A high-level and hands-on approach for organizations to deal with counterfeiting and piracy. Jan Corstens WIPO Moscow

© 2011 Deloitte Bedrijfsrevisoren Counterfeit & Piracy: introduction Increasing phenomenon with effects on Socio-economical environment (crime, employment, innovation...) Right’s holders Consumers Government There are 2 Markets: Primary: consumers buy counterfeit product believing they buy the genuine products Secondary: consumers knowingly buy counterfeit products Governments are taking mitigating actions, adapting legislation. What should organisations do? 1

© 2011 Deloitte Bedrijfsrevisoren 2 Overall Approach In attacking and defending against counterfeit & piracy organisations should: ensure effective, efficient and ongoing pan-European, and even global enforcement of intellectual property rights on a hands-on or project basis in close consultation and collaboration with customs authorities throughout the European Union (and abroad) but without forgetting the risksk that are associated with their own extended enterprise.

© 2011 Deloitte Bedrijfsrevisoren Short term actions Obtain an overview of all Intellectual Property Rights (“IP”) held and create a procedure, roles & reponsibilities to keep inventory up to date Obtain an overview of historic acts of counterfeiting and piracy encountered in the market Create an overview of contractual risks of your extended enterprise, adapt contracts with appropriate controls ans audit clauses. Develop a solid IP protection and enforcement strategy and (internal procedures), including training of key employees Establish favorable communication and collaboration with customs authorities throughout the EU: ‒ which control procedures are in place in view of a successful collaboration? ‒ Negotiations with customs authorities on collaboration and requirements and signing of Memorandum of Understanding 3

© 2011 Deloitte Bedrijfsrevisoren What is the extended enterprise? 4 Suppliers Company Licensees Joint Ventures Distributors Customers Agents Franchisee Affiliates Manufacturers Service Providers

© 2011 Deloitte Bedrijfsrevisoren Map the Extended Enterprise, Example Example: Manufacturing Lifecycle Product Design Product Manufacturing IP Licensing Product Support Product Sales Supplier Inventory Inspections Most Favored Pricing Inspections Royalty Inspections Distributor Inspections Advertising Inspections Franchise Inspections Call Center Inspections Service Provider Inspections Joint Development Agreement Inspections 5

© 2011 Deloitte Bedrijfsrevisoren Mid term actions Starting off with a pilot project with customs authorities, identify a limited number of countries, preferably in a European state, US or Canada. Pilot a compliance audit of one or more selected members from your extended enterprise Create an internal specialist team, potentially assisted by external legal advisors or auditors. This combination of these actions will help your organisation: ‒ Identify potential missing revenue and revenue leakage in the market ‒ Identify potential excess costs ‒ In rationalizing relationships ‒ Increase transparency of controls and ability to mitigate risks ‒ Identify risks of external business relationships ‒ Increase dialogue with other parties, which can help improve relationships ‒ Manage and protect their IP, reputation and brand 6

© 2011 Deloitte Bedrijfsrevisoren Long term actions Roll out customs project to other countries (mind that even within EU approaches with customs authorities may not be consistent). Maturity phase of compliance audits from your extended enterprise – rotation program – optimisation of activities – ROI Include “online business approach” in your actions, create a strategy! Termination of contracts of certain extended enterprise members Litigation 7

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