfair business practices act. On March 7, 2006, the court denied the defendants demurrers to and motions to strike the amended
complaint. The defendants each filed a motion to appeal the court's decision, we responded and the California Attorney General submitted an amicus brief
supporting our view; the court has ruled that this appeal stays discovery in the case. On May 30, 2007 the California Court of Appeals upheld the lower court's
ruling in our favor. Defendants filed motions for rehearing, which the Court of Appeals summarily denied on June 27, 2007. Defendants filed Petitions for
Review before the California Supreme Court which the California Supreme court denied on September 19, 2007. On October 1, 2007, the Court of Appeals
remitted the case back to the Superior Court. On December 4, 2007, Matthew Kliber, a former principal of Gradient Analytics, filed a motion for judgment on
the pleading which the court denied on February 8, 2008. Discovery in this case is currently stayed. We intend to continue to pursue this action vigorously.
The court has set a trial date of September 9, 2008.
On November 9, 2007, Copper River Partners, L.P. (formerly known as Rocker Partners, LP) filed a cross-complaint against us and certain of our current
and former directors. The Copper River cross-complaint alleges cross-defendants have engaged in violations of California's state securities laws, violations of
California's unfair business practices act, tortuous interference with contract and prospective business advantage, and deceit. In January 2008, each of the
cross-defendants filed various motions in opposition of this cross-complaint. On January 30, 2008, Gradient Analytics, Inc. filed a motion for leave to file a
cross-complaint against us and Patrick Byrne. The court has not ruled on this motion. The proposed Gradient Analytics cross-complaint alleges that we and
Dr. Byrne engaged in violations of California's unfair business practices act, interference with prospective business advantage, and libel. These cases are in
the initial stages. We intend to defend these cross-complaints vigorously.
On May 9, 2006 we received a notice of an investigation and subpoena from the Securities and Exchange Commission, Salt Lake City District Office. On
May 17, 2006, Patrick Byrne also received a subpoena from the Securities and Exchange Commission, Salt Lake City District Office. These subpoenas
requested a broad range of documents, including, among other documents, all documents relating to our accounting policies, our targets, projections or
estimates related to financial
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