Logitech 2005 Annual Report Download - page 68

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Audio. Competitors in audio devices vary by product line. In the PC speaker business, competitors include
Altec Lansing and Creative Labs. In the PC and console headset, telephony and microphone business,
competitors include Altec Lansing and Plantronics. In addition, with Logitech’s entry into the mobile phone
headset business, the Company competes against mobile phone and accessory companies such as Jabra
Corporation (a company of the GN Netcom Group), Motorola, Nokia, Plantronics and Sony-Ericsson, some of
whom have substantially greater resources than Logitech and each of whom has an established market position in
this business. These markets are intensely competitive and market leadership changes as a result of new products,
designs and pricing.
Advanced Remote Controls. With the Company’s acquisition of Intrigue Technologies in May 2004,
Logitech has expanded its product portfolio to include a new line of personal peripheral devices for home
entertainment systems. The market for advanced remote controls is highly competitive with many companies
offering universal remote controls at price points similar to or lower than those of the Harmony remote offering.
These companies include among others, Philips, Universal Remote, Universal Electronics, RCA and Sony.
Refer to the discussion in Item 3D. Risk Factors – “If we do not compete effectively, demand for our
products could decline and our business and operating results could be adversely affected.”
Intellectual Property and Proprietary Rights
Intellectual property rights that apply to Logitech’s products and services include patents, trademarks,
copyrights and trade secrets.
The Company holds various United States patents and pending applications, together with corresponding
patents and pending applications from other countries. While Logitech believes that patent protection is
important, the Company also believes that patents are of less competitive significance than factors such as
technological expertise and innovation, ease of use, and quality design. No single patent is in itself essential to
Logitech as a whole. From time to time the Company receives claims that it may be infringing on patents or other
intellectual property rights of others. Claims are referred to counsel, and current claims are in various stages of
evaluation and negotiation. If necessary or desirable, the Company may seek licenses for certain intellectual
property rights. Refer also to the discussion in Item 3D Risk Factors – “We may be unable to protect our
proprietary rights. Unauthorized use of our technology may result in the development of products that compete
with our products.”
To distinguish genuine Logitech products from competing products and counterfeit products, Logitech has
used, registered, and/or applied to register certain trademarks and trade names in the U.S. and in foreign
countries and jurisdictions. Logitech enforces its trademark and trade name rights in the U.S. and abroad. In
addition, the software for Logitech’s products and services is entitled to copyright protection, and the Company
generally requires its customers to obtain a software license before providing them with that software. Logitech
also protects details about its products and services as trade secrets through employee training, license and non-
disclosure agreements and technical measures.
Governmental Regulation
The European Union (“EU”) has adopted the Directive on the Restriction of Use of Certain Hazardous
Substances in Electrical and Electronics Equipment, or RoHS. This directive restricts the placement into the EU
market of electrical and electronic equipment containing certain hazardous materials including, lead, mercury,
cadmium, chromium, and halogenated flame-retardants. RoHS is to take effect beginning July 2006. However,
several EU member states have not yet enacted national legislation to transpose the directive into law. Most
Logitech products are affected by the directive and must be modified to some extent to be RoHS compliant.
Logitech continues to source and introduce the use of RoHS compliant components and manufacturing methods
in order to comply with the requirements of the directive.
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