Company Confidential Registration Management Committee Counterfeit Parts Jason Dickstein, General Counsel Aviation Suppliers Association What Does “Counterfeit” Mean? Why is this an Issue?

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Information Jason Dickstein, Attorney Washington Aviation Group, PC Clients include these trade association - all three have MOUs with IAQG and AAQG for industry support and awareness: Aviation Suppliers Association (ASA) Modification and Replacement Parts Association (MARPA) Aircraft Electronics Association (AEA)

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Outline Counterfeiting Law U.S. Government Creating an Opportunity for Increased Anti-Counterfeiting Scrutiny Practical Tips for Auditing a Counterfeit Aircraft Parts Program

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee The FAA World of Parts FAA Approved Parts Unapproved Parts Counterfeit Parts

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee What is Counterfeiting? Lanham Act Unauthorized use in commerce of a trademark so as to cause –confusion, –mistake, or –deceit FAA or DoD approval may not be dispositive of counterfeiting questions There are many other fraud laws and parts laws in addition to this law

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Trademark Law Protects distinctive marks from use by others in commerce that leads to confusion, deception, or mistake –EXAMPLE: “palming off” something you created as if it were another manufacturer’s product –EXAMPLE: “reverse palming off” another manufacturer’s product as if it were something that you created –EXAMPLE: misuse of your registrar’s logo (the logo is likely a certification mark)

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Trademark Hypothetical OEM “X” sells a part described as Jason’s Parts obtains Air Force source approval to create a replacement that has the part number J OEM “X” wants to know if this part from Jason’s Parts is a counterfeit?

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Several Cases Have Addressed This Issue A single letter prefix or suffix that distinguishes OEM parts from aftermarket parts is inadequate –Could be confused for an OEM revision identifier Parts must be uniquely identified in a fashion that will make it possible to establish the source of such part even in the event of failure FAA Order permits multi-character prefixes and suffixes that identify source –So Jason might be an acceptable part number

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee The U.S. Defense Industry is Experiencing Counterfeiting Issues Commerce and GSA have issued reports Congress held hearing on this subject in November 2011 –Many of the counterfeits identified were discrete electronic parts that had been purchased by OEMs –Nearly every counterfeiting fact pattern from the reports includes a purchase from an ‘unknown suppler’

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Boeing Testified Before Congress Boeing noted that they had verified that all parts supplied did conform to appropriate physical properties –Congress took the position that even if the parts can be shown to conform to all physical properties, counterfeits are nonetheless considered “non-conforming” –Passed 2012 National Defense Authorization Act –Requires the Secretary of Defense to implement a program to “enhance contractor detection and avoidance of counterfeit electronic parts” –Program will essentially shift the burden for detecting counterfeit parts onto contractors by requiring them to establish policies and procedures to ensure counterfeit electronic parts do not enter the supply chain –A trusted supplier program will be part of this (Section 818 of the 2012 NDAA)

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee 2012 National Defense Authorization Act Passed 2012 –Requires the Secretary of Defense to implement a program to “enhance contractor detection and avoidance of counterfeit electronic parts” –Program will essentially shift the burden for detecting counterfeit parts onto contractors by requiring them to establish policies and procedures to ensure counterfeit electronic parts do not enter the supply chain –A trusted supplier program will be part of this (Section 818 of the 2012 NDAA)

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Tips for a Counterfeit Program How does the business ‘know’ their suppliers –Programs like FAA AC help ensure adequate quality systems for distributors using 3 rd party audit verification –Registrar auditor regularly conducting AC audits –FAA does not give a certificate number or logo to distributor to use – Ahttp:// A –594 companies participating in program

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Tips for a Counterfeit Program A Robust Receiving Inspection Process –Clear standards –Inspector training –Closed loop process for investigating red flags

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Unusual Finish/No Inspection Stamp

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Tips for a Counterfeit Program The receiving inspectors should look at the Parts – Not Just the Paperwork –Inspectors should look for visual discrepancies –Ensure the parts match the paperwork

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Vibrapeened Part Number

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Tips for a Counterfeit Program Inspectors should read the documentation –Inspectors should identify and investigate incongruities

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee No Documentation (OOP)

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Documentation Review Tips Check whether inspectors –ensure part numbers match the part number listed on the documentation –ensure serial numbers match the serial number listed on the documentation –ensure the part that arrived matches the purchase order description –Look at the signatures – do they appear to be robo-signed and is this normal?

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Different Finish

RMC Workshop Minneapolis, MN 19 – 20 July 2012 Registration Management Committee Thank You Jason Dickstein, ASA Counsel Washington Aviation Group, PC 2233 Wisconsin Avenue, Suite 503 Washington, DC Tel: (202) – Fax: (202)