1 MEMA Brand Protection Council March 5, 2009 Detroit, MI

2 Agenda Welcome & Introductions – Cifranic & Kempski FBI Update – Charles Rankin Review Antitrust Guidelines – Arent Fox Legal Update – Arent Fox Government Affairs Update – Boland Quantifying IP Protection in the US – Cameron Lunch N.A. Security Products Organization - Sherwood Work Session: Identification Guidelines – Cifranic Break – 15 minutes Council Updates: –Special Report: Flow of Counterfeit Products –2008 MEMA Brand Protection Award nominations –Mid America Truck Show –Future meetings

3 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”.

4 Anti-Trust Guidelines

5 Legal Update Tony Lupo – Arent Fox Sarah Bruno – Arent Fox

6 Government Affairs Update Brand Protection Council March 5, 2009 Catherine Boland Director, Government Relations Motor and Equipment Manufacturers Association

7 MEMA Washington, D.C. Office Six 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

8 MEMA Legislative Summit LEGISLATIVE SUMMIT April 29-30, Hyatt Regency on Capitol Hill Costs: $200 registration fee, $2000 exhibitor fee Tom Donohue, US Chamber president, is keynote; will invite Henry Waxman to attend Thurs breakfast Program committee call held 1/16 with several good suggestions on agenda and meeting materials Economic data from CAR, “sustainability” document MEMA, MSAs to continue push for registration, exhibitors

9 Implementing the PRO-IP bill Fiscal Year 2009 Omnibus Appropriations –Close to $9.4 million for dedicated FBI agents Same localities of DOJ Computer Hacking and Intellectual Property (CHIP) units with no less than 26 agents assigned for this purpose –$3 million in grants for state and local training to combat IP crimes including counterfeiting and piracy U.S. Chamber will be working to get funding in FY 2010 for state and local grants –Should this be a MEMA priority?

10 Implementing the PRO-IP bill President Obama has not appointed the Intellectual Property Enforcement Coordinator, aka IP Czar –This is a Senate-confirmed post Government Accountability Office (GAO) study on how the federal government can best protect the IP of manufacturers –GAO has not begun work on this study, but they will reach out to MEMA when they begin work on it

11 Customs Reauthorization & Trade Enforcement In January, Rep. Charles Rangel and Rep. Sander Levin introduced the Trade Enforcement Act of 2009 (H.R. 496) –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.

12 Customs Reauthorization & Trade Enforcement Senator Max Baucus, Chairman of the Senate Finance Committee, is planning to move Customs Reauthorization legislation in the coming months Senator Debbie Stabenow of Michigan serves on the Finance Committee and is interested in being helpful to the supplier industry on counterfeiting

13 CBP Seizures

14 Pocket Card

15 Patent Reform Earlier this week, Patent Reform legislation was introduced in both Houses of Congress These bills are very similar to the legislation opposed by MEMA and other business groups last year Issues of concern that remain –Apportionment of Damages –Inequitable Conduct If you or your company is interested in this, have the appropriate member of your staff contact me

16 Anti-Counterfeiting Trade Agreement In 2007, 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 ACTA still being negotiated Very few details available

17 Discussion For more information contact Catherine Boland Director, Government Relations or

18 Quantifying IP Protection in the US Requested by DOJ and other government agencies to place an updated value on lost revenues and expenditures to protect Intellectual Property Current estimate by the FTC of $12B global and $3B US is in need of updating and validating Article in Authentication News by Reconnaissance International states $16B global growing 9-10% annual Need to update MEMA BPC Special Report on IP Last BPC Work Session proposed a member survey

19 Quantifying IP Protection in the US Survey Results – 6 of 25 Member Companies Responding:

20 Quantifying IP Protection in the US Mathematical Update to 2004 FTC Estimates:

21 Lunch

22 The North American Security Products Organization A Security Assurance Standard for the Protection of Security Components Robert Sherwood, CPP NASPO Chairman VP Security Programs Management, Sekuworks LLC

