1 mema brand protection council november 13, 2008 detroit, mi

1

MEMA Brand Protection Council

November 13, 2008Detroit, MI

2

Agenda• Welcome & Introductions – Cifranic & O’Rourke• Review Antitrust Guidelines – Arent Fox• Pending Litigations Update – Arent Fox• AAPEX Update / IP Incidents – Arent Fox• TechIdentity – Francois Augnet, TRW • Lunch – 30 minutes• Government Affairs Update- Catherine Boland• Brand Protection Talking Points – Catherine

Boland• Work Session: Quantifying IP Protection in North

America Vehicle Parts Industry – Andy Cifranic• Break – 15 minutes• Final Review: Special Report Draft on Flow of

Counterfeit Parts• Council Updates / Adjourn

3

AASA/MEMA Brand Protection Council

• “To support members’ global efforts to prevent, detect and prosecute intellectual property offenses against their products and brands”.

• “Provide the means for collective industry action against counterfeiting, sharing market intelligence and best practices, media and education campaigns and gaining increased enforcement by all relevant law enforcement agencies”.

4

Anti-Trust Guidelines It is the unqualified policy of the Motor & Equipment Manufacturers Association to conduct its operations in strict compliance with the antitrust laws of the United States. MEMA's antitrust policy prohibits any discussions which constitute or imply an agreement or understanding concerning: 1) prices, discounts, or terms or conditions of sale; 2) profits or profit margins or cost data; 3) market shares, sales territories or markets; 4) allocation of customers or territories; 5) selection, rejection or termination of customers or suppliers; 6) restricting the territory or markets in which a company may resell products; 7) restricting the customers to whom a company may sell; or 8) any matter which is inconsistent with the proposition that each manufacturer, wholesaler and distributor must exercise its independent business judgement in pricing its services or products, dealing with its customers and suppliers and choosing markets in which it will compete.

Counterfeiting at AAPEX

Litigation Update

• Autozone v. Strict Enterprises Inc.

• Bosch v. Pylon

• U.S. v. Able Time

• Toyota Hybrid Lawsuit - Green Claim

• SIIA v. eBay

• Kingdom Auto Parts v. MEMA

Counterfeiting at AAPEX

Summary of the Actions at 2008 AAPEX

Number of Complainants: 9

Number of Companies Complained About: 21

Nature of Violations (The number exceeds the total number of complaints because there were multiple complaints about some companies)

• Non-compliant product: 12• Patent Violations: 4• Trademark and/or part number infringements: 4• Generalized IP allegations, including trade dress and copyright: 3

Resolution of Complaints (without follow-up to assure compliance in all cases)

• Insufficient evidence to pursue, or complaint withdrawn or deferred: 2• Products seized and/or catalogs removed or redacted: 7• Delivered Letter or Warning to Booth: 3

Mema Brand Protection Council MeetingTecIdentify

Francois Augnet13th November 08

© TRW Automotive Inc. 20088

Mema Brand Protection Council Meeting

2

Why a Branch Solution? Facts and Figures

1

What is TecIdentify? Fully integrated solution

2

Benefits & Value Added Usage of code in daily business

3

Status & Future First Movers & The next steps

4

8


Criminal Activities growing…

Product piracy costs

Global Automotive Parts Industry

5 – 10 € billion per year

Source: OECD


Spare parts – Threats!

• Counterfeit parts – including trademark-infringement

• Grey-market imports – including genuine parts diverted from one market to another without consent of brand owner

• Excess stock by authorised suppliers, including non-branded genuine parts sold directly from supplier to dealer without consent of brand owner

• Re-labelling – eg. Sales of used parts / reject parts

• ….and more!

Source: OECD


Spare parts counterfeiting facts

Targeted products

• Fast moving products

• Standard parts sold off-the-shelf & which can be fitted to different models

• Parts with low per-unit costs as less likely to carry any security device

Consequences

• Illegal

• Brand Image affected – disastrous long term effects

• Liability in case of accidents

• Lost revenues

Eg. manufacturers 5% - 7% p.a

Source: OECD


Potential threats in Supply Chain

??

