Under Armour 2015 Annual Report Download - page 15

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inventory efficiency over the long term by putting systems and processes in place to improve our inventory
management. These systems and processes are designed to improve our forecasting and supply planning
capabilities. In addition to systems and processes, key areas of focus that we believe will enhance inventory
performance are added discipline around the purchasing of product, production lead time reduction, and better
planning and execution in selling of excess inventory through our factory house stores and other liquidation
channels.
Our practice, and the general practice in the apparel, footwear and accessory industries, is to offer retail
customers the right to return defective or improperly shipped merchandise. As it relates to new product
introductions, which can often require large initial launch shipments, we commence production before receiving
orders for those products from time to time. This can affect our inventory levels as we build pre-launch
quantities.
Intellectual Property
We believe we own the material trademarks used in connection with the marketing, distribution and sale of
our products, both domestically and internationally, where our products are currently sold or manufactured. Our
major trademarks include the UA Logo and UNDER ARMOUR®, both of which are registered in the United
States, Canada, Mexico, the European Union, Japan, China and numerous other countries. We also own
trademark registrations for other trademarks including, among others, UA®, ARMOUR®, HEATGEAR®,
COLDGEAR®, ALLSEASONGEAR®, PROTECT THIS HOUSE®, I WILL®, and many trademarks that
incorporate the term ARMOUR such as ARMOURBITE®, ARMOURSTORM®, ARMOUR®FLEECE, and
ARMOUR BRA®. We also own applications to protect new connected fitness branding such as UA RECORD™,
UA HEALTHBOX™ and UNDER ARMOUR CONNECTED FITNESS™. We own domain names for our
primary trademarks (most notably underarmour.com and ua.com) and hold copyright registrations for several
commercials, as well as for certain artwork. We intend to continue to strategically register, both domestically and
internationally, trademarks and copyrights we utilize today and those we develop in the future. We will continue
to aggressively police our trademarks and pursue those who infringe, both domestically and internationally.
We believe the distinctive trademarks we use in connection with our products are important in building our
brand image and distinguishing our products from those of others. These trademarks are among our most
valuable assets. In addition to our distinctive trademarks, we also place significant value on our trade dress,
which is the overall image and appearance of our products, and we believe our trade dress helps to distinguish
our products in the marketplace.
We traditionally have had limited patent protection on much of the technology, materials and processes used
in the manufacture of our products. In addition, patents are increasingly important with respect to our innovative
products and new businesses and investments, particularly in our Connected Fitness business. As we continue to
expand and drive innovation in our products, we expect to seek patent protection on products, features and
concepts we believe to be strategic and important to our business. We will continue to file patent applications
where we deem appropriate to protect our new products, innovations and designs. We expect the number of
applications to increase as our business grows and as we continue to expand our products and innovate.
Competition
The market for performance apparel, footwear and accessories is highly competitive and includes many new
competitors as well as increased competition from established companies expanding their production and
marketing of performance products. Many of the fabrics and technology used in manufacturing our products are
not unique to us, and we own a limited number of fabric or process patents. Many of our competitors are large
apparel and footwear companies with strong worldwide brand recognition and significantly greater resources
than us, such as Nike and Adidas. We also compete with other manufacturers, including those specializing in
outdoor apparel, and private label offerings of certain retailers, including some of our retail customers.
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