Overstock.com 2013 Annual Report Download - page 24

Table of Contents
•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.
We may be accused of infringing intellectual property rights of third parties.
Other parties have claimed and may claim that we infringe their intellectual property rights. We have been and are subject to, and expect to continue to
be subject to, legal claims of alleged infringement of the intellectual property rights of third parties. The ready availability of damages, royalties and the
potential for injunctive relief has increased the defense litigation costs of patent infringement claims, especially those asserted by third parties whose sole or
primary business is to assert such claims. Such claims, even if not meritorious, may result in significant expenditure of financial and managerial resources,
and the payment of damages or settlement amounts. Additionally, we may become subject to injunctions prohibiting us from using software or business
processes we currently use or may need to use in the future, or requiring us to obtain licenses from third parties when such licenses may not be available on
financially feasible terms or terms acceptable to us or at all. In addition, we may not be able to obtain on favorable terms, or at all, licenses or other rights with
respect to intellectual property we do not own in providing e-commerce services to other businesses and individuals under commercial agreements.
Our business and reputation may be harmed by the offering 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 items offered 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 offering and selling 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. We may implement measures in an effort 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 business. 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.
Use of social media may adversely impact our reputation.
There has been a marked increase in use of social media platforms and similar devices, including weblogs (blogs), social media websites, and other
forms of Internet-based communications which allow individual access to a broad audience of consumers and other interested persons. Consumers value
readily available information concerning retailers, manufacturers, and their goods and services and often act on such information without further
investigation, authentication and without regard to its accuracy. The availability of information on social media platforms and devices is virtually immediate
as is its impact. Social media platforms and devices immediately publish the content their subscribers and participants post, often without filters or checks on
accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is virtually limitless. Information
concerning or affecting us may be posted on such platforms and devices at any time. Information posted may be inaccurate and adverse to us, and it may
harm our business. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms also could be used for the
dissemination of trade secret information or compromise of other valuable company assets, any of which could harm our business.
Our car listing service may be subject to a variety of regulatory requirements and risks.
Many states and other jurisdictions, including Utah, where we are located, have regulations governing the conduct of car sellers and public
advertisement for car sales. Generally, these regulations govern the conduct of those sellers advertising their automobiles for sale and are not directly applicable
to those providing the medium through which the advertisement is made available to the public. Sellers are often subject to regulations in the nature of “truth in
advertising laws.” We have no ability to know whether the information sellers provide is correct. While our site terms and conditions of usage prohibit
unlawful acts, we cannot assure that sellers will comply with all laws and regulations applicable to them and their transactions. The application of these
regulations to online car listing service providers is not clear. Although we do not expect these laws to
23