Trustedsupply chain

Trustedsupply chain

Original manufacturer

Distributor /Dealer Garage / End user

Unknownsource

Distributor /Dealer

Source: Vesdo


Consequences - dealing with counterfeited products

Personal (Emotional)

• Dealer is cheated as he pays for an original product & gets “junk” goods

Liability

• Low quality product create quality claims

Reputation

• Low quality products ruin the dealers reputation

Business

• The dealer is in breach of his contract with the original parts manufacturer

Legal

• Selling counterfeit products is prohibited

Source: Vesdo


Mema Brand Protection Council Meeting -

TecIdentify

2


1


2


3


4

14


TRW supports Industry Solution

TecIdentify

New CLEPA coding standard for authentication

TRW Response to Counterfeiting

Source: Vesdo


Future

16

246 248 438 686Every item gets its own identityAnonymous mass of items

(21)……. =

14 digits(01) 9 - 20 digits…....free space

GTIN SerialisationSource: Vesdo Ltd

Today

CLEPA Code –Basic Principles of Logical Security and Barcode Structure


Product Folding box Bundle/ Display Shipping case

Objective forpilot project

Objective forpilot project For Track & Trace

Extendedsecurity

17

combination with other security systems

combination with other security systems

Application of Clepa Code

Source: Vesdo Ltd & Teccom


TRW Label with CLEPA Code


TecIdentify Version 1.2 Authentication Process

19

Clepa Code

19

TecIdentify Database

Single Scans

Online

Mobile

Multiple Scans

Online

Local


TecIdentify Version 1.2Scan, show results

20

TecCom Mobile

TecIdentify

Congratulations!

This part is a genuine part from TecCom GmbH.

[9] Impress

Authentication: OK

TecCom Mobile

TecIdentify

Warning!

Unknown Code.This part partmight not be an original part from TecCom GmbH.

[1] Yes, I want to report this!

[9] Impressum

Authentication: Warning

20


Feedback form

TecCom Mobile

TecIdentify

Contact Form:

Name:

Phone:

E-mail:

TecCom Mobile

TecIdentify

E-mail:

Yes, send the form!

Barcode: (01)14399901959689(10)2457689145(21)ABC123DEF45

[9] Impress

21

TecIdentify Version 1.2Feedback possible


TecIdentify Version 1.2Website

22

1. scan

2. check

22


TecIdentify Version 1.2Response

2323


1. Open solution based on global standards (GS1,ISO..)Customs, importers, distributors, garages, car driver.....

2. Worldwide 24/7

3. Answer within seconds

4. Low requirements Internet PC with scanner Mobile phone with camera and free to download

reader software

5. Direct contact in case of a problem possible

6. Sophisticated algorithms on a secure database

TecIdentifyFeatures & Benefits

24



Tecidentify

2


1


2


3


4

25


Manufacturer Requirements & Benefits

Requirements• Pre-requisite for TRW to implement branch solution =

Achieve Global Standard Label, Design & Printing

• Move from local sites doing local labeling to streamlined standards and processes for all aspects of product labels

Benefits of Global Standard Label, Design & Printing Project• Synergy – Standard processes & data integrity• More efficient & effective• Flexible – additions/deletions & immediate changes to labels worldwide• Can implement branch solution using CLEPA code and Tecidentify!


Possible Approach - Challenges & Benefits

How to start ?

By Product National Global

Requirements Low Medium High

Benefits of CLEPA code on label

Protection of specific products

Marketing messages etc.

Security for a certain region or country

Marketing messages etc.

Global solution protecting all products & territories

Synergy & Economies of scale

Targetted marketing activities by using the code for messaging, promotions, part of loyalty program

Challenges If product produced across multiple sites – adapt site processes or review need to standardise?

Or cost to outsource the work but then lose some control

Creating one process across the sites within one region

Or cost to outsource the work but then lose some control

Large workload to standardise processes, role definitions & resource allocation

To find / create a global, user friendly software solution


TRW Approach - Challenges & Benefits

How to start ?

By Product National Global

Requirements Start with packed in house products

Starting with 2 geographical regions in initial roll out

Will roll out globally step by step

Review current processes & resources for labeling activities

Understand internal & external requirements

Definition of future requirements & conceptual design with chosen software provider

Benefits Global web-based solution for TRW & suppliers / Controlled access for suppliers

Protection of all products (Image, turnover etc.)

