Nautilus 2003 Annual Report Download - page 64

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Table of Contents
In December 2002, the Company filed suit against ICON Health and Fitness, Inc. (“ICON”) in the Federal District Court, Western
District of Washington (the “District Court”) alleging infringement by ICON of the Company’s Bowflex patents and trademarks. The
Company seeks injunctive relief, unquantified treble damages, and its fees and costs. In October 2003, the District Court dismissed our
patent infringement claims. We appealed this decision to the United States Court of Appeals for the Federal Circuit (the “Appeals
Court”), and in November 2003, the Appeals Court overruled the District Court and reinstated our patent infringement claims. The
Company expects the District Court to conduct a trial on both our patent and trademark infringement claims against ICON in calendar
year 2004.
In July 2003, the District Court ruled in favor of the Company on a motion for preliminary injunction on the issue of trademark
infringement, and entered an order barring ICON from using the trademark “CrossBow” on any exercise equipment. In its ruling, the
District Court concluded that the Company showed “a probability of success on the merits and irreparable injury” on its trademark
infringement claim. ICON appealed this ruling to the Appeals Court. In August 2003, the Appeals Court granted ICON a temporary stay
of the injunction, which allows ICON to continue using the trademark “CrossBow” until a decision is issued by the Appeals Court. The
Company argued its case to the Appeals Court in October 2003, and the court has not yet issued a decision. As noted above, the Company
expects the District Court to conduct a trial on both our patent and trademark infringement claims against ICON in calendar year 2004.
16.
EMPLOYEE BENEFIT PLAN
The Company adopted a 401(k) profit sharing plan (the “Plan”) in 1999 covering all employees over the age of 18. The Plan was
amended in 2000 to allow for immediate eligibility in the Plan. Each participant in the Plan may contribute up to 30% of eligible
compensation during any calendar year, subject to certain limitations. The Plan provides for Company matching contributions of up to
50% of the first 6% of eligible contributions made by all participants. All participants must have completed one year of service before
becoming eligible for Company matching contributions. Employees are 25% vested in the matching contributions per year for the first
four years of service. Expense for the plan was $613, $356, and $225 for the years ended December 31, 2003, 2002 and 2001,
respectively.
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