Transcript Slide 1

MEMA Brand Protection
Council
November 13, 2008
Detroit, MI
1
Agenda
•
•
•
•
•
•
•
•
•
Welcome & Introductions – Cifranic & O’Rourke
Review Antitrust Guidelines – Arent Fox
Pending Litigations Update – Arent Fox
AAPEX Update / IP Incidents – Arent Fox
TechIdentity – Francois Augnet, TRW
Lunch – 30 minutes
Government Affairs Update- Catherine Boland
Brand Protection Talking Points – Catherine Boland
Work Session: Quantifying IP Protection in North
America Vehicle Parts Industry – Andy Cifranic
• Break – 15 minutes
• Final Review: Special Report Draft on Flow of
Counterfeit Parts
• Council Updates / Adjourn
2
AASA/MEMA
Brand Protection Council
• “To support members’ global efforts to prevent, detect
and prosecute intellectual property offenses against their
products and brands”.
• “Provide the means for collective industry action against
counterfeiting, sharing market intelligence and best
practices, media and education campaigns and gaining
increased enforcement by all relevant law enforcement
agencies”.
3
Anti-Trust Guidelines
It is the unqualified policy of the Motor & Equipment Manufacturers Association to
conduct its operations in strict compliance with the antitrust laws of the United
States.
MEMA's antitrust policy prohibits any discussions which constitute or imply an
agreement or understanding concerning: 1) prices, discounts, or terms or
conditions of sale; 2) profits or profit margins or cost data; 3) market shares, sales
territories or markets; 4) allocation of customers or territories; 5) selection,
rejection or termination of customers or suppliers; 6) restricting the territory or
markets in which a company may resell products; 7) restricting the customers to
whom a company may sell; or 8) any matter which is inconsistent with the
proposition that each manufacturer, wholesaler and distributor must exercise its
independent business judgement in pricing its services or products, dealing with
its customers and suppliers and choosing markets in which it will compete.
4
Litigation Update
Autozone v. Strict Enterprises Inc.
Bosch v. Pylon
U.S. v. Able Time
Toyota Hybrid Lawsuit - Green Claim
SIIA v. eBay
Kingdom Auto Parts v. MEMA
Counterfeiting at AAPEX
Summary of the Actions at 2008 AAPEX
Number of Complainants: 9
Number of Companies Complained About: 21
Nature of Violations (The number exceeds the total number of complaints because
there were multiple complaints about some companies)
•
•
•
•
Non-compliant product: 12
Patent Violations: 4
Trademark and/or part number infringements: 4
Generalized IP allegations, including trade dress and copyright: 3
Resolution of Complaints (without follow-up to assure compliance in all cases)
• Insufficient evidence to pursue, or complaint withdrawn or deferred: 2
• Products seized and/or catalogs removed or redacted: 7
• Delivered Letter or Warning to Booth: 3
Counterfeiting at AAPEX
Mema Brand Protection Council
Meeting
TecIdentify
Francois Augnet
13th November 08
Mema Brand Protection Council Meeting
1
Why a Branch Solution?
Facts and Figures
What is TecIdentify?
2 2
Fully integrated solution
3
Benefits & Value Added
Usage of code in daily business
4
Status & Future
First Movers & The next steps
8
© TRW Automotive Inc. 2008
8
Criminal Activities growing…
Product piracy costs
Global Automotive Parts Industry
5 – 10 € billion per year
Source:
OECD
9
© TRW Automotive Inc. 2008
Spare parts – Threats!
• Counterfeit parts – including trademark-infringement
• Grey-market imports – including genuine parts diverted from one market to
another without consent of brand owner
• Excess stock by authorised suppliers, including non-branded genuine parts sold
directly from supplier to dealer without consent of brand owner
• Re-labelling – eg. Sales of used parts / reject parts
• ….and more!
