1. AFTA Preserving Competition Celebrating Parallel (Gray) Market Trade Or Targeting Counterfeits While Facilitating Lawful Parallel Market Trade June 27, 2016 American Free Trade Association www.aftaus.com

2. AFTA This Presentation Will Cover:  Information about the American Free Trade Association (“AFTA”)  Common Fight Against Counterfeiting  Background on the Secondary Marketplace  Information About Parallel Imports  Benefits of Parallel Market Trade  Litigation, Legislation and Regulation of the Gray Market  Ongoing Issues for Congress  Preserving Competition While Stopping Counterfeits  Securing Confidentiality of Supply Chains  Enhancing Border Enforcement/Facilitation Mechanisms 2 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

3. AFTA Your Presenters Today: 3 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Lauren V. Perez President, LVP Solutions, LLC AFTA’s Government Affairs Advisor lauren@lvpsolutionsllc.com Lee Sander, Esq. Member, Sandler, Travis & Rosenberg, P.A. AFTA’s General Counsel lsandler@strtrade.com Fred Paliani, Esq. General Counsel, Quality King Distributors AFTA’s President fpaliani@qkd.com

4. AFTA 4 For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Parallel Market Words Matter Unauthorized Secondary Market Reseller Wholesaler Gray Market Illegitimate Arbitrage Underground Discounter Illegal Exhaustion Refurbished Free Rider Diversion Fraudulent Product Integrity Genuine Infringing Counterfeit Downstream Distribution Monopoly Retail Price Maintenance Free Trade Fair Trade Reimportation Authenticity Trade Secrets Goodwill Quality Control Competition Cost Control Consumer Access Global Marketplace Repackaging Branded Goods

5. AFTA 5 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Consequences Matter Prevent Against Monopolies Foster Innovation Facilitate Consumer Choice Enable Competitive Pricing Protect Against Counterfeit Merchandise Incentivize Investment Smart Allocation of Agency Resources Prevent Consumer Confusion Maintain Product Integrity Support domestic SMEs Remove Non- Tariff Trade Barriers Encourage New Technologies Reap Benefits of Global Marketplace Ensure Product Safety Promote Economic Growth Reward Creativity Serve the Public Good Transparent Regulations Balanced Domestic Marketplace

6. AFTA What is AFTA?  A not-for-profit trade association of independent American importers, distributors, retailers and wholesalers.  Member companies typically distribute fragrance products, alcoholic beverages, cosmetics, health and beauty aids.  Operating in the United States for 30+ years Dedicated to preservation of the parallel market to assure competitive pricing and distribution of genuine and legitimate brand-name goods for American consumers. 6 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

7. AFTA AFTA Fights Against Importation and Distribution of Counterfeit Goods AFTA has actively opposed counterfeiting and counterfeiters and has supported legislation and rulemaking focused on eradicating all forms of this illicit trade. 7 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

8. AFTA AFTA members: Comply with CBP Rules & Regulations Depend on Integrity of Products Avoid or Report Counterfeiting goods through In-House Protocols and Procedures Work with trusted suppliers and vetted distribution Partners Provide American Consumers with Competitive, Safe, Genuine Branded Merchandise Work with CBP, Congress and other Federal Agencies to stop Counterfeiting while Preserving Brand Name Competition 8 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

9. AFTA A Little Bit About Quality King Distributors  50+ years in business  An industry leader in the Alternate Source category.  5000+ National Brand items spanning all categories: HBC, GM, Stationary, Auto, Battery, Grocery, Candy as well as Promotional Value items.  Supplies National and Regional markets: Retail Drug, Supermarket, Mass Merchandise, Wholesale Grocery, C-store Suppliers, and E-Commerce.  Over 1200 accounts nationwide  75% of partnerships are in the Forbes top 500  Successful Plaintiff in Quality King Distributors v. L’Anza Research International (523 U.S. 135 (1998)) 9 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

10. AFTA Gray market goods as “genuinely branded merchandise distinguished only by their sale through channels unauthorized by the trademark owner.” L.P. Bucklin, “Modeling the International Gray Market for Public Policy Decisions,” International Journal of Research in Marketing 10 (1993): 387–405, 387. The goods appear to be, and in most cases are, physically identical in every way, including their trademarks. Therefore, price is the major difference.” J. Cross, J. Stephans, and R.E. Benjamin, “Gray Markets: A Legal Review and Public Policy Perspective,” Journal of Public Policy and Marketing 9 (1990): 183–194, 183. 10 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

11. AFTA 11 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Are Reconditioned/Refurbished Goods Counterfeit? “And we would not suppose that one could be enjoined from selling a [used] car whose valves had been reground and whose piston rings had been replaced unless he removed the name Ford or Chevrolet.” Justice Douglas, Champion Spark Plug Co. v. Sanders, 331 U.S. 125 (1947)