23 NASPO Concept proposed at a conference First Board Meeting December 2002 Development of an industry standard completed September 2003 First audited companies certified January 2004 Recognized as an ANSI Accredited Standards Developer October 2004 ANSI/NASPO-SAv3.0P-2005 Declared by ANSI as an American National Standard on November, Update January 2008

24 The Need for NASPO Fraud and terrorism has been enabled by the lack of a secure supply chain to restrict the availability of security materials and technologies. No structure was available to recognize and certify organizations that met a specified level of security assurance. Governmental agencies and private industry has recognized that this standard supports their efforts of enhanced security assurance. One holistic recognized standard versus multiple narrowly defined standards.

25 NASPO and Current Legislation Sarbanes Oxley – Risk management requirements for publicly held companies Bioterrorism Bill – Secure supply issues in pharmaceuticals and food Real ID Act – Securing our identification documents Consumer Privacy Act (GLB Act) – Securing personal information in the financial market

26 Application of the ANSI/NASPO Standard Requirements in RFP’s and contracts Compliance to legislative and industry regulations Internal security practices The control of purchased and sold security materials. A set of “Best Practices” for organizations Recognition of certified companies for market differentiation

27 Risk Management Requirements 3 - Levels :- Class I - Very High Security Class II - Medium-High Security Class III - Basic Security Management Objectives (Security Culture) Avoids Weakness of Checklist Approach 9 Areas of Risk Each Area has Own Objective Risk Reduction Infrastructure, Systems Procedures Based on a Consensus of Best Practice

28 Risk Management Objectives Class I – To prevent all unwanted disclosure of information of potential strategic value to Criminals and Terrorists criminals and terrorists and to fully mitigate the effects of fraudulent acts in the event that they occur. Class II - To prevent unwanted disclosure of selected information of potential strategic value to Criminals and Terrorists criminals and terrorists and to mitigate the effects of fraudulent acts in the event that they occur. Class III - To be aware of the need and act to avoid disclosure of selected information of potential strategic value to Criminals criminals and to act quickly to mitigate the effects of fraudulent acts in the event that they occur.

29 Areas of Risk Customer Related Information – Computer (IT) and Non Computer Based Materials Supply & Custody Chains Physical Intrusion Personnel Disaster Recovery Breaches of Security Management

30 Public Disclosure Standard Avoids helping bad guys. Requirements re-stated as performance requirements. Requirements say what not how to deliver security. Elective requirements removed Class 1, II & III retained. Certificates based solely on compliance with mandatories. Perception of Very High Barriers should Deter Attempts to Defraud

31 Risk Reduction Policies Procedures Infrastructure Systems

32 Certification Openness (under NDA) Qualification Application/Class Determination Readiness Review Conformity Assessment (NASPO Audit) Action Items Certificate Award by NASPO Board Annual Maintenance

33 NASPO Conformity Assessment (Audit) Self evaluation prior to audit. Non disclosure agreement with independent, trained auditor Mutual classification determination On-site audit verifying self audit to actual Discrepancy rectification Audit report to NASPO Certification

34 Conformity Assessment Process Vulnerability Assessment Attractiveness of Product Portfolio to Thieves Consequences of Getting Into Wrong Hands History of Local Attack Identification of Potential Risks Identification of Actual Risks Being Taken

35 NASPO / ASIS Connection Both Standards Development Organizations (SDO) NASPO / ASIS Standards Complementary NASPO Standard Example: Requires employee background screening ASIS Standards Example: Guide to implementing a screening process

36 Security Assurance in the Context of ISO Technical Advisory Group (TAG) 247 established “Fraud Countermeasures and Control” ISO Secretariat for TC 247 has been awarded to ANSI. ISO Secretariat and US TAG Administration will be supported by the North American Security Products Organization, NASPO

