Intellectual Property and Brand Protection Jack Cameron, AAP Vice President, Automotive Aftermarket Suppliers Association Group Executive, MEMA Brand Protection Council

What is MEMA? Motor & Equipment Manufacturers Association – founded 1904 Exclusively represents North American Manufacturers Over 700 members Three Market Segment Associations: Automotive Aftermarket Suppliers Association (AASA) Heavy Duty Manufacturers Association (HDMA) Original Equipment Manufacturers Association (OESA) Motor & Equipment Manufacturers Association is over 100 years old, founded in 1904. Collectively, MEMA represents over 700 manufacturing suppliers to the automotive and commercial vehicle markets.

MEMA Brand Protection Council Formed in 2004 Represents all MEMA market segments Approximately 35 member companies Law enforcement members include: Federal Bureau of Investigations (FBI) Department of Justice (DOJ) Royal Canadian Mounted Police (RCMP) Liaison with other agencies include: Customs and Border Protection (CBP) Immigrations and Customs Enforcement (ICE)

Counterfeiting Statistics: The automotive industry loses an estimated $12 Billion in revenue annually (75% from Asia) to service parts counterfeiters, $3 Billion in the U.S. alone. Projected to grow to $45 Billion by 2011. It is estimated that 250,000 automotive industry jobs are lost to counterfeit auto parts. The International Anti-Counterfeiting Coalition puts revenue loss to U.S. Trademark holders at $200 Billion per year. The International Chamber of Commerce estimates 7% of the world trade is in counterfeit goods worth $350 Billion. More than 80% of goods seized at U.S. borders are produced in China. Other countries include Taiwan, Hong Kong, Russia, India, Pakistan and Uruguay. An estimated 30% of products sold in mainland China are counterfeit. Counterfeit parts constitute over 37% of the total automotive aftermarket in India.

Most Frequently Counterfeited Oil filters, air filters, fuel filters Disc brake pads Brake Rotors Spark plugs Suspension parts Belts and hoses Windshields Alloy Wheels Head & tail lamps

Counterfeit windshields seized and destroyed in China Counterfeit Product Counterfeit windshields seized and destroyed in China

Seizure of brake pads in Shanghai Counterfeit Product Seizure of brake pads in Shanghai GM “AC Delco” packaging with Chrysler Group “Grand Cherokee” labeled parts

Seizure of brake pads in Kuwait Counterfeit Product Seizure of brake pads in Kuwait

Counterfeit Product Safety Issues: GENUINE COUNTERFEIT No machining on the inside surface or bezel to ensure true fit to the rotor’s surface Aluminum is substandard Also noted: The counterfeit wheel is marked “USA” and “UAW,” neither of which Chrysler Group casts into this part and has a slightly tilted Chrysler Pentastar trademark. The genuine wheel has the Pentastar (although not as visible due to the heavy use of the casting), location of origin and the supplier’s vendor code. Source: DaimlerChrysler COUNTERFEIT GENUINE

Counterfeit Product The Pentastar’s internal lines are too thick “Mopor” instead of “Mopar” The silk screening on these fakes leaves the filter’s print smudged and hard to read The boxes are made of inferior paper

Seizure of filters in China Counterfeit Product Seizure of filters in China

Counterfeit Product Brake Valves Fake Genuine Bendix

Counterfeit Product Bearings Fake Genuine Timken Incorrect font on logo and product Fake Genuine Timken

Counterfeit Product Belt Tensioners

Counterfeit Product Alternators Genuine Fake

Counterfeit Product Starters Genuine Fake

Counterfeit Product Adhesives Fake Genuine

MEMA Brand Protection Council Display Counterfeit Product MEMA Brand Protection Council Display

Other IP Violations Copyrights Trademarks Web Site Design Advertising / Viral Marketing Packaging Catalogs and Price Sheets Trademarks Logos / Product Names Part Numbers Shape and Design of Packaging Trade Dress

Guidelines To Protect IP Registration – Register all copyrights and trademarks with the U.S. Patent and Trademark Office. Additionally, register with U.S. Customs and Border Protection. License Agreement – Even when giving permission for customers to use IP on their own Web sites, it is important and helpful to have them sign a license agreement to avoid problems down the road. It also helps keep track of legitimate use versus infringement. Terms of Use – Always add a "terms of use" clause to any cyber information (Web site, e-catalog, etc.) that must be accepted prior to any one having access to data, even if it is public. This helps defend and guard against possible misuse. Redirect – When illegal or infringing sites are shut down, many companies having found it beneficial to redirect Internet surfers to the official site location.