12. AFTA A Few Retailers A Few IP Owners Brand Owners and Major Retailers all Fight Counterfeits – Fight each other on Genuine Goods American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved 12

13. AFTA Secondary Market Sales of Genuine Merchandise Benefits American consumers  Alternative to Lower-Priced Counterfeits, Fakes, Unsafe and Tampered- with Merchandise  Promotes Intra-brand competition and Maintains a Competitive Marketplace  Greater Access to Branded Merchandise for Consumers in Rural and Lower-Income Communities  Non-Discriminatory Treatment of U.S. Consumers  Greater Inventory for Discount Retail Outlets serving and employing hundreds of thousands of U.S. Consumers  More Favorable Sourcing Opportunities  Opens U.S. Borders for U.S. Trading Partners  Protects Against Monopolistic Commercial Practices  Engages U.S. Small Businesses 13 For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

14. AFTA  Market Segmentation  Pricing Differential  Currency Fluctuations  Brand Owner’s Distribution Partner Breaches Contractual Restrictive Covenants 14 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Why do “Gray Markets” Exist in the First Place  Brand Owner authorizes sales that result in excess inventory that must be sold off to “meet the numbers” and/or to ensure sales prior to product expiration or otherwise becomes obsolete  Products Manufactured For Export Never Leave U.S.

15. AFTA Why are there Imports of Parallel Market Goods? Global Trade Arbitrage 15 Arbitrage/ Restricted Distribution The Sale/Distribution of Genuine Branded Goods Outside Their Authorized Chain of Distribution For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

16. AFTA Some Characteristics of Genuine Parallel Goods Made in the USA and Reimported Identical to Like Product Currently on Retail Shelves Passes Look/Feel/Smell TestCould be in last year’s packaging Papertrail back to Manufacturer Often Unavailable Retailer/Supplier Offers Consumer Warranty Importer has its own track/trace/coding system for purposes of recall Importer works closely with CBP to avoid disclosure of proprietary trade secrets to competing brand owner Exporter/Importer Has No Relationship to Domestic Brand Owner Laboratory testing validates product authenticity Subject to Importer’s Quality Control and verification processes in addition to those practiced by the manufacturer at time of production Distribution Codes Removed to Protect Competitive Supply Chains and Maintain Alternative Sourcing Opportunities For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) ©2016. American Free Trade Association. All Rights Reserved

17. AFTA Impetus for Gray Market Transaction Impact on IPR Enforcement Strategy Market Segmentation  Brand Owner Proprietary Selective Distribution Strategy  No Impact on Product Authenticity Pricing Differentials  Brand Owner Selective Global Pricing Strategy  No Impact on Product Authenticity Currency Fluctuations  Consequence of Global Market Performance  No Impact on Product Authenticity Excess Inventory Resales To Comply with Minimum Sales Obligations or to Ensure Distribution Prior to Product Expiration/Obsolescence  Supplier Inventory Challenge  No impact on Determination of Product Authenticity  Examine Expiration Dates for Consumable/Pharmaceutical Product Viability and Integrity Contractual Violations  Symptom of Ineffective Enforcement of Private Contractual Provisions  No impact on Determination of Product Authenticity  Manufacturer Responsible for Enforcement of Private Contracts For-Export Merchandise Never Leaves U.S.  No impact on Determination of Product Authenticity  May Constitute Fraud or Other Commercial Trading Violations 17

18. AFTA to Costco (2010) to Wiley (2012) To Quality King (1998) to K-Mart/Cartier (1988 ) to Lever Brothers (1989) Litigation American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved 18 Apollinaris (1886) To Lexmark (2016)

19. AFTA 19 Legislation American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

20. AFTA 20 The Regulated Parallel Marketplace American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

21. AFTA 21 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved In terms of economics, a monopolistic distributor stands to set prices for its products at a much higher level than when compared to perfect competition or if there were a few firms offering close substitutes (oligopoly). Monopoly pricing maximizes producer surplus, and renders lower quantities (due to price elasticity) when compared to perfect competition along the same demand curve. The consumer surplus suffers under conditions of monopoly http://www.ewp.rpi.edu/hartford/~stoddj/BE/GreyMkts.htm

22. AFTA Some Stuff for Congressional Action and Oversight: Here are Some Statutes and Regs: Customs Law (Tariff Act Section 526 19 CFR 133.21-22) Trademark Law (Lanham Act Sections 42, 32(a) and 43(a)) Copyright Law (17 USC 602 – 19 CFR 133.42) Patent Law, Unfair Trade and Lever Rule (Tariff Act section 337) 22 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

23. AFTA 23 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Why a Customs Law and a Trademark Law? Congress Acts Faster than the Courts: Bourjois v. Katzel 1921: Second Circuit found no Lanham infringement because branded product was genuine September, 1922: Congress Adopts Genuine Goods Exclusion (Tariff Act 1922, Section 526) to prevent Second Circuit results in the future January, 1923: Supreme Court Reverses Second Circuit Lanham Act Decision

24. AFTA 24 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Lanham Act Section 42 of the Lanham Trademark Act of 1946 prohibits the importation of goods bearing trademarks that "copy or simulate" trademarks registered in the United States.

