Overstock.com 2013 Annual Report Download - page 9

Table of Contents
marketing and promotional campaigns and devote substantially more resources to their website and systems development than we do. Many have supply
chain operations that decrease product shipping times to their customers, or have options for in-store product pick-up options or allow in-store returns and
offer other delivery and returns options that we do not have. New technologies and the continued enhancement of existing technologies and developments in
related areas, such as same-day product deliveries, also may increase competitive pressures on us. Our competitors include Amazon.com, Inc. We cannot
ensure that we will be able to compete successfully against current or future competitors or address increased competitive pressures (see Item 1A—"Risk
Factors").
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Our business is affected by seasonality because of the holiday retail season, which historically has resulted in higher sales volume during our fourth
quarter, which ends December 31. We recognized 30.5%, 31.1% and 29.8% of our annual revenue during the fourth quarter of 2013, 2012, and 2011,
respectively.
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See Item 15 of Part IV, "Financial Statements"—Note 22—"Business Segments" for information regarding our business segments and geographical
areas.
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We regard our domain names and similar intellectual property as critical to our success. We rely on a combination of laws and contractual
restrictions with our employees, customers, suppliers, affiliates and others to establish and protect our proprietary rights, including the law pertaining to trade
secrets. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our intellectual property or trade secrets without
authorization. In addition, we cannot ensure that others will not independently develop similar intellectual property. Although we have registered and are
pursuing the registration of our key trademarks in the United States and some other countries, some of our trade names may not be eligible to receive registered
trademark protection. In addition, effective trademark protection may not 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. Additionally our efforts to protect our trade secrets may not succeed.
Third parties have in the past recruited 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 and trade secrets.
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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 is costly
and time consuming and can 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, associated costs, 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").
For further information, see the information set forth under Item 15 of Part IV, "Financial Statements—Note 13—Commitments and Contingencies,
subheading Legal Proceedings," contained in the "Notes to Consolidated Financial Statements" of this Annual Report on Form 10-K.
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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
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