Synergy, efficient streamlined processes for all labeling design & print activities (internal efficiencies), Single data source & storage for label information

Marketing benefits - code can be used in daily business to eg. Send messages, announce promotions, link to a customer loyalty programme etc.

Challenges Managing IAM & VMS channels

Large workload & rethinking of roles & resource allocation

Large workload to standardise processes, complex to design & arrive at global user friendly software solution for TRW sites & suppliers


The Clearing Hub - Architecture of an authentication system

If each manufacturer is operating his own system:

Business processes at the POS will be very complicated.

Using a hub as unique certification authority in a given industry:

Business processes at the POS will be simple & easy.



Tecidentify

2


1


2


3


4

30


1 Bosch 13 Contitech

2 Continental Teves 14 ThyssenKrupp

3 Federal Mogul 15 Knorr Bremse

4 GKN 16 Osram

5 Hella (2009)

6 Mahle

7 Mann + Hummel (2009)

8 Schaeffler, LuK, INA Networking

9 Tenneco ITG

10 TRW Figiefa

11 Wabco MEMA / JAPIA

12 ZF-Trading Car Manufacturer

First Moversproject started project start open decision open

31


Automechanika 2008First Movers activities

- Invitation with 2DMatrix- Presentation on the booths- Promotion using Clepa Code

Joint PR activities with CLEPA & Messe Frankfurt

TecIdentify won the Innovation award at Automechanika in IT category

Automechanika Sept.2008

Source:Teccom


Next steps

33

2. Anticounterfeiting - Platform - conceptual

Projects

Security Concepts

Uncovered Fakes

Links

Company Case Country Contact

Schaeffler Gruppe

5 container of clutches

Czech-German Border

Mario Thümmler

TRW Ningbo Automechanika Frankfurt 2006

Karen Landis

Contitech 195.000 drive belts

Malta Christoph Stegemann

…

1. TecIdentify Version 1.3: Enhancement of user interface Add new algorithms Enhancement of reports ....

1. TecIdentify Version 1.3: Enhancement of user interface Add new algorithms Enhancement of reports ....


• Encouraging garages etc. across all territories to use the solution!

• Equipment available?

• Ensuring this great solution is embedded in an internal process eg. what happens in YOUR COMPANY when a garage gets a warning message?

Challenges for ALL companies!


Q & A

36

Lunch30 minutes

37

Government Affairs UpdateBrand Protection Council

November 13, 2008

Catherine Boland

Director, Government Relations

Motor and Equipment Manufacturers Association

38

MEMA Washington, D.C. Office

• Seven person office that develops legislative and regulatory strategies on issues impacting automotive and heavy duty suppliers

• Resource for OESA, AASA, HDMA members

• Government Affairs Committee that sets legislative priorities based on input from market segments

39

Legislative Update

PRO-IP Bill (S. 3325) signed into law on October 13, 2008

• Contains language requested by MEMA that calls for a Government Accountability Office (GAO) study on how the federal government can best protect the IP of manufacturers

• Study is to be completed and submitted to Congress by October 2009

• GAO has not begun work on this study, but they will reach out to MEMA when they begin work on it

40

Legislative UpdatePRO-IP Bill (S. 3325) • Heavy focus on copyright and trademark

protection• Coordination of Federal Effort Against

Counterfeiting and Piracy– This legislation takes domestic portions of the Bayh

Voinovich bill and creates an advice-and-consent level position, the Intellectual Property Enforcement Coordinator (IPEC), to serve in the Executive Office of the President and chair an inter-agency committee, that will produce and implement a joint strategic plan to enforce intellectual property laws

41

Legislative Update

PRO-IP Bill (S. 3325)• Increased Resources at Department of Justice

– This legislation increases the resources available to federal and local law enforcement agencies to combat theft of intellectual property

• Creates grants for state and local law enforcement• New operational unit within the FBI • Training program on intellectual property offenses• New funds for the FBI and DOJ for additional agents and

prosecuters • Sends five “intellectual property law enforcement

coordinators” to the countries or regions where there presence and assistance can have the greatest positive effect on US intellectual property rights and interests

