Trademark Infringement Issues in Central & Eastern Europe Presented by Jim Kennedy Procter & Gamble Global Brand Protection Manager 6 April 2004

A BRIEF OVERVIEW OF THE PROCTER & GAMBLE COMPANY *

P&G Worldwide… At A Glance 300 brands marketed in 160 countries Manufacturing in 80 countries 105,000 employees

Brands & Trademarks

Brands & Trademarks Branded Goods are a P&G “Trademark” Consumer Loyalty is key to our success Trust is fundamental to our Brands

Brands & Trademarks Without our Trademarks we would have no company. We work tirelessly to earn and keep the trust of consumers. Trademarks protect companies investments & encourage reinvestment in the economy.

Types of Counterfeits that P&G Encounters Exact Copy of Package Look-a-Likes Refills of Shampoo Bottles

Types of Counterfeits that P&G Encounters Counterfeits—We’re Different!! Consumer Knowledge Often Varies: $10/$5,000 Rolex or $15/$1,200 Gucci Handbag = Consumers Know They are Purchasing a Fake $5/$450 MS Office XP Professional = Consumer is Complicit $2/$2.25 Bottle of Fake Shampoo = Consumer Doesn’t Know

Counterfeits (Non-FMCG) Trademark Infringement Outward Appearance is Very Close to Genuine Product Components Usually Inferior to Genuine Product

Counterfeits (Non-FMCG) Trademark Infringement Usually Small Fraction of the Price of Genuine Product Sometimes Viewed as a Harmless Offense Government NEVER Collects Taxes on the Fake

Counterfeits vs. Pirated OM P&G Counterfeit Pirate Consumer isn’t aware she/he is purchasing fake Package is similar but product is inferior Genuine product is usually available Consumer often knows she/he is purchasing fake Package is similar and product is usually identical Often impossible to find genuine product

Counterfeits (FMCG) Trademark Infringement Consumers Usually Don’t Intend to buy a Fake FMCG Product Sometimes Viewed as a Harmless Offense Government NEVER collects Taxes on the Fake Price is Usually Equal to or Slightly Less than Original

Cost of Counterfeits Hurt Society From Many Angles: Put Consumers at Risk Lost Investment-Both Foreign & Local Promote and Perpetuate Corruption Cheat Society From Its Rightful Benefits Source of Funding for Organized Crime

Common Issues Lack of coordination among state agencies/institutions dealing with anti-counterfeiting (police, customs, prosecutors, judges, consumer protection agencies, state agencies, and industry, etc.)

After EU Accession? An increase of counterfeits from the East Free flow of counterfeits among all countries Increase in counterfeits from China

Identification of Fakes Often difficult to determine Company or distributor personnel are often the best resource. Companies can also perform chemical analysis if necessary to help officials.

Enforcement – What Does Not Work Pre-Market Controls (PMC certification) do not work with FMCG products Counterfeits of major brands change constantly Marks (like holograms, special printing) are easily copied. PMC add to the cost of goods but do not protect consumers.

Enforcement – What Does Work In-Market Control and Surveillance Working with manufacturers to pre-target offending wholesalers and retailers Raid and harass the offenders. Let the criminals know that selling counterfeits will not be tolerated in your country.

Cooperation is the Key to Success!!! All enforcement bodies need to communicate State Standards, Police, Tax Police, Customs, and Prosecutors must cooperate. Focus on going after the “little guy” No prison, just seize his goods Let him know that you will not allow him to put your citizens in danger.

Time is Important! You should act now before the counterfeit problem becomes too large. Look at the Vietnamese community in West Bohemia. They are entrenched and it will be very difficult to clean it up. Yi Wu in China

Thank You