Source:
OECD
10
© TRW Automotive Inc. 2008
Spare parts counterfeiting facts
Targeted products
• Fast moving products
• Standard parts sold off-the-shelf & which
can be fitted to different models
• Parts with low per-unit costs as less likely
to carry any security device
Consequences
•
Illegal
•
Brand Image affected – disastrous
long term effects
•
Liability in case of accidents
•
Lost revenues
Eg. manufacturers 5% - 7% p.a
Source:
OECD
11
© TRW Automotive Inc. 2008
Potential threats in Supply Chain
Distributor /
Dealer
Original
manufacturer
Trusted
supply chain
Garage / End user
Trusted
supply chain
?
Unknown
source
Source:
Vesdo
12
Distributor /
Dealer
© TRW Automotive Inc. 2008
Consequences - dealing with counterfeited products
Personal (Emotional)
•
Dealer is cheated as he pays for an original product & gets “junk” goods
Liability
•
Low quality product create quality claims
Reputation
•
Low quality products ruin the dealers reputation
Business
•
The dealer is in breach of his contract with the original parts manufacturer
Legal
•
Selling counterfeit products is prohibited
Source:
Vesdo
13
© TRW Automotive Inc. 2008
Mema Brand Protection Council Meeting TecIdentify
1
Why a Branch Solution?
Facts and Figures
What is TecIdentify?
2 2
Fully integrated solution
3
Benefits & Value Added
Usage of code in daily business
4
Status & Future
First Movers & The next steps
14
© TRW Automotive Inc. 2008
14
TRW Response to Counterfeiting
TRW supports Industry
Solution
TecIdentify
New CLEPA coding standard for authentication
Source:
Vesdo
15
© TRW Automotive Inc. 2008
CLEPA Code –
Basic Principles of Logical Security and Barcode Structure
Today
Future
Anonymous mass of items
Every item gets its own identity
246
(01)
14 digits
248
…....free space (21)…….
438 686
9 - 20 digits
=
Source: Vesdo Ltd
GTIN
16
Serialisation
© TRW Automotive Inc. 2008
16
Application of Clepa Code
Extended
security
Product
Objective for
pilot project
For Track & Trace
Folding box
Bundle/ Display
Shipping case
combination with
other security systems
Source: Vesdo Ltd & Teccom
17
© TRW Automotive Inc. 2008
17
TRW Label with CLEPA Code
18
© TRW Automotive Inc. 2008
18
TecIdentify Version 1.2
Authentication Process
 Single Scans
 Online
 Mobile
Clepa Code
 Multiple Scans
 Online
TecIdentify
Database
 Local
19
© TRW Automotive Inc. 2008
19
TecIdentify Version 1.2
Scan, show results
Authentication: OK
Authentication: Warning
TecCom Mobile
TecCom Mobile
TecIdentify
TecIdentify
Warning!
Congratulations!
Unknown Code.
This part part
might not be an
original part from
TecCom GmbH.
This part is a
genuine part from
TecCom GmbH.
[9] Impress
[1] Yes, I want to report
this!
[9] Impressum
20
© TRW Automotive Inc. 2008
20
TecIdentify Version 1.2
Feedback possible
Feedback form
TecCom Mobile
TecIdentify
Contact Form:
TecCom Mobile
TecIdentify
E-mail:
Name:
Phone:
E-mail:
Yes, send the form!
Barcode:
(01)14399901959689(10)24576
89145(21)ABC123DEF45
[9] Impress
21
© TRW Automotive Inc. 2008
21
TecIdentify Version 1.2
Website
1. scan
2. check
22
© TRW Automotive Inc. 2008
22
TecIdentify Version 1.2
Response
23
© TRW Automotive Inc. 2008
23
TecIdentify
Features & Benefits
1. Open solution based on global standards (GS1,ISO..)
Customs, importers, distributors, garages, car driver.....
2. Worldwide 24/7
3. Answer within seconds
4. Low requirements
 Internet PC with scanner
 Mobile phone with camera and free to download
reader software
5. Direct contact in case of a problem possible
6. Sophisticated algorithms on a secure database
24
© TRW Automotive Inc. 2008
24
Mema Brand Protection Council Meeting Tecidentify
1
Why a Branch Solution?
