WeightWatchers 2003 Annual Report Download - page 51

WeightWatchers.com Intellectual Property License
We have entered into an amended and restated intellectual property license agreement with
WeightWatchers.com that governs WeightWatchers.com’s right to use our trademarks and materials
related to the Weight Watchers program.
The amended and restated license agreement grants WeightWatchers.com the exclusive right to
(1) use any of our trademarks, service marks, logos, brand names and other business identifiers as part
of a domain name for a website on the Internet; (2) use any of the domain names we own; (3) use any
of our trademarks on the Internet and any other similar or related forms of interactive digital
transmission that now exists or may be developed later (provided that we and our affiliates, franchisees,
and licensees other than WeightWatchers.com can continue using the trademarks in connection with
online advertising and promotion of activities conducted offline); and (4) use any materials related to
the Weight Watchers program, including any text, artwork and photographs, and advertising, marketing
and promotional materials on the Internet. The license agreement also grants WeightWatchers.com a
non-exclusive right to (1) use any of our trademarks to advertise any approved activities that relate to
its online weight-loss business; and (2) create derivative works. All rights granted to
WeightWatchers.com must be used solely in connection with the conduct of its online weight-loss
business.
Beginning in January 2002, WeightWatchers.com began paying us a royalty of 10% of the net
revenues it earns through its online activities. For fiscal 2003 and 2002, we earned royalties of
$7.1 million and $4.2 million, respectively.
We retain exclusive ownership of all of the trademarks and materials that we license to
WeightWatchers.com and of the derivative works created by WeightWatchers.com.
All of the rights granted to WeightWatchers.com in the license agreement are subject to our
pre-existing agreements with third parties, including franchisees.
The license agreement provides us with control over the use of our intellectual property. In
particular, we have the right to approve WeightWatchers.com’s e-commerce activities, any materials,
sublicenses, communication to consumers, products, privacy policy, marketing programs, and materials
publicly displayed on the Internet. These controls are designed to protect the value of our intellectual
property.
WeightWatchers.com and we will jointly own user data collected through the website and both
parties are required to adhere to the site’s privacy policy.
WeightWatchers.com Service Agreement
Simultaneously with the signing of the amended and restated intellectual property license, we
entered into a service agreement with WeightWatchers.com, under which WeightWatchers.com provides
the following types of services:
• information distribution services, which include the hosting, displaying and distributing on the
Internet of information relating to us and our affiliates and franchisees;
• marketing services, which include the hosting, displaying and distributing on the Internet of
information relating to our products and services such as classroom meetings, the Weight
Watchers Magazine and At Home and similar products and services from our affiliates and
franchisees; and
• customer communication services, which include establishing a means by which customers can
communicate with us on the Internet to ask questions related to our products and services and
the products and services of our affiliates and franchisees.
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