Overstock.com 2014 Annual Report Download - page 100

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server to a client computer. The case was tried and on January 16, 2015 the jury rendered a verdict of infringement assessing damages in the amount of $4.0
million. The court may also order injunctive relief, the payment of pro and post-judgment interest, future royalties, attorney fees and costs. We intend to
appeal. The nature of the loss contingencies relating to claims that have been asserted against us are described above. We intend to vigorously defend this
action and pursue our indemnification rights with our vendors.
On February 11, 2013, RPost Holdings, Inc., RPost Communications Limited, and RMail Limited, filed suit against us in the United States District
Court in Eastern District of Texas for infringement of patents covering products and services that verify the delivery and integrity of email messages. We
tendered defense of the case to an indemnitor which accepted the defense. We answered the complaint. The case is in its early stages. The nature of the loss
contingencies relating to claims that have been asserted against us are described above. However, no estimate of the loss or range of loss can be made. We
intend to vigorously defend this action and pursue our indemnification rights with our vendors.
On January 31, 2014, Guardian Media Technologies LTD filed suit against us in the United States District Court in the Eastern District of Texas for
infringement of patents covering parental control features in DVD players and televisions. The suit relates to two prior lawsuits with Guardian filed in 2008,
and in 2013, which were previously dismissed. The case was settled for a nominal amount and is now dismissed.
On September 30, 2013, Altaf Nazerali filed suit against us in the Supreme Court of British Columbia for vicarious liability for defamation, liable
and slander. The suit relates to alleged representations about Nazerali found on the website www.deepcapture.com. The suit alleges that the representations
were made by our Chief Executive Officer, Patrick Byrne, and two other employees. The case is in its discovery stages. A trial is scheduled in April 2015. The
nature of the loss contingencies relating to claims that have been asserted against us are described above. However, no estimate of the loss or range of loss can
be made.
In June 2013, William French filed suit against us and 46 other defendants under seal in the Superior Court of the State of Delaware. The filing was
unsealed on March 24, 2014. French brought the action on Delaware’s behalf for violations of Delaware’s unclaimed property laws and for recovery of the
unredeemed gift card value allegedly attributable to Delaware residents. French’s complaint alleges that we, and other defendants, knowingly refused to
fulfill obligations under Delaware's Abandoned Property Law by failing to report and deliver unclaimed gift card funds to the State of Delaware, and
knowingly made, used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit money to
Delaware in violation of the Delaware False Claims and Reporting Act. The complaint seeks an injunction, monetary damages (including treble damages)
penalties, and attorneys' fees and costs. The case is in its discovery stages. The nature of the loss contingencies relating to claims that have been asserted
against us are described above. However, no estimate of the loss or range of loss can be made.
We establish liabilities when a particular contingency is probable and estimable. At December 31, 2014, we have accrued $12.5 million in light of
these probable and estimable liabilities. It is reasonably possible that the actual losses may exceed our accrued liabilities. We have other contingencies which
are reasonably possible; however, the reasonably possible exposure to losses cannot currently be estimated.
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During our normal course of business, we have made certain indemnities, commitments, and guarantees under which we may be required to make
payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities to various lessors in connection with facility leases
for certain claims arising from such facility or lease, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State
of Delaware. The duration of these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these
indemnities, commitments, and guarantees do not provide for any limitation of the maximum potential future payments we could be obligated to make. As
such, we are unable to estimate with any reasonableness our potential exposure under these items. We have not recorded any liability for these indemnities,
commitments, and guarantees in the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability,
including those that may arise from indemnification provisions, when future payment is both probable and reasonably estimable.
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