Guidelines To Protect IP Settlement – It is usually in companies' best interest to reach a settlement especially with small infringers. Settling minimizes costs yet still gains publicity for the plaintiff company, and establishes it as a business which pursues infringers. Cease and Desist – This action is still the first step in contacting an infringer. More often than not, cease and desist orders produce results and saves expense of a law suit. Evidence of Confusion – In these cases, infringers use legitimate brand names and part numbers as cross reference, and confuse or mislead buyers into thinking they are buying the genuine part. Proof of this is important in any legal action and usually obtained from the infringer's Web site. Obtain Rights in Foreign Markets – Companies which register trademarks and copyrights only filed in the United States put their IP at risk in global markets.

Guidelines To Protect IP Develop “Product Identification Training” Utilizing U.S. Custom & Border Protection Guidelines (handout) Company Information Registration and Recordation Information Product Information Manufacturing and Distribution Information Violation Information Disclaimer

MEMA Brand Protection Council Quarterly meetings to share best practices and develop actionable solutions Washington DC meetings with US agencies: DOJ, CBP, ICE, FBI, NHTSA Participation in law enforcement training conferences – booth, materials, interaction Published white papers / Special Reports: Direct Importing: Do Risks Outweigh Rewards – October 2007 Intellectual Property: Protecting Valuable Assets – January 2008 Protection of Part Numbers and E-Catalogs – January 2008 Distributor Liability on Counterfeit Parts – February 2008 Scams Prey on Corporate Goodwill – June 2008 Launched “member-only” web site

MEMA Brand Protection Council Trade Show Anti-Counterfeit Activities AAPEX Guidelines, Enforcement and Webinar Announced cooperation with CLEPA and JAPIA (Trilateral) Provided recommended guidelines to North American shows Adopted by American Trucking Association trade show Adopted by Mid-America Trucking show Agreement by Truck World Show in Canada Developed Counterfeit and Gray Market Flow Chart For North American law enforcement training (requested by DOJ) To be published as a Special Report (see attached slides) Developed Position Paper on Brand Protection Utilized in MEMA Legislative Summit Capitol Hill visits To be expanded to Talking Points white paper Developing MEMA member survey Quantify size and expenditure of IP protection in our industry

AAPEX 2007 Patent Infringement Complaints: 5 Trademark and Copyright: 5 NHTSA Complaints: 22 All of the above lead to product removal and/or booth closures

AAPEX 2007 Confiscation of infringing products on show floor

MEMA BPC Initiatives Legitimate w/ Counterfeit and Gray Market Original Equipment Channel O.E. Vehicle Manufacturer O.E. Dealer Raw Material Or Component Domestic Supplier Domestic Manufacturer Distribution Center Warehouse Distributor Repair Facility End User / Vehicle Owner MEMA Member Company US Manufacturer Parts Store / Jobber / Retail Chain International Supplier Independent Aftermarket Channel Legitimate w/ Counterfeit and Gray Market Master Dist / Importer of Record Unauthorized International Supplier Unauthorized Manufacturer Color Key: = Raw Materials and/or Components = MEMA Member Companies / US Mfgs = Original Equipment Channel = Independent Aftermarket Channel = Steps in the legitimate Supply Chain = Illegitimate Steps in Supply Chain Internet / web site /mail order Will-Fit Supplier converted to counterfeit Broker

MEMA BPC Initiatives O International Origin U.S. Destination Dubai Free Trade Zone Freight Consolidator Customs Broker Customs Broker Freight Consolidator Purchaser Dubai Canada Paraguay Mexico Panama Shipments get “pinballed” around the world prior to final destination Illustrative of Potential Counterfeit and Gray Market