42

Legislative Update

Issues not addressed in PRO-IP

This bill does not address certain MEMA priorities– Increased protection for IP of goods not

bearing a trademark– Increased protection of trade dress– International cooperation between like-minded

countries

43

Legislative Update - International

Rangel-Levin Trade Enforcement Bill – H.R. 6530– Introduced as a legislative marker in July– Will not move this Congress– Title III of bill covers enforcement of IP laws at U.S.

borders• Enforces U.S. Intellectual Property Rights (IPR). The bill

creates a Director of IPR Enforcement and an IPR Enforcement advisory committee to advise on IPR enforcement issues; promotes the use of new technology to better fight intellectual property rights (IPR) infringement; creates a “watch list” for suspected bad actors; and prevents Customs from excusing fines assessed for illegal imports.

• Increases Staffing, Resources, Training and Coordination. The bill authorizes the support, resources and training that Customs and Immigration and Customs Enforcement need and deserve to carry out their import safety and IPR enforcement responsibilities.

44

Legislative Update - International

S. 3464 - International Intellectual Property Protection and Enforcement Act of 2008 (introduced by Senator Baucus and Senator Hatch)

• Action Plans. The bill requires the United States Trade Representative (USTR) to develop an action plan for each foreign country that has remained on USTR’s “Priority Watch List” of intellectual property deficient countries for at least one year.

• Enforcement Actions. If a foreign country has not complied with its action plan within one year, the bill authorizes the President to take various enforcement actions against the country.

• Developing Country Assistance. The bill authorizes appropriations to USTR to assist developing countries in complying with their action plans.

• Congressional Report. The bill requires USTR to include, in its annual “Special 301” report, a description of the action plan developed for each country and the actions taken by each country pursuant to that plan.

• Intellectual Property Officials. The bill requires the President to ensure that intellectual property officials are placed in the U.S. embassy of each foreign country that has a commercially significant relationship with the United States.

45

Anti-Counterfeiting Trade Agreement

• Late last year, USTR announced that they had begun discussions with our trading partners engaged in discussions to negotiate an anti-counterfeiting trade agreement

• Discussions include Canada, the European Union (with its 27 Member States), Japan, Korea, Mexico, New Zealand, and Switzerland

• The National Association of Manufacturers is working with USTR and Immigration and Customs Enforcement to put together a round table in the Detroit area to discuss the trade agreement– When this is scheduled, MEMA Washington will inform the BPC

and provide information about attending

46

Discussion

For more information contact

Catherine Boland

Director, Government Relations

202-312-9241 or [email protected]

47

Working Session:Quantifying IP Protection in North American Vehicle Parts Industry

• Second in a series to engage council members and develop valuable industry information to support IP enforcement

• Today's topic requested by Department of Justice• To be published by BPC and distributed to assist

MEMA DC Office and IP enforcement

48

Break15 minutes

49

Working Session:Flow of Counterfeit and Gray Market

Goods

• Special Report: “Understanding the Flow of Counterfeit and Gray Market Goods through the U.S. Automotive and Commercial Vehicle Parts Marketplace” (handout)

• Developed at last BPC meeting• Forwarded via e-mail for review• Finalize before publishing and distribution

50

Legitimate U.S. Motor Vehicle Parts Supply Chain• Raw material and component suppliers – These may include

international or domestic.• Manufacturing – This includes the actual manufacture, assembly

and completion of a finished component or part.• Distribution Center – Owned by the manufacturer and where

finished parts are moved for packaging, warehousing and shipping.

• OE Production or Warehouse Distributor – The part is then sold by the manufacturer either for assembly onto a vehicle (OE Production) or into the aftermarket distribution channel (Warehouse Distributor).

• Parts Store / Jobber / Retail Chain – In the case of the aftermarket distribution channel, a warehouse distributor may elect to sell through a parts store either independent or company owned.

• Repair Facility – If the part is installed professionally, the part is sold directly or indirectly to a repair facility. This may be independent or a car dealer.

• End User / Vehicle Owner – The ultimate end-user or consumer of the part.