25. AFTA K Mart Corp. v. Cartier, Inc. The United States Supreme Court confirmed that the Customs Service could allow entry into the United States of gray-market imports where the foreign manufacturer and domestic trademark owner are subject to common control. 19 CFR 133.2(d) 25 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved K Mart Corp. v. Cartier, Inc. (1) Common ownership means individual or aggregate ownership of more than 50 percent of the business entity; and (2) Common control means effective control in policy and operations and is not necessarily synonymous with common ownership

26. AFTA Gray Market Importation Restricted 26 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

27. AFTA §133.2 Application to record trademark. (**note: registered copyrights may also be recorded) An application shall include the following information: (a) The name, complete business address, and citizenship of the trademark owner or owners; (b) The places of manufacture of goods bearing the recorded trademark; (c) The name and principal business address of each foreign person or business entity authorized or licensed to use the trademark and a statement as to the use authorized; and (d) The identity of any parent or subsidiary company or other foreign company under common ownership or control which uses the trademark abroad. Recordation does not permit brand owners to designate authorized importers to distinguish from parallel importers If the U.S. Trademark Owner is not under common control or ownership with the owner of the mark outside of the United States, CBP will restrict gray market imports Brand owners may elect NOT to provide CBP with information identifying authorized supply chain partners to facilitate CBP’s sharing of entry information for/about each and every shipment – This is an unfortunate waste of CBP resources and leads to unnecessary entry delays 27 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

28. AFTA 28 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Physical and Material Differences Lever Bros. Co. v. United States, 981 F.2d 1330, 1338 (D.C. Cir. 1993) The existence of common ownership or control does not preclude CBP prohibiting entry of genuine parallel imports provided that (1)the mark is federally registered, (2)the trademark owner records the mark with CBP, and (3)the imported goods are physically and materially different from those authorized for domestic sale

29. AFTA 19 C.F.R. § 133.2(e) 29 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved The “Lever Rule” Trademark Owners can apply to CBP for “Lever Rule” protection to restrict gray market imports

30. AFTA The application must include a description of any physical and material difference between the specific articles authorized for importation or sale in the United States and those not so authorized. 30 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Trademark Owners Must Apply to CBP for Lever Rule Protection Against Gray Market Imports Physical and material differences may include: (1) The specific composition of both the authorized and gray market product(s) (including chemical composition); (2) Formulation, product construction, structure, or composite product components, of both the authorized and gray market product; (3) Performance and/or operational characteristics of both the authorized and gray market product; (4) Differences resulting from legal or regulatory requirements, certification, etc.; (5) Other distinguishing and explicitly defined factors that would likely result in consumer deception or confusion as proscribed under applicable law.

31. AFTA Goods determined by the Customs Service to be entitled to Lever Rule protection will not be detained if a conspicuous and legible label is affixed to dispel any consumer confusion This product is not a product authorized by the United States trademark owner for importation and is physically and materially different from the authorized product 31 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved The “Lever Rule”

32. AFTA 32 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved The “Lever Rule” Applied

33. AFTA 33 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Lever-Rule Importation Restricted

34. AFTA 34 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, No. 07-3340 (10th Cir. 2009)) Differences in Post-Sale Services are Material Differences Societe Des Produits Nestle, S.a., et al.,v. Casa Helvetia, Inc., et al, 982 F.2d 633 (1st Cir. 1992) Lower Prices are Material Differences Brand Owners Expand Lever Rule through ITC and Court Actions Gamut Trading v. US ITC User Manuals in English language is a Material Difference 200 F.3d 775 (Fed. Cir. 1999) Original Appalachian Artworks, 816 F.2d at 73 (2d Cir.) Fake Adoption Certificates in Spanish is a Material Difference Removal of UPC Codes is a Material Difference Zino Davidoff SA v. CVS Corp., 571 F.3d 238 (2d Cir. N.Y. 2009) Hokto Kinoko Co. v. Concord Farms, 810 F. Supp. 2d 1013 (C.D. Cal. 2011) Labeling and Packaging Information are Material Differences

