WeightWatchers 2009 Annual Report Download - page 25

Competition among commercial weight management programs is largely based on program recognition and
reputation and the effectiveness, safety and price of the program. In the United States, we compete with several
other companies in the commercial weight management industry, although we believe that the businesses are not
comparable. For example, many of these competitors’ businesses are based on the sale of pre-packaged meals
and meal replacements. Our meetings use group support, education and behavior modification to help our
members change their eating habits, in conjunction with flexible food plans that allow members the freedom to
choose what they eat. There are no significant group education-based competitors in any of our major markets,
except in the United Kingdom. Even there, we possess the largest share of the market.
We believe that food manufacturers that produce meal replacement products are not comparable
competition because these businesses’ meal replacement products do not engender behavior modification through
education in conjunction with a flexible, healthy food plan.
We also compete with various self-help diets, products and publications, such as low-carbohydrate diets,
which gained in popularity and media exposure beginning in 2003.
Trademarks and Patents
We own numerous domestic and international trademarks, patents and other proprietary rights that are
valuable assets and are important to our business. Depending upon the jurisdiction, trademarks are valid as long
as they are used in the regular course of trade and/or their registrations are properly maintained. Patent protection
extends for varying periods according to the date of patent filing or grant and the legal term of patents in the
jurisdiction in which the patent is granted. The actual protection afforded by a patent may vary from country to
country depending upon the type of patent, the scope of its coverage and the availability of legal remedies in the
country. We believe the protection of our trademarks, copyrights, patents, domain names, trade dress and trade
secrets is important to our success. We aggressively protect our intellectual property rights by relying on a
combination of trademark, copyright, patent, trade dress and trade secret laws, and through the domain name
dispute resolution system.
History
Early Development
In 1961, Jean Nidetch, our founder, attended a New York City obesity clinic and took what she learned from
her personal experience at the obesity clinic and began weight-loss meetings with a group of her overweight
friends in the basement of a New York apartment building. Under Ms. Nidetch’s leadership, the group members
supported each other in their weight-loss efforts, and word of the group’s success quickly spread. Ms. Nidetch
and Al and Felice Lippert, who all successfully lost weight through these efforts, formally launched our business
in 1963. Weight Watchers International, Inc. was incorporated as a Virginia corporation in 1974 and succeeded
to the business started in New York in 1963. Heinz acquired us in 1978.
Artal Ownership
In September 1999, Artal Luxembourg, S.A., or Artal Luxembourg, acquired us from Heinz. Artal
Luxembourg is an indirect subsidiary of Artal Group, S.A., which together with its parent and its subsidiaries is
referred to in this Annual Report on Form 10-K as Artal. Subsequent to Artal’s acquisition of us, Artal
Luxembourg transferred ownership of its shares in us to Artal Participations and Management S.A. and Artal
Holdings Sp. z o.o., each also members of Artal. Currently, Artal Holdings Sp. z o.o. is the only record holder of
our shares by Artal.
WeightWatchers.com Acquisition
On June 13, 2005, we entered into an agreement to acquire control of our licensee and affiliate,
WeightWatchers.com. On July 1 and 2, 2005, we increased our ownership interest in WeightWatchers.com from
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