Nautilus 2000 Annual Report Download - page 15

conventional mattress manufacturers and Select Comfort, may adversely affect our efforts to market and sell our airbeds and, consequently, may
adversely affect our financial performance.
INTELLECTUAL PROPERTY
Protecting our intellectual property is an important factor in maintaining our competitive position in the fitness and mattress industries. If we do
not, or are unable to, adequately protect our intellectual property, our sales and profitability could be adversely affected. Accordingly, we have
taken the following protective measures:
•
We hold 17 United States patents and have applied for three additional United States patents with respect to our Nautilus products;
•
We hold four patents relating to our Bowflex home fitness equipment;
•
We have applied for one patent relating to our Nautilus Sleep Systems;
•
We have obtained United States trademark protection for various names associated with our products, including "Bowflex,"
"Nautilus," "Power Rod," "Bowflex Power Pro," "Motivator" and "Versatrainer";
•
We have applied for United States trademark protection for the names "Direct Focus," "Instant Comfort" and various other names
and slogans associated with our products;
•
We have registered the name "Bowflex" in Canada and the European Community, and have registered or applied to register the
"Nautilus" trademark in approximately 30 foreign countries;
•
We have obtained trademark protection for the "look" of our Bowflex Power Rods; and
•
We hold eight United States copyright registrations relating to our Nautilus products.
Notwithstanding these measures, our efforts to protect our proprietary rights may be inadequate, and applicable laws provide only limited
protection. For example, of our four Bowflex patents, the most important covers our Power Rods, and this patent expires on April27, 2004. The
other three patents expire on February16, 2005, April14, 2007, and January4, 2010. In addition, we may not be able to successfully prevent
others from claiming that we have violated their proprietary rights. We could incur substantial costs in defending against such claims, even if
they are invalid, and we could become subject to judgments requiring us to pay substantial damages.
Each federally registered trademark is renewable indefinitely if the mark is still in use at the time of renewal. We are not aware of any material
claims of infringement or other challenges to our right to use our marks.
ENVIRONMENTAL REGULATION
Environmental regulations most significantly affect our Nautilus facilities in Independence, Virginia. The Virginia Department of
Environmental Quality has issued an air permit for several point sources at this facility. The sources include boilers, flash ovens and high solids
paint booths. The permit imposes operation limits based on the length of time each piece of equipment is operated each day, and we operate the
plant within these limits. The town of Independence, Virginia has issued an industrial user's wastewater permit that governs our discharge of
on-site generated wastewater and storm water. In addition to the foregoing, in early 1999, we completed a Phase I Environmental Site
Assessment and a limited Phase II Soil Analysis Assessment at our Nautilus facilities in Independence, Virginia. No significant deficiencies or
violations were noted. We do not believe that continued compliance with federal, state and local environmental laws will have a material effect
upon our capital expenditures, earnings or competitive position.
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