Nautilus 2007 Annual Report Download - page 10

Table of Contents
INTELLECTUAL PROPERTY
Trademarks – We own many trademarks including Nautilus
®
, Bowflex
®
, Power Rod
®
, TreadClimber
®
, Schwinn
®
Fitness, SelectTech
®
,
StairMaster
®
, Trimline
®
and Universal
®
. Our trademarks, the great majority of which are either registered or protected by common law rights,
are used on nearly all of our products sold in the U.S. and internationally. We believe that having distinctive trademarks readily identifiable by
consumers is an important factor in creating a market for our goods, in identifying our Company, and in distinguishing our goods from others.
Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal. We are not aware of any
material claims of infringement or other challenges to our trademark rights.
Patents
– The Company has a broad array of patents, both issued and pending, covering its exercise equipment. Within these patents are various
products and technologies including TreadClimber, variable stride ellipticals, selectorized weights, recumbent bicycles, and Spiraflex. Our patent
protection for some of these technologies extends as far as 2025. Expiration of our patents could trigger the introduction of similar products by
our competitors.
Building our intellectual property portfolio is an important factor in maintaining our competitive position in the fitness equipment and apparel
industries. We have followed a policy of filing applications for the U.S. and foreign patents on inventions, new designs and improvements that
we deem valuable to our business. If we do not, or are unable to, adequately protect our intellectual property, our sales and profitability could be
materially adversely affected. We protect our proprietary rights vigorously and take prompt action to prevent counterfeit reproductions of or
other infringing on our intellectual property. As we increase our market share, geographic scope and product categories, we anticipate that
intellectual property disputes will increase making it more expensive for us to establish and/or protect our proprietary rights, and to defend
against claims of infringement by others. Refer to Note 14 to the consolidated financial statements located at Part II, Item 8 of this Form 10-K
for a discussion of significant intellectual property disputes.
ENVIRONMENTAL MATTERS
Our operations are subject to federal, state and local health and safety and environmental laws and regulations, as well as those in other countries
that impose workplace standards and limitations on the discharge of pollutants into the environment and establish standards for the handling,
generation, emission, release, discharge, treatment, storage and disposal of materials, substances and wastes. U.S. federal environmental
legislation having particular impact on the Company includes the Toxic Substances Control Act; the Resource Conservation and Recovery Act;
the Clean Air Act; the Clean Water Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response, Compensation and
Liability Act (also known as Superfund). We are also subject to regulation by the Occupational Safety and Health Administration (OSHA)
concerning employee safety and health matters. The United States Environmental Protection Agency (EPA), OSHA, and other federal agencies
have the authority to promulgate regulations that have an impact on our operations.
The nature of our manufacturing and assembly operations exposes us to the risk of claims with respect to environmental matters, and although
compliance with local, state, federal and international requirements relating to the protection of the environment has not had a material adverse
effect on our financial condition or results of operations, there can be no assurance that material costs or liabilities will not be incurred in
connection with such environmental matters. Future events, such as changes in existing laws and regulations or enforcement policies or the
discovery of contamination on sites owned or operated by us may give rise to additional compliance costs or operational interruptions which
could have a material adverse effect on our financial condition, results of operations, and cash flows. While we are not aware of any existing
conditions that are likely to result in material costs or liabilities to us, there can be no assurance that all potential instances of soil or ground
water contamination have been identified even where Environment Site Assessments have been conducted.
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