Facts and Figures
What is TecIdentify?
2 2
Fully integrated solution
3
Benefits & Value Added
Usage of code in daily business
4
Status & Future
First Movers & The next steps
25
© TRW Automotive Inc. 2008
25
Manufacturer Requirements & Benefits
Requirements
• Pre-requisite for TRW to implement branch solution =
Achieve Global Standard Label, Design & Printing
• Move from local sites doing local labeling to streamlined standards and
processes for all aspects of product labels
Benefits of Global Standard Label, Design & Printing Project
• Synergy – Standard processes & data integrity
• More efficient & effective
• Flexible – additions/deletions & immediate changes to labels worldwide
• Can implement branch solution using CLEPA code and Tecidentify!
26
© TRW Automotive Inc. 2008
Possible Approach - Challenges & Benefits
How to
start ?
By Product
National
Global
Requirements
Low
Medium
High
Benefits of
CLEPA code
on label
Protection of specific
products
Marketing messages etc.
Security for a certain region or
country
Marketing messages etc.
Global solution protecting all
products & territories
Synergy & Economies of scale
Targetted marketing activities
by using the code for
messaging, promotions, part of
loyalty program
Challenges
If product produced
across multiple sites –
adapt site processes or
review need to
standardise?
Or cost to outsource the
work but then lose some
control
Creating one process across the
sites within one region
Or cost to outsource the work
but then lose some control
Large workload to standardise
processes, role definitions &
resource allocation
To find / create a global, user
friendly software solution
27
© TRW Automotive Inc. 2008
TRW Approach - Challenges & Benefits
How to
start ?
By Product
National
Global
Requirements
Start with packed in
house products
Starting with 2
geographical regions in
initial roll out
Will roll out globally step by step
Review current processes & resources
for labeling activities
Understand internal & external
requirements
Definition of future requirements &
conceptual design with chosen
software provider
Benefits
Global web-based solution for TRW & suppliers / Controlled access for suppliers
Protection of all products (Image, turnover etc.)
Synergy, efficient streamlined processes for all labeling design & print activities (internal
efficiencies), Single data source & storage for label information
Marketing benefits - code can be used in daily business to eg. Send messages, announce
promotions, link to a customer loyalty programme etc.
Challenges
Managing IAM & VMS
channels
28
Large workload &
rethinking of roles &
resource allocation
© TRW Automotive Inc. 2008
Large workload to standardise
processes, complex to design & arrive
at global user friendly software solution
for TRW sites & suppliers
The Clearing Hub - Architecture of an
authentication system
If each manufacturer is
operating his own
system:
Business processes at
the POS will be very
complicated.
Using a hub as unique
certification authority in a
given industry:
Business processes at the
POS will be simple & easy.
29
© TRW Automotive Inc. 2008
Mema Brand Protection Council Meeting Tecidentify
1
Why a Branch Solution?
Facts and Figures
What is TecIdentify?
2 2
Fully integrated solution
3
Benefits & Value Added
Usage of code in daily business
4
Status & Future
First Movers & The next steps
30
© TRW Automotive Inc. 2008
30
First Movers
project started
31
1
2
3
4
5
6
7
8
9
10
11
12
project start open
Bosch
Continental Teves
Federal Mogul
GKN
Hella (2009)
Mahle
Mann + Hummel (2009)
Schaeffler, LuK, INA
Tenneco
TRW
Wabco
ZF-Trading
decision open
© TRW Automotive Inc. 2008
13
14
15
16
Contitech
ThyssenKrupp
Knorr Bremse
Osram
Networking
ITG
Figiefa
MEMA / JAPIA
Car Manufacturer
31
Automechanika Sept.2008
Automechanika 2008
First Movers activities
- Invitation with 2DMatrix
- Presentation on the booths
- Promotion using Clepa Code
Joint PR activities with CLEPA & Messe Frankfurt
TecIdentify won the Innovation award at Automechanika in IT
category
Source:Teccom
32
© TRW Automotive Inc. 2008
32
Next steps
1. TecIdentify Version 1.3:
 Enhancement of user interface
 Add new algorithms
 Enhancement of reports
 ....