Government Affairs “Stop Counterfeiting in Manufactured Goods Act” Signed into law by President Bush in 2005 Extends authority of federal seizures to include tooling, equipment and supplies used to produce counterfeit goods. Makes it criminal to produce stickers, tags, boxes or other items used to traffic counterfeit products. Expands definition of trafficking to include import and export of counterfeit goods and strengthens penalties. United States Trade Representatives

Government Affairs “PRO-IP Bill” S. 3325 Signed into law by President Bush on October 13, 2009 Creates an Intellectual Property Enforcement Coordinator (IPEC) in Executive Office of the President to enforce Intellectual Property laws Increases the resources available to federal and local law enforcement agencies to combat theft of intellectual property Includes MEMA recommended GAO study on manufacturers rights United States Trade Representatives

Government Affairs “International IP Protection & Enforcement Act” S. 3464 Introduced Sept. 10 by Senators Baucus and Hatch Requires US Trade Representative to spur countries that violate US IP rights and take specific steps to stop violators Provides funds to increase USTR capability to improve enforcement Did not pass this 2008 Congress but sets groundwork for similar legislation in 2009 United States Trade Representatives

International Efforts Formed Trilateral with CLEPA and JAPIA Agreement to adopt International standards on brand protection Develop International trade show guidelines for IP protection Initiated European Aftermarket Forum (EAF) Turned over to CLEPA but remain a member Developed product authentication initiative Tec Identity – 2D barcode authentication standard in Europe Initiated Brand Protection Guidelines with Automechanika Contributed to show rules and regulations on IP Participated Brand Protection trade show booth Formed China Aftermarket Forum (CAF) Introduced CLEPA / Tec Identity to the China Aftermarket Forum Anti-counterfeiting booth at Shanghai Auto Show (participation in QBPC – Quality Brands Protection Committee)

International Efforts Shanghai Auto Show

International Efforts Automechanika - Frankfurt

Royal Canadian Mounted Police Get Help Royal Canadian Mounted Police

Get Help State and Local Law Enforcement Privately Retained Legal Counsel U.S. Customs and Border Protection (CBP) Web site www.cbp.gov E-mail ipr.helpdesk@dhs.gov Contact David Brener david.brener@dhs.gov U.S. Immigrations and Customs Enforcement (ICE) Web site www.ice.gov Contact David Faulconer david.faulconer@dhs.gov Federal Bureau of Investigation (FBI) Web site www.usdoj.gov/criminal/cybercrime/reporting.htm Contact Kiffa Shirley kiffa.shirley@ic.fbi.gov U.S. Department of Justice (DOJ) Web site www.cybercrime.gov Contact Matt Bassiur matthew.bassiur@usdoj.gov

Get Help U.S. Customs and Border Protection (CBP) 20 Field Operations Offices 327 Ports of Entry in the U.S. 15 Preclearance offices in Canada and Caribbean U.S. Immigrations and Customs Enforcement (ICE) 26 Field Offices and Headquarters 150 Special Agents Federal Bureau of Investigation (FBI) – Cyber Crime Unit 56 Field Offices 424 Special Agents 67 FBI-led Task Forces U.S. Department of Justice (DOJ) – CC & IP Section 93 U.S. Attorney’s Offices (94 Districts) 25 Units – Computer Crime & Intellectual Property 230 Prosecutors - CCIP

Prosecutable Criminal IP Statutes Criminal Copyright Infringement (17 USC § 506, 18 USC § 2319) Criminal Trademark Infringement (18 USC § 2320) Trade Secret Theft (18 USC §§ 1831, 1832) Bootlegging (18 U.S.C. § 2319A) Camcording (18 USC § 2319B) Counterfeit Labels (18 U.S.C. § 2318) Digital Millennium Copyright Act (17 USC §§ 1201, 1204) NO Patent Criminal Law

Get Involved MEMA www.mema.org AASA www.aftermarketsuppliers.org HDMA www.hdma.org OESA www.oesa.org MEMA Brand Protection Council jcameron@mema.org

Questions?