Nautilus 2015 Annual Report Download - page 16
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Please find page 16 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.By decision dated April 27, 2015, the same panel of the Federal Circuit affirmed its earlier reversal of the District Court’s decision on summary judgment. On May
27, 2015, we filed a petition for a rehearing en banc in the Federal Circuit, which was denied on August 4, 2015 and a Petition for Review by the U. S. Supreme
Court which was also denied. The case will be returned to the District Court for further proceedings. We do not believe that our use of heart rate monitors utilized
or purchased from third parties, and otherwise, infringes the BioSig patents.
Licensor Dispute
In August 2014, we initiated an arbitration proceeding to resolve a dispute with the licensor under a 1999 license agreement pursuant to which we had licensed
certain rights relating to our TreadClimber ® products. We asserted that our obligation to pay royalties under the license agreement ceased in the fourth quarter of
2013 and sought a declaratory ruling in the arbitration that there is no continuing royalty obligation and that we had performed all of our obligations under the
license agreement. The licensor disputed this and asserted various intellectual property and contract claims. The matter proceeded to mediation by agreement of the
parties and was settled in December 2015. Under the settlement agreement, we agreed to pay certain cash amounts and sales-based royalties over a period of
multiple years. In connection with this settlement, in the fourth quarter of 2015, we recorded a charge of $2.5 million as a component of cost of sales. Future
royalty payments under the settlement agreement are not expected to have a material impact on our financial position, results of operations or cash flows.
In addition to the matters 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.
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