Presented by Vaughn Volpi Chief Strategy Officer Rudy Diaz Chief Operating Officer

2. Best Practices for a Global Brand Protection Strategy:Internal and External Success Factors and Risks Presented by Vaughn Volpi Chief Strategy Officer Rudy Diaz Chief Operating Officer PICA Corporation September 20, 2010

3. Presentation Outline • Building an internal brand protection program that supports your business objectives. • Managing through the day-to-day external risk factors inherent in operating a successful worldwide program. • Case studies which illustrate how proper program design and management will yield measurable results. • Open Panel Discussion

4. Building Your Program

5. Structure and Global Alignment • Define Strategy • Establish Global Metric • Increase Market Share • Increase Revenue • Identifying Internal Stakeholders • Identifying External Partners • Resource Allocation

6