37 Benefits of NASPO Enhances Overall Security Set of “Best Practices” Uniform interoperability Vendor / Vendor Vendor / Customer Cost reductions Adoption and/or Recognition by US Government Agencies

38 NASPO Members Pro-Document Solutions – Northstar – Meyercord Revenue – JDSU/Flex Products – Glatfelter – Sun Chemical – Intel – Chesapeake Resource Group – GDW Consulting – Amgraf – Brady – ITW Covid – Appleton – Arjo Wiggins – Keller Crescent - SICPA – Sekuworks - Standard Register – John Henry – Kurz – Challenge Printing – Bristol Myers Squibb – Technicote – Ultradots – Accucote – Armark – National Label – DSS – Yottamark – Midwest Banknote – Nanoink – Authentix – Fasver – CCL Label – Digimarc – Inksure – TUV Rheinland – NPC – Ashton Potter – Gemalto – PPG – Troy Group - Latitude 49 – Viisage – Worldmark – American Bank Note – Schreiner Group - RR Donnelley – 3M – Stardust Materials – Crane & Company – Tullis Russell – US Government Printing Office- Hologram Industries – Crane & Co. – on+qor - NPC As of 4-08

39 Use of Standard Update 11 Certified Companies 32 Companies in process >25 Companies – serious intent Adopted by GPO Real ID DHS

40 The ANSI/NASPO Standard Security Assurance Standards for the Document & Product Security Industries Reference : ANSI/NASPO-SA From

41 Thank You Any Questions ?

42 Working Session: Identification Guidelines Third in a series to engage council members and develop valuable industry information to support IP enforcement Today's topic requested by U.S. Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP) To be published by BPC and distributed IP enforcement –Manufacturers Identification Guide –Trademark ID Guide Book

43 Break 15 minutes

44 BPC Updates Special Report: Flow of Counterfeit Products –Posted to web site –Distributed to Government Agency contacts 2008 MEMA Brand Protection Award nominations Updated BPC presentation posted to member-only web site Mid America Truck Show Future Agenda Topics –Ideas –Volunteers for Member Spotlight / Best Practices

MEMA Brand Protection Award OVERVIEW The MEMA Brand Protection Council is establishing an award to honor government officials (foreign or domestic) whose work and dedication in the fight against counterfeiting merit special recognition by our group. ELIGIBILITY Any government official (foreign or domestic) is eligible for nomination for the award. The nomination form is attached. SELECTION PROCESS Nominations will be accepted until the June 11, 2009 Brand Protection Council meeting. Nominations will be announced and voted on during the meeting. (See nomination form)

MEMA Brand Protection Award Recipients U.S. Customs and Border Protection – Port of Savannah for their timely seizure and ultimate forfeiture and destruction of products involving trademark and U.S. design patent infringement. Nominated by Chrysler. Mr. Mohammad Al-Aiyash who is Director General of Internal Trade and Chairman of the IPR Committee for Ministry of Commerce & Industry in the Kingdom of Saudi Arabia recognized for his efforts which lead to the seizure of counterfeit brake fluid and chassis parts. Nominated by Federal-Mogul. The Anti-Fraud Division of the Consumer Protection Department for the Sharjah Municipality of United Arab Emirates (UAE) for their aggressive investigation and prosecution of violators with several brand owners and MEMA members. Nominated by Ford.

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

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 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.

Counterfeit Product Brake Valves FakeGenuine Bendix

Counterfeit Product Belt Tensioners

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

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

Get Help State and Local Law Enforcement Privately Retained Legal Counsel U.S. Customs and Border Protection (CBP) –Web site – –Contact David Brener U.S. Immigrations and Customs Enforcement (ICE) –Web site –Contact David Faulconer Federal Bureau of Investigation (FBI) –Web site –Contact Kiffa Shirley U.S. Department of Justice (DOJ) –Web site –Contact Matt Bassiur

54 Thank You! Travel Safe!