Overstock.com 2010 Annual Report Download - page 12

Table of Contents
be available or we may not seek protection in every country in which we market or sell our products and services, including in the United States.
Third parties have in the past, and may in the future, recruit our employees who have had access to our proprietary technologies, processes and
operations. These recruiting efforts expose us to the risk that such employees and those hiring them will misappropriate and exploit our intellectual property.
Legal and Regulatory Matters
From time to time, we receive claims and become subject to regulatory investigations or actions, consumer protection, employment, intellectual property
and other commercial litigation related to the conduct of our business. We also prosecute lawsuits to enforce our legal rights. Such 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, we may be subject to significant damages or equitable remedies 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.
These and other types of claims could result in increased costs of doing business through legal expenses, adverse judgments or settlements or require us
to change our business practices in expensive and significant ways. In addition, litigation could result in interpretations of the law that require us to change our
business practices or otherwise increase our costs.
Additional litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and
scope of the proprietary rights of others. Any litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and
technical resources, any of which could materially harm our business (see Item 1A—"Risk Factors").
See the information set forth under Item 15 of Part IV, "Financial Statements—Note 14—Commitments and Contingencies, subheading Legal
Proceedings," contained in the "Notes to Consolidated Financial Statements" of this Annual Report on Form 10-K.
Government Regulation
Our services are subject to federal and state consumer protection laws including laws protecting the privacy of consumer information and regulations
prohibiting unfair and deceptive trade practices. In particular, under federal and state financial privacy laws and regulations, we must provide notice to
consumers of our policies on sharing non-public information with third parties, advance notice of any changes to our policies and, with limited exceptions, we
must give consumers the right to prevent sharing of their non-public personal information with unaffiliated third parties. Furthermore, the growth and demand
for online commerce could result in more stringent consumer protection laws that impose additional compliance burdens on online companies. These
consumer protection laws could result in substantial compliance costs and could interfere with the conduct of our business.
In many states, there is currently great uncertainty whether or how existing laws governing issues such as property ownership, sales and other taxes, libel
and personal privacy apply to the Internet and commercial online services. These issues may take years to resolve. In addition, new state tax regulations in
states where we do not now collect state and local taxes, may subject us to the obligation to collect and remit state and local taxes , or subject us to additional
state and local sales and income taxes, or to requirements intended to assist states with their tax collection efforts. New legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not currently apply to our business or the application of existing laws and regulations to
the Internet and commercial online services could result in significant additional taxes on our business. These taxes could have an adverse effect on our cash
flows and results of operations. Furthermore, there is a possibility that we may be subject to significant fines or other payments for any past failures to comply
with these requirements.
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