2. Anticounterfeiting - Platform - conceptual
Projects
Company
Case
Country
Contact
Security Concepts
Schaeffler
Gruppe
5 container
of clutches
CzechGerman
Border
Mario
Thümmler
TRW
Ningbo
Automecha
nika
Frankfurt
2006
Karen
Landis
Contitech
195.000
Malta
© TRW Automotive Inc. 2008
drive belts
Uncovered Fakes
Links
33
Christoph
Stegemann
33
Challenges for ALL companies!
•
Encouraging garages etc. across all territories to use
the solution!
•
Equipment available?
•
Ensuring this great solution is embedded in an
internal process eg. what happens in YOUR
COMPANY when a garage gets a warning message?
34
© TRW Automotive Inc. 2008
34
Q&A
35
© TRW Automotive Inc. 2008
35
Lunch
30 minutes
36
Government Affairs Update
Brand Protection Council
November 13, 2008
Catherine Boland
Director, Government Relations
Motor and Equipment Manufacturers Association
37
MEMA Washington, D.C. Office
• Seven person office that develops legislative
and regulatory strategies on issues impacting
automotive and heavy duty suppliers
• Resource for OESA, AASA, HDMA members
• Government Affairs Committee that sets
legislative priorities based on input from market
segments
38
Legislative Update
PRO-IP Bill (S. 3325) signed into law on October
13, 2008
• Contains language requested by MEMA that
calls for a Government Accountability Office
(GAO) study on how the federal government can
best protect the IP of manufacturers
• Study is to be completed and submitted to
Congress by October 2009
• GAO has not begun work on this study, but they
will reach out to MEMA when they begin work on
it
39
Legislative Update
PRO-IP Bill (S. 3325)
• Heavy focus on copyright and trademark
protection
• Coordination of Federal Effort Against
Counterfeiting and Piracy
– This legislation takes domestic portions of the Bayh
Voinovich bill and creates an advice-and-consent level
position, the Intellectual Property Enforcement
Coordinator (IPEC), to serve in the Executive Office of
the President and chair an inter-agency committee, that
will produce and implement a joint strategic plan to
enforce intellectual property laws
40
Legislative Update
PRO-IP Bill (S. 3325)
• Increased Resources at Department of Justice
– This legislation increases the resources available to
federal and local law enforcement agencies to combat
theft of intellectual property
•
•
•
•
Creates grants for state and local law enforcement
New operational unit within the FBI
Training program on intellectual property offenses
New funds for the FBI and DOJ for additional agents and
prosecuters
• Sends five “intellectual property law enforcement
coordinators” to the countries or regions where there
presence and assistance can have the greatest positive
effect on US intellectual property rights and interests
41
Legislative Update
Issues not addressed in PRO-IP
This bill does not address certain MEMA
priorities
– Increased protection for IP of goods not
bearing a trademark
– Increased protection of trade dress
– International cooperation between like-minded
countries
42
Legislative Update - International
Rangel-Levin Trade Enforcement Bill – H.R. 6530
– Introduced as a legislative marker in July
– Will not move this Congress
– Title III of bill covers enforcement of IP laws at U.S.
borders
• Enforces U.S. Intellectual Property Rights (IPR). The bill
creates a Director of IPR Enforcement and an IPR
Enforcement advisory committee to advise on IPR enforcement
issues; promotes the use of new technology to better fight
intellectual property rights (IPR) infringement; creates a “watch
list” for suspected bad actors; and prevents Customs from
excusing fines assessed for illegal imports.
• Increases Staffing, Resources, Training and Coordination.
The bill authorizes the support, resources and training that
Customs and Immigration and Customs Enforcement need and
deserve to carry out their import safety and IPR enforcement
responsibilities.
