Overstock.com 2015 Annual Report Download - page 11

• traditional general merchandise and specialty retailers and liquidators, many of which have a significant online presence.
Many of our current and potential competitors have greater brand recognition, longer operating histories, larger customer bases and significantly
greater financial, marketing and other resources than we do. Further, any of them may enter into strategic or commercial relationships with larger, more
established and well-financed companies, including exclusive distribution arrangements with our vendors or service suppliers that could deny us access to
key products or needed services, or acquisitions of our suppliers or service providers, having the same effect. Many of them do or could devote greater
resources to 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 and the development of proprietary delivery systems, are also increasing competitive
pressures on us. Our competitors include Amazon.com, Inc and Wayfair LLC. 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 29.0%, 31.4% and 30.5% of our annual revenue during the fourth quarter of 2015, 2014, and 2013,
respectively.
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See Item 15 of Part IV, "Financial Statements"—Note 20. 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 in the form of 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 may limit
our current or future business, 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").
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