35. AFTA There is no statutory language defining what constitutes a “material difference” sufficient to constitute trademark infringement and obstruct competition in genuine goods 35 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved  Product Quality/Formulation  Packaging/Labeling  Warranties  Pricing  Presentation  Languages  Packaging shape  Safety warnings  Instructions  Units of Measure  Operator Manual  Post-sale services “…the existence of any difference…that consumers would likely consider to be relevant when purchasing a product creates a presumption of consumer confusion sufficient to support a Lanham Trade-Mark Act claim.” (Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc. (1st Circuit, 1992))

36. AFTA Importations are prohibited…..17 USC Section 602 (a) Infringing Importation or Exportation.— (1) Importation.— Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501. But Owners of Copies are free to sell to anyone……17 USC Section 109(a) Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord Copyright Owners Control (1) Production of copies and (2) distribution, limited to (“THE FIRST SALE”) 36 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Copyright Law

37. AFTA Maintaining A Balanced, Competitive Domestic Marketplace Depends Upon Confidentiality and Protection of Proprietary Supply Chain Information 37 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved Avoiding Disclosures to “Competitors”

38. AFTA  Once CBP detains merchandise that it suspects bears counterfeit marks, it will issue a detention notice to the importer within five business days.  CBP’s detention notice starts a seven-day period within which the importer may demonstrate that the goods do not bear a counterfeit mark before CBP will release any unredacted product samples to the rights owner  The importer may receive an unredacted product sample/image at any time to assist with its verification of authenticity  Customs Reauthorization Section 231: Any Changes? 38 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved The 7-Day Rule 19 CFR 137.21(b), effective October 19, 2015

39. AFTA 39 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved The Unredacted Sample Concern

40. AFTA 40 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved CBP Must Disclose Certain Information to the Brand Owner Immediately and Must Disclose Additional Information if Goods are Ultimately Seized From the time merchandise is presented for examination, CBP may disclose to the owner of the mark : (i)The date of importation; (ii)The port of entry; (iii)The description of the merchandise (iv)The quantity, (v)The country of origin of the merchandise (vi)Redacted photographs, images, or samples 19 U.S.C. §133.21(b)(4) and (5) When merchandise is seized, CBP will disclose to the owner of the mark (i)The date of importation; (ii)The port of entry; (iii)The description of the merchandise from the notice of seizure; (iv)The quantity as set forth in the notice of seizure; (v)The country of origin of the merchandise; (vi)The name and address of the manufacturer; (vii)The name and address of the exporter; (viii) The name and address of the importer. (ix)unredacted photographs, images, and samples. 19 U.S.C. §133.21(e) and (f)

41. AFTA Are goods moving in unauthorized supply chains Compliant with Requirements of FDA, USDA, CPSC, EPA, DOT, et.al Will CBP be caught in the middle? Will “First Sale” Limit on Distribution be Eliminated or Facilitated by PGA? As they did for non-Conforming vehicles 19 CFR 12.73(d) TD 88-40 41 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved A Word About Other Agencies

42. AFTA What Can Congress Do To Help Protect the Parallel Marketplace?  Ensure Appropriate Balance in Rights of Third-Party Resellers and Rights Holders While Enhancing Tools to Protect Against Trafficking in Counterfeit Goods Recognizing the Competitive Advantages of Fair Trade Promoting Global Trade for Benefit of U.S. Consumers  Harmonize First Sale Protection and Infringing Goods Definitions under Copyright, Trademark and Patent Laws  Protect Proprietary Commercial Information (Trade Secrets) in Anti-Counterfeiting Efforts  Limit “Lever Rule” Protection to “Physical and Material Differences” Affecting Composition and Performance of Products  Support CBP Programs for Low-Risk Targeting of Known and/or Trusted Parallel Market Importers  Reject Efforts to Monopolize Downstream Distribution, Whether Direct or Indirect 42 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved

43. AFTA  Effective Anti-Counterfeiting Tools at the Border  Statutory Standard for Granting Lever Rule protection  International Exhaustion Provision in FTAs  Industry Recognized as Critical Stakeholder by Administration, invited to participate in discussions and forums committed to enhancing IPR protection and enforcement  Enhanced Detention Decision-making  Private Sector Educational programs for CBP  IPR Known Importer Program  Improved Registration and Recordation information 43 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved A Vision for the Future

44. AFTA 44 American Free Trade Association For additional information, please contact Lee Sandler, Esq. (lsandler@strtrade.com) or Lauren V. Perez (lauren@lvpsolutionsllc.com) | ©2016. American Free Trade Association. All Rights Reserved