43
Legislative Update - International
S. 3464 - International Intellectual Property Protection and Enforcement Act of 2008
(introduced by Senator Baucus and Senator Hatch)
•
Action Plans. The bill requires the United States Trade Representative (USTR) to
develop an action plan for each foreign country that has remained on USTR’s “Priority
Watch List” of intellectual property deficient countries for at least one year.
•
Enforcement Actions. If a foreign country has not complied with its action plan
within one year, the bill authorizes the President to take various enforcement actions
against the country.
•
Developing Country Assistance. The bill authorizes appropriations to USTR to
assist developing countries in complying with their action plans.
•
Congressional Report. The bill requires USTR to include, in its annual “Special 301”
report, a description of the action plan developed for each country and the actions
taken by each country pursuant to that plan.
•
Intellectual Property Officials. The bill requires the President to ensure that
intellectual property officials are placed in the U.S. embassy of each foreign country
that has a commercially significant relationship with the United States.
44
Anti-Counterfeiting Trade
Agreement
• Late last year, USTR announced that they had begun
discussions with our trading partners engaged in
discussions to negotiate an anti-counterfeiting trade
agreement
• Discussions include Canada, the European Union (with
its 27 Member States), Japan, Korea, Mexico, New
Zealand, and Switzerland
• The National Association of Manufacturers is working
with USTR and Immigration and Customs Enforcement
to put together a round table in the Detroit area to
discuss the trade agreement
– When this is scheduled, MEMA Washington will inform the BPC
and provide information about attending
45
Discussion
For more information contact
Catherine Boland
Director, Government Relations
202-312-9241 or [email protected]
46
Working Session:
Quantifying IP Protection in North
American Vehicle Parts Industry
• Second in a series to engage council members and
develop valuable industry information to support IP
enforcement
• Today's topic requested by Department of Justice
• To be published by BPC and distributed to assist MEMA
DC Office and IP enforcement
47
Break
15 minutes
48
Working Session:
Flow of Counterfeit and Gray Market Goods
• Special Report: “Understanding the Flow of
Counterfeit and Gray Market Goods through the U.S.
Automotive and Commercial Vehicle Parts
Marketplace” (handout)
• Developed at last BPC meeting
• Forwarded via e-mail for review
• Finalize before publishing and distribution
49
U.S. Automotive and Commercial Vehicle Parts
Distribution Supply Chain Model
Legitimate U.S. Motor Vehicle Parts Supply Chain
• Raw material and component suppliers – These may include
international or domestic.
• Manufacturing – This includes the actual manufacture, assembly and
completion of a finished component or part.
• Distribution Center – Owned by the manufacturer and where finished
parts are moved for packaging, warehousing and shipping.
• OE Production or Warehouse Distributor – The part is then sold by the
manufacturer either for assembly onto a vehicle (OE Production) or
into the aftermarket distribution channel (Warehouse Distributor).
• Parts Store / Jobber / Retail Chain – In the case of the aftermarket
distribution channel, a warehouse distributor may elect to sell through
a parts store either independent or company owned.
• Repair Facility – If the part is installed professionally, the part is sold
directly or indirectly to a repair facility. This may be independent or a
car dealer.
• End User / Vehicle Owner – The ultimate end-user or consumer of the
part.
50
U.S. Automotive and Commercial Vehicle Parts
Distribution Supply Chain Model
Raw
Material
Or
Component
Domestic
Supplier
O.E.
Production
Domestic
Manufacturer
Distribution
Center
Warehouse
Distributor
Repair
Facility
End User /
Vehicle
Owner
Parts Store /
Jobber /
Retail Chain
International
Supplier
MEMA Member Company
US Manufacturer
Legitimate
51
U.S. Automotive and Commercial Vehicle Parts
Distribution Supply Chain Model
Supply Chain – How Counterfeit and Gray Products get Introduced:
• Unauthorized Suppliers – Producers of raw materials or components
that were not commissioned by the original manufacturer.
