1. COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES Counterfeit Electronic Components Avoidance Workshop August 27, 2008 Laurence E. Pappas © EQuality Services, LLC 2008

2. COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations A. Direct and Contributory Trademark Infringement and Dilution. 1. Direct trademark infringement: Valid mark entitled to protection that is used in commerce in connection to sale or advertising of goods or services without consent and is likely to cause confusion as to link user and holder of trademark or origin of goods and services. © EQuality Services, LLC 2008

3. COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES © EQuality Services, LLC 2008 I. Internet Sales and Trademark Violations a. If trademark is valid, key question is whether use is likely to cause confusion as to the origin of the goods or services. b. Nominative fair use: defense to use.

4. © EQuality Services, LLC 2008 COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations 1. Trademark owners cannot prevent others from making a descriptive use of their trademark. Resale of authentic non- counterfeit goods is protected even though resale is not authorized. 2. Nominative fair use proven when product or service is not easily identifiable without trademark, only so much of mark is used that is necessary to identify goods or services, and user does not suggest sponsorship or endorsement by holder of mark.

5. © EQuality Services, LLC 2008 COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations EXAMPLES: “Tiffany” used to describe Tiffany jewelry. Without using word “Tiffany”, reseller might have to say “Silver jewelry from prestigious N.Y. company where Audrey Hepburn once liked to eat breakfast” or “Jewelry bearing same name as 1980s pop star”. “Playboy” used to resell goods without special font or symbols - e.g., the famous Playboy bunny associated with the mark.

6. © EQuality Services, LLC 2008 COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations EXAMPLES: continued “Playboy Playmate of the Year in 1981” phrase used by woman (woman had disclaimer of endorsement on website). Disclaimer not required but safer.

7. © EQuality Services, LLC 2008 COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations c. Purchase of sponsored links advertising on search engines availability of trademark items: protected in same manner as use on own website.

8. © EQuality Services, LLC 2008 COUNTERFEIT COMPONENTS AND RELATED LEGAL ISSUES I. Internet Sales and Trademark Violations 2. Contributory Infringement: A person intentionally induces another to infringe upon a mark or continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement. a. Mere suspicion or general knowledge of counterfeiting not enough.