Overstock.com 2007 Annual Report Download - page 28

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
Website 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.
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 Website. 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 or
require us to enter into costly royalty or licensing agreements, if available. As a result, these claims could harm our business.
Negative publicity generated as a result of the foregoing could damage our reputation, harm our business and diminish the value of our brand name.
Our Gradient Analytics and Rocker Partners, L.P. litigation may have an adverse effect on our business and financial condition.
In August 2005 we filed an unfair business practice lawsuit against Gradient Analytics, Rocker Partners, LP and others, alleging that the defendants have
conspired to denigrate Overstock's business for personal profit. In October 2005 we filed an amended complaint alleging additional causes of action and
articulating in greater detail the allegations against the defendants. In November 2007, Copper River Partners, L.P. (formerly known as Rocker Partners, LP)
filed a cross-complaint against us and some of our current and former directors. In January 2008, Gradient Analytics requested the court that it be allowed to
file against us and our Chief Executive Officer, Dr. Patrick Byrne. Dr. Byrne has appeared on nationally syndicated television programs and elsewhere to
discuss the litigation. The use of management's time and attention in connection with the litigation and related matters may reduce the time management is
able to spend on other aspects of our business, which may have adverse effects on other aspects of our business. To the extent that any such adverse effects
exceed any benefits we may realize from pursuing the litigation, our business, prospects, financial condition and results of operation may suffer.
Our Prime Broker litigation may have an adverse effect on our business and financial condition.
In February 2007, along with five shareholder plaintiffs, we filed a lawsuit in the Superior Court of California, County of San Francisco against Morgan
Stanley & Co. Incorporated, Goldman Sachs & Co., Bear Stearns Companies, Inc., Bank of America Securities LLC, Bank of New York, Citigroup Inc.,
Credit Suisse (USA) Inc., Deutsche Bank Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., and UBS Financial Services, Inc. In September 2007,
we filed an amended complaint adding Lehman Brothers, Inc. as an additional defendant and articulating in greater detail
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