U.S. Automotive and Commercial Vehicle Parts Distribution Supply Chain Model

51


DomesticSupplier

DomesticManufacturer

InternationalSupplier

Distribution Center

O.E. Production

WarehouseDistributor

Parts Store /Jobber /

Retail Chain

Repair Facility

End User /Vehicle Owner

MEMA Member CompanyUS Manufacturer Legitimate

RawMaterial

Or Component

52

Supply Chain – How Counterfeit and Gray Products get Introduced:• Unauthorized Suppliers – Producers of raw materials or components

that were not commissioned by the original manufacturer.• Unauthorized Manufacturers – Producers products made for the

replacement of the original but in violation of the original manufacturer’s intellectual property.

• Generic Supplier – May produce legitimate replacement products not in violation of intellectual property but may later be converted to counterfeit by affixing trade marks or other trade dress violations by another party.

• Master Distributor / Importer of Record – Generally the company that takes receipt of illegitimate products within the U.S. with the intent to distribute. They may also be the converters of legitimate replacement products to counterfeit through the use of markings, packaging, etc.

• Internet / Web Sites / Mail Order – May also be distributors of illegitimate products and may or may not be located in the U.S.

• Broker – In the commodities business. Generally not product experts but in the business of selling large quantities of over run, over stock products which may or may not contain counterfeit goods.


53

RawMaterial

Or Component


DomesticSupplier

DomesticManufacturer

InternationalSupplier

Distribution Center

O.E. Production

WarehouseDistributor

Parts Store /Jobber /

Retail Chain

Repair Facility

End User /Vehicle Owner

Legitimatew/ Counterfeit

and Gray Market

UnauthorizedInternational

Supplier

UnauthorizedManufacturer

Internet/ web site

/mail order

Master Dist / Importer of Record

GenericSupplier

Broker

converted to counterfeit

54

A simplified flow chart illustrating the normal flow of products from international sources to U.S. buyers include:

• Free Trade Zone – Within international borders.• Freight Consolidator – Actual transporter of goods.• Customs Broker – Completes necessary documentation for export

of goods.• The process is then reversed upon receipt within U.S. borders.

U.S. Automotive and Commercial Vehicle Parts Distribution Product Flow

55

O


Free Trade Zone

FreightConsolidator

CustomsBroker

CustomsBroker

FreightConsolidator

Purchaser

Legitimate

Origin Destination

56

In the case of counterfeit or gray market products, shipments are generally not direct to U.S. borders but may include many stops along the way. There are too many to name but some include:

• Dubai• Paraguay• Panama• Mexico• CanadaWhere import restrictions are less complicated and the entry of

counterfeit goods more likely. The additional paper trail of many stops along the way make origin hard to detect.


57

O


Free Trade Zone

FreightConsolidator

CustomsBroker

CustomsBroker

FreightConsolidator

Purchaser

International Origin U.S. Destination

Illustrative of Potential Counterfeit and Gray Market

Dubai

Paraguay Mexico

Canada

Panama

58

To address the serious issue of counterfeiting and other IPR violations within the automotive manufacturing community, the Motor & Equipment Manufacturers Association (MEMA) – in conjunction with its market segment associations to include the Automotive Aftermarket Suppliers Association (AASA), Heavy Duty Manufacturers Association (HDMA), Original Equipment Suppliers Association (OESA) – created the Brand Protection Council to provide a forum for manufacturers to discuss counterfeiting and other IPR violations with a focus on North America.

For more information on the Brand Protection Council or for assistance in contacting automotive brand owners, please contact Jack Cameron at 919-406- 8856 or e-mail [email protected].

(http://www.aftermarketsuppliers.org/issues/counterfeiting.php)

U.S. Automotive and Commercial Vehicle Parts Distribution

mailto:[email protected]

http://www.aftermarketsuppliers.org/issues/counterfeiting.php

http://www.aftermarketsuppliers.org/issues/counterfeiting.php

59

MEMA and BPC Updates

• CBP Product Identification Guidelines (handout)– Most effective ways to help enforcement agencies– Develop a database or CD of MEMA BPC member

companies for distribution

• Brian O’Rourke – Thank you!• Rick Kempski – Welcome, incoming Co-

Chairman

60

Thank You!Travel Safe!

1 mema brand protection council november 13, 2008 detroit, mi

Documents

trw automotive

vesdo slide

mema slide

oecd slide

clepa code slide

mi slide

teccom slide

trw lunch