• Unauthorized Manufacturers – Producers products made for the
replacement of the original but in violation of the original manufacturer’s
intellectual property.
• Generic Supplier – May produce legitimate replacement products not in
violation of intellectual property but may later be converted to
counterfeit by affixing trade marks or other trade dress violations by
another party.
• Master Distributor / Importer of Record – Generally the company that
takes receipt of illegitimate products within the U.S. with the intent to
distribute. They may also be the converters of legitimate replacement
products to counterfeit through the use of markings, packaging, etc.
• Internet / Web Sites / Mail Order – May also be distributors of
illegitimate products and may or may not be located in the U.S.
• Broker – In the commodities business. Generally not product experts
but in the business of selling large quantities of over run, over stock
52
products which may or may not contain counterfeit goods.
U.S. Automotive and Commercial Vehicle Parts
Distribution Supply Chain Model
Raw
Material
Or
Component
Domestic
Supplier
O.E.
Production
Domestic
Manufacturer
Distribution
Center
Warehouse
Distributor
Generic
Supplier
End User /
Vehicle
Owner
Parts Store /
Jobber /
Retail Chain
International
Supplier
Unauthorized
International
Supplier
Repair
Facility
Unauthorized
Manufacturer
Master Dist
/ Importer
of Record
Internet
/ web site
/mail order
Broker
Legitimate
w/ Counterfeit
and Gray Market
53
U.S. Automotive and Commercial Vehicle Parts
Distribution Product Flow
A simplified flow chart illustrating the normal flow of products from
international sources to U.S. buyers include:
• Free Trade Zone – Within international borders.
• Freight Consolidator – Actual transporter of goods.
• Customs Broker – Completes necessary documentation for export of goods.
• The process is then reversed upon receipt within U.S. borders.
54
U.S. Automotive and Commercial Vehicle Parts
Distribution Product Flow
Origin
Free Trade
Zone
Freight
O
Consolidator
Destination
Customs
Broker
Customs
Broker
Freight
Consolidator
Purchaser
Legitimate
55
U.S. Automotive and Commercial Vehicle Parts
Distribution Product Flow
In the case of counterfeit or gray market products, shipments are generally not
direct to U.S. borders but may include many stops along the way. There are
too many to name but some include:
• Dubai
• Paraguay
• Panama
• Mexico
• Canada
Where import restrictions are less complicated and the entry of counterfeit
goods more likely. The additional paper trail of many stops along the way
make origin hard to detect.
56
U.S. Automotive and Commercial Vehicle Parts
Distribution Product Flow
International Origin
Free Trade
Zone
Freight
O
Consolidator
U.S. Destination
Customs
Broker
Customs
Broker
Dubai
Canada
Paraguay
Freight
Consolidator
Purchaser
Mexico
Panama
Illustrative of Potential
Counterfeit and Gray Market
57
U.S. Automotive and Commercial Vehicle Parts
Distribution
To address the serious issue of counterfeiting and other IPR violations within
the automotive manufacturing community, the Motor & Equipment
Manufacturers Association (MEMA) – in conjunction with its market
segment associations to include the Automotive Aftermarket Suppliers
Association (AASA), Heavy Duty Manufacturers Association (HDMA),
Original Equipment Suppliers Association (OESA) – created the Brand
Protection Council to provide a forum for manufacturers to discuss
counterfeiting and other IPR violations with a focus on North America.
For more information on the Brand Protection Council or for assistance in
contacting automotive brand owners, please contact Jack Cameron at
919-406- 8856 or e-mail [email protected].
(http://www.aftermarketsuppliers.org/issues/counterfeiting.php)
58
MEMA and BPC Updates
•
CBP Product Identification Guidelines (handout)
– Most effective ways to help enforcement agencies
– Develop a database or CD of MEMA BPC member
companies for distribution
•
•
Brian O’Rourke – Thank you!
Rick Kempski – Welcome, incoming Co-Chairman
59
Thank You!
Travel Safe!
60