Build-A-Bear Workshop 2012 Annual Report Download - page 18

BUILD-A-BEAR WORKSHOP, INC. 2012 FORM 10-K
INTELLECTUAL PROPERTY AND TRADEMARKS
As of December 29, 2012, we had obtained over 206 U.S.
trademark registrations, including Build-A-Bear Workshop for
stuffed animals and accessories for the animals, retail store
services and other goods and services, 36 issued U.S. patents
with expirations ranging from 2013 through 2020 and
over 381 copyright registrations. In addition, we have five
U.S. trademark applications pending. We have exclusive
patent rights from a third party in association with our
BUILD-A-SOUND message device and system. We were
granted exclusive licenses to use the device and system
covered by the patents in retail stores similar to ours. While
we have the right to sublicense the patent, the licensor has
agreed not to grant competing license rights to any of our
competitors. In the event that we or the licensor has reason
to believe that a third party is infringing upon the patents, the
licensor is generally required to bear the expenses required
to maintain and defend the patents. Our exclusive rights will
last until the expiration of the latest patent covered by the
agreement, calculated to be 2017, unless the agreement
is terminated.
We believe our copyrights, service marks, trademarks,
trade secrets, patents and similar intellectual property are
critical to our success, and we intend, directly or indirectly,
to maintain and protect these marks and, where applicable,
license the intellectual property and the registrations for the
intellectual property. We rely on trademark, copyright and
other intellectual property law to protect our proprietary rights
to the extent available in any relevant jurisdiction. We also
depend on trade secret protection through confidentiality and
license agreements with our employees, subsidiaries,
licensees, licensors and others. We may not have agreements
containing adequate protective provisions in every case, and
the contractual provisions that are in place may not provide
us with adequate protection in all circumstances. Any
infringement or misappropriation of our intellectual property
rights or breach of our confidentiality or license agreements
could result in significant litigation costs, and any failure to
adequately protect our proprietary rights could result in our
competitors offering similar products, potentially resulting in
loss of one or more competitive advantages and decreased
revenues. In addition, intellectual property litigation or claims
could force us to do one or more of the following: cease
selling or using any of our products that incorporate the
challenged intellectual property, which would adversely
affect our revenue; obtain a license from the holder of the
intellectual property right alleged to have been infringed,
which license may not be available on reasonable terms,
if at all; and redesign or, in the case of trademark claims,
rename our products to avoid infringing the intellectual
property rights of third parties, which may not be possible
and time-consuming if it is possible to do so.
Despite our efforts to protect our intellectual property
rights, intellectual property laws afford us only limited
protection. A third party could copy or otherwise obtain
information from us without authorization. Accordingly,
we may not be able to prevent misappropriation of our
intellectual property or to deter others from developing similar
products or services. Further, monitoring the unauthorized use
of our intellectual property is difficult. Litigation has been and
may continue to be necessary to enforce our intellectual
property rights or to determine the validity and scope of the
proprietary rights of others. Litigation of this type could result
in substantial costs and diversion of resources, may result in
counterclaims or other claims against us and could
significantly harm our results of operations. In addition, the
laws of some foreign countries do not protect our proprietary
rights to the same extent as do the laws of the United States.
We also conduct business in foreign countries to the
extent our merchandise is manufactured or sold outside the
United States and we have opened stores outside the
United States either directly or indirectly through franchisees.
We filed, obtained or plan to file for registration of marks in
foreign countries to the degree necessary to protect these
marks, although our efforts may not be successful and
there may be restrictions on the use of these marks in
some jurisdictions.
SEGMENTS AND GEOGRAPHIC AREAS
We conduct our operations through three reportable segments
consisting of retail, international franchising, and commercial.
The retail segment includes the operating activities of
company-owned stores in the United States, Canada, the
United Kingdom and Ireland, and other retail operations,
including our web-store and non-traditional store locations
such as tourist venues, temporary locations and ballpark
stores. The commercial segment includes our transactions with
other business partners, mainly comprised of licensing our
intellectual property, including entertainment properties, for
third-party use and wholesale product sales. The international
franchising segment includes the activities under our franchise
agreements with locations in Asia, Australia, Africa, the
Middle East, Europe, Mexico and South America.
Our reportable segments are primarily determined by the
types of customers they serve and the types of products and
services that they offer. Each reportable segment may operate
in many geographic areas. See the financial statements
included elsewhere in this Annual Report on Form 10-K for
further discussion and financial information related to our
segments and the geographic areas in which we operate.
AVAILABILITY OF INFORMATION
We make certain filings with the Securities and Exchange
Commission (the “SEC”), including our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K, and all amendments and exhibits to those
reports, available free of charge in the Investor Relations
section of our corporate website, http://ir.buildabear.com,
as soon as reasonably practicable after they are filed with the
SEC. The filings are also available through the SEC at the
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