Rayovac 2013 Annual Report Download - page 19

the trademark with travel guides and industrial batteries and VARTA Microbattery GmbH has the right to use the
trade mark with micro batteries. We are party to a Trademark and Domain Names Protection and Delimitation
Agreement that governs ownership and usage rights and obligations of the parties relative to the VARTA
trademark.
As a result of the common origins of the Remington Products, L.L.C. (“Remington Products”) business we
acquired in September 2003 and the Remington Arms Company, Inc. (“Remington Arms”), the REMINGTON
trademark is owned by us and by Remington Arms each with respect to its principal products as well as
associated products. Accordingly, we own the rights to use the REMINGTON trademark for electric shavers,
shaver accessories, grooming products and personal care products, while Remington Arms owns the rights to use
the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools. In
addition, the terms of a 1986 agreement between Remington Products and Remington Arms provides for the
shared rights to use the REMINGTON trademark on products which are not considered “principal products of
interest” for either company. We retain the REMINGTON trademark for nearly all products which we believe
can benefit from the use of the brand name in our distribution channels.
We license the Black & Decker brand in North America, Latin America (excluding Brazil) and the
Caribbean for four core categories of household appliances: beverage products, food preparation products,
garment care products and cooking products. Russell Hobbs has licensed the Black & Decker brand since 1998
for use in marketing various household small appliances. In July 2011, Russell Hobbs and The Black & Decker
Corporation (“BDC”) extended the trademark license agreement for a fourth time through December 2015.
Under the agreement as extended, Russell Hobbs agreed to pay BDC royalties based on a percentage of sales,
with minimum annual royalty payments of $15.0 million from calendar year 2011 through calendar year 2015.
The agreement also requires us to comply with maximum annual return rates for products.
If BDC does not agree to renew the license agreement, we have 18 months to transition out of the brand
name. No minimum royalty payments will be due during such transition period. BDC has agreed not to compete
in the four core product categories for a period of five years after the end of the transition period following
termination of the license agreement. Upon request, BDC may elect to extend the license to use the Black &
Decker brand to certain additional product categories. BDC has approved several extensions of the license to
additional categories and geographies.
Through the Hardware Acquisition, we own the patented SmartKey technology, which enables customers to
easily rekey their locks without hiring a locksmith.
On November 8, 2012, we acquired a 56% interest in Shaser Biosciences, Inc. Through this acquisition we
acquired patented technology that is used in our i-Light product line.
Competition
In our retail markets, we compete for limited shelf space and consumer acceptance. Factors influencing
product sales include brand name recognition, perceived quality, price, performance, product packaging, design
innovation, and consumer confidence and preferences as well as creative marketing, promotion and distribution
strategies.
The battery product category is highly competitive. Most consumer batteries manufactured throughout the
world are sold by one of four global companies: Spectrum Brands (manufacturer/seller of Rayovac and VARTA
brands); Energizer Holdings, Inc. (“Energizer”) (manufacturer/seller of the Energizer brand); The Procter &
Gamble Company (“Procter & Gamble”) (manufacturer/seller of the Duracell brand); and Matsushita
(manufacturer/seller of the Panasonic brand). We also face competition from the private label brands of major
retailers, particularly in Europe. The offering of private-label batteries by retailers may create pricing pressure in
the consumer battery market. Typically, private-label brands are not supported by advertising or promotion, and
9