2.2.0.7 false Commitments and Contingencies 0208 - Disclosure - Commitments and Contingencies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Commitments and Contingencies [Abstract] 0 meli_CommitmentsAndContingenciesAbstract meli false na duration Commitments and Contingencies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Commitments and Contingencies. false 3 Commitments and Contingencies 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="3%" nowrap="nowrap" align="left"><b>8.</b></td> <td width="1%"> </td> <td> <div style="text-align: justify"><b>Commitments and Contingencies</b> </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Litigation and Other Legal Matters</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">As of June 30, 2010, the Company had established reserves for proceeding-related contingencies of $981,595 to cover 288 legal actions against the Company where the Company has determined that a loss is probable. As of June 30, 2010 no loss amount has been accrued for over 1,273 legal actions for the aggregate amount up to $3,567,504 because a loss is not considered probable. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">At the beginning of 2010, the Brazilian subsidiary of the Company had 295 cases in litigation in ordinary courts, 8 of which (QIX Skateboards Industria e Comercio Ltda., Editora COC Empreendimentos Culturais Ltda., Vintage Denim Ltda., Fallms Distribuiçăo de Fitas Ltda., 100% Nacional Distribuidora de Fitas Ltda., Xuxa Promoções e Produções Artísticas Ltda., Praetorium Instituto de Ensino, Pesquisas e Atividades de Extensăo e Direito Ltda., Botelho Indústria e Distribuição Cinematográfica Ltda. and SERASA S.A) were related to alleged intellectual property infringement. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">During the three-month period ended June 30, 2010, the Brazilian subsidiary of the Company was sued in 36 cases in ordinary courts. In most of these cases the plaintiffs asserted that the Company was responsible for fraud committed against them, or responsible for damages suffered when purchasing an item on the Company’s website, when using MercadoPago, or when the Company invoiced them. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 0pt"> <b> </b> <b> </b> </div> <div style="margin-top: 0pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="3%" nowrap="nowrap" align="left"> <b> </b> </td> <td width="1%"></td> <td> <div style="text-align: justify"> <b> </b> </div> </td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 0pt; margin-left: 4%"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">As of June 30, 2010, 318 legal actions were pending in the Brazilian ordinary courts, 8 of which (QIX Skateboards Industria e Comercio Ltda., Editora COC Empreendimentos Culturais Ltda., Vintage Denim Ltda., Fallms Distribuiçăo de Fitas Ltda., Xuxa Promoções e Produções Artísticas Ltda., Praetorium Instituto de Ensino, Pesquisas e Atividades de Extensăo e Direito Ltda., Botelho Indústria e Distribuição Cinematográfica Ltda. and SERASA S.A) were related to alleged intellectual property infringement. In addition, during the three-month period ended on June 30, 2010, the Brazilian subsidiary of the Company received approximately 496 summons of legal actions filed in Brazilian consumer courts, where a lawyer is not required to file or pursue a claim. In most of the cases, the plaintiffs asserted that the Company was responsible for fraud committed against them, or responsible for damages suffered when purchasing an item on the Company’s website, when using MercadoPago, or when the Company invoiced them. As of June 30, 2010, there were more than 1,832 cases still pending in Brazilian consumer courts. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Other third parties have from time to time claimed, and others may claim in the future, that the Company was responsible for fraud committed against them, or that the Company has infringed their intellectual property rights. The underlying laws with respect to the potential liability of online intermediaries like the Company are unclear in the jurisdictions where the Company operates. Management believes that additional lawsuits alleging that the Company has violated copyright or trademark laws will be filed against the Company in the future. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Intellectual property claims, whether meritorious or not, are time consuming and costly to resolve, could require expensive changes in the Company’s methods of doing business, or could require the Company to enter into costly royalty or licensing agreements. The Company may be subject to patent disputes, and be subject to patent infringement claims as the Company’s services expand in scope and complexity. In particular, the Company may face additional patent infringement claims involving various aspects of the Payments businesses. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">From time to time, the Company is involved in other disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries are increasing as the Company’s business expands and the Company grows larger. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Any claims or regulatory actions against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, and result in the diversion of significant operational resources. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">On June 12, 2007, a state prosecutor of the State of São Paulo, Brazil presented a claim against the Company’s Brazilian subsidiary. The state prosecutor alleges that the Company’s Brazilian subsidiary should be held joint and severally liable for any fraud committed by sellers on the Brazilian version of its website, or responsible for damages suffered by buyers when purchasing an item on the Brazilian version of the MercadoLibre website. The Company was summoned on December 12, 2007 and presented its defense on January 4, 2008. On June 26, 2009, the Judge sentenced in favor of the State of São Paulo Public Prosecutor in all his claims. On June 29, 2009 a recourse to the lower court was presented by the Company. On September 29, 2009 the Company presented an appeal and requested to suspend effects of the sentence issued by the lower court until the appeal is decided. On November 2009, the suspension of the effects of the ruling was granted, however the appeal is still pending. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 0pt"> <b> </b> <b> </b> </div> <div style="margin-top: 0pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="3%" nowrap="nowrap" align="left"> <b> </b> </td> <td width="1%"></td> <td> <div style="text-align: justify"> <b> </b> </div> </td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 0pt; margin-left: 4%"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">On March 28, 2003, Qix Skateboards Indústria e Comercio Ltda., or Qix, sued MercadoLivre.com Atividades de Internet Ltda., the Company’s Brazilian subsidiary, in the 3rd Civil Court, County of Novo Hamburgo, State of Rio Grande do Sul, Brazil. Qix alleged that the Company’s Brazilian subsidiary was infringing Qix’s trademarks as a result of users selling allegedly counterfeit Qix shoes through the Brazilian page of the Company’s website, based on Brazilian Industrial Property Law (Law 9,279/96). Qix sought an order enjoining the sale of Qix-branded shoes on the MercadoLibre marketplace with a $50,000 daily non-compliance penalty. On April 25, 2003 an injunction was issued prohibiting the offer of Qix products on the Company’s platform with a $500 daily non-compliance penalty. On May 5, 2003, the Company appealed the decision, but the injunction was not lifted. On April 28, 2010, the Company reached an agreement with Qix to settle the case and agreed to establish a procedure pursuant to which the Company will remove items from the website which infringe on Qix intellectual property rights when notified by Qix. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">On October 5, 2007, a state prosecutor of the State of Minas Gerais, city of Uberlandia, Brazil initiated a claim against the Company’s Brazilian subsidiary. The state prosecutor alleges that the Company’s Brazilian subsidiary should be held liable for any fraud committed by sellers on the Brazilian version of the Company’s website, or responsible for damages suffered by buyers when purchasing an item on the Brazilian version of the Company’s website. In May 2010, the Company agreed to settle the case. As part of the settlement, the Company agreed: (i) remove from the terms of service for the website any clause that limits (a) the Company’s Brazilian subsidiary’s responsibility for services provided by it and (b) the right of consumers to choose the jurisdiction to file claims against the Brazilian subsidiary, (ii) that the Company would not disclose or modify users’ information without user instruction or order issued by a competent authority, and (iii) to pay a fine of approximately $1,000 per day of non-compliance starting May, 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Litigation after June 30, 2010</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">After June 30, 2010 and up to the date of issuance of these consolidated financial statements, the Company was sued in 16 cases in ordinary courts (13 of which correspond to the Brazilian subsidiary) and 223 new cases in consumer courts (181 of which correspond to the Brazilian subsidiary). No loss amount has been accrued in connection with these actions because a loss is not considered probable. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 0pt"> <b> </b> <b> </b> </div> <div style="margin-top: 0pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="3%" nowrap="nowrap" align="left"> <b> </b> </td> <td width="1%"></td> <td> <div style="text-align: justify"> <b> </b> </div> </td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Other contingencies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">As of June 30, 2010, the Company had reserved $61,176 against some tax contingencies (other than income tax), identified in some of its subsidiaries. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Other Commitments</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">On June 19, 2008, the Company’s Argentine subsidiary agreed to participate in a real estate trust for the construction of an office building located in the City of Buenos Aires, buying 5,340 square meters divided into 5 floors and 70 parking spaces, where the Company plans to move its headquarters and Argentine operation offices. As of June 30, 2010, the Argentine subsidiary has invested $9,112,345 in the aforementioned trust. As this investment represents an undivided interest for more than 20% of the total amount of the real estate trust, it is accounted for under the equity method and it is classified as Long-Term Investments in the balance sheet. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 false 1 2 false UnKnown UnKnown UnKnown false true