Nautilus 2013 Annual Report Download - page 16

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Item 2. Properties
Following is a summary of our principal properties as of December 31, 2013 :
Each of our principal properties is used by both our Direct segment and our Retail segment. Our properties generally are well-
maintained,
adequate and suitable for their intended purposes and we believe our existing properties will meet our operational needs for the foreseeable
future. If we require additional warehouse or office space in the future, we believe we will be able to obtain such space on commercially
reasonable terms.
Item 3. Legal Proceedings
In 2004, we were sued in the Southern District of New York by BioSig Instruments, Inc. for alleged patent infringement in connection with our
incorporation of heart rate monitors into certain cardio products. No significant activity in the litigation occurred until 2008. In 2012, the United
States District Court granted summary judgment to us on grounds that BioSig’
s patents were invalid as a matter of law. BioSig appealed the
grant of summary judgment and, in April 2013, the United States Court of Appeals for the Federal Circuit reversed the District Court’
s decision
on summary judgment and remanded the case to the District Court for further proceedings. On January 10, 2014, the U.S. Supreme Court
granted our petition for a writ of certiorari to address the legal standard applied by the Federal Circuit in determining whether the patents may be
valid under applicable law. The U.S. Supreme Court is expected to hear arguments in April 2014. We do not believe that our use of heart rate
monitors utilized or purchased from third parties, and otherwise, infringe the BioSig patents.
In addition to the matter described above, from time to time we are subject to litigation, claims and assessments that arise in the ordinary course
of business, including disputes that may arise from intellectual property related matters. Management believes that any liability resulting from
such additional matters will not have a material adverse effect on our financial position, results of operations or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
12
Location
Primary Function(s)
Owned or
Leased
Washington
Corporate headquarters, customer call center and R&D facility
Leased
Oregon
Warehouse and distribution
Leased
Canada
Warehouse and distribution
Leased
China
Quality assurance office
Leased