GNC 2008 Annual Report Download - page 16

Table of Contents
diet products. Our international competitors also include large international pharmacy chains and major international supermarket chains as well
as other large U.S.-based companies with international operations. Our wholesale and manufacturing operations also compete with other
wholesalers and manufacturers of third-party nutritional supplements.
Trademarks and Other Intellectual Property
We believe trademark protection is particularly important to the maintenance of the recognized brand names under which we market our
products. We own or have rights to material trademarks or trade names that we use in conjunction with the sale of our products, including the
GNC brand name. We also rely upon trade secrets, know-how, continuing technological innovations, and licensing opportunities to develop and
maintain our competitive position. We protect our intellectual property rights through a variety of methods, including trademark, patent, and
trade secret laws, as well as confidentiality agreements and proprietary information agreements with vendors, employees, consultants, and
others who have access to our proprietary information. Protection of our intellectual property often affords us the opportunity to enhance our
position in the marketplace by precluding our competitors from using or otherwise exploiting our technology and brands. We are also a party to
several intellectual property license agreements relating to certain of our products. For example, we are a party to license agreements entered
into in connection with the Numico acquisition pursuant to which we license certain patent rights to Numico and Numico licenses to us specific
patent rights and proprietary information. These license agreements generally continue in existence until the expiration of the licensed patent, if
applicable, the licensee's election to terminate the agreement, or the mutual consent of the parties. The patents which we own generally have a
term of 20 years from their filing date, although none of our owned or licensed patents are currently associated with a material portion of our
business. The duration of our trademark registrations is generally 10, 15, or 20 years, depending on the country in which the marks are
registered, and the registrations can be renewed by us. The scope and duration of our intellectual property protection varies throughout the
world by jurisdiction and by individual product.
Insurance and Risk Management
We purchase insurance to cover standard risks in the nutritional supplements industry, including policies to cover general products
liability, workers' compensation, auto liability, and other casualty and property risks. Our insurance rates are dependent upon our safety record
as well as trends in the insurance industry. We also maintain workers' compensation insurance and auto insurance policies that are
retrospective in that the cost per year will vary depending on the frequency and severity of claims in the policy year. We currently maintain
product liability insurance and general liability insurance.
We face an inherent risk of exposure to product liability claims in the event that, among other things, the use of products sold by GNC
results in injury. With respect to product liability coverage, we carry insurance coverage typical of our industry and product lines. Our coverage
involves self-insured retentions with primary and excess liability coverage above the retention amount. We have the ability to refer claims to
most of our vendors and their insurers to pay the costs associated with any claims arising from such vendors' products. In many cases, our
insurance covers such claims that are not adequately covered by a vendor's insurance and provides for excess secondary coverage above the
limits provided by our product vendors.
We self-insure certain property and casualty risks due to our analysis of the risk, the frequency and severity of a loss, and the cost of
insurance for the risk. We believe that the amount of self-insurance is not significant and will not have an adverse impact on our performance.
In addition, we may from time to time self-insure liability with respect to specific ingredients in products that we may sell.
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