Nautilus 2008 Annual Report Download - page 12

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Table of Contents
because they offer superior biomechanics at a competitive price. Our Nautilus ONE strength line is marketed at a higher price point due to its
superior quality and innovative dial weight selection feature. In addition, we are the only company in this segment to offer the StairMaster
Stepmill. Our other commercial cardiovascular products augment our circuit-training strength products to provide our commercial customers a
suite of fitness products.
EMPLOYEES
As of February 28, 2009, we have approximately 850 employees. Management considers its relationship with employees to be good. None of our
employees are subject to any collective bargaining agreements. There has never been a material interruption of our operations due to labor
disputes.
SIGNIFICANT CUSTOMERS
We had no individual customers that accounted for 10 percent or more of our consolidated net sales during the past three fiscal years.
INTELLECTUAL PROPERTY
Trademarks, patents and other forms of intellectual property are vital to the success of our business and an essential factor in maintaining our
competitive position in the health and fitness industry.
Trademarks
We own many trademarks including Nautilus
®
, Bowflex
®
, Power Rod
®
, TreadClimber
®
, Schwinn
®
Fitness, SelectTech
®
, StairMaster
®
,
Trimline
®
and Universal
®
. The vast majority of our trademarks are either registered or protected by common law rights. Our trademarks are
displayed in a prominent manner on nearly all of our products. We believe that having distinctive trademarks, which are readily identifiable by
consumers, is an important factor in creating a market for our products, in identifying our Company and in distinguishing our goods from others.
Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal. We are not aware of any
material claims of infringement or other challenges to our trademark rights in our major markets.
Patents
The Company has a broad array of patents, both issued and pending, covering its exercise equipment. These patents cover a variety of
technologies, some of which are deployed in the following products: TreadClimber; variable stride ellipticals; selectorized weights; recumbent
bicycles; and the Bowflex Revolution. Patent protection for these technologies extends as far as 2025, with none expiring prior to 2015. Patent
protection has ended for our rod-based home gyms and stepper products. Expiration of these and other patents could trigger the introduction of
similar products by our competitors.
Building our intellectual property portfolio is an important factor in maintaining our competitive position in the health and fitness equipment
industry. We have followed a policy of filing applications for U.S. and foreign patents on inventions, new designs and improvements that we
deem valuable to our business. If we do not, or are unable to, adequately protect our intellectual property, other parties might use our technology
to market their products, which could have a material adverse impact on our sales, profitability and cash flows. We protect our proprietary rights
vigorously and take prompt, reasonable action to prevent counterfeit reproductions of or other infringement on our intellectual property. If we
experience an increase in our market share, geographic scope or expand our product categories, intellectual property disputes could escalate,
making it more expensive for us to establish and/or protect our proprietary rights and defend the Company against claims of infringement by
others. Refer to Note 15 of the consolidated financial statements located at Part II, Item 8 of this Form 10-K for a discussion of significant
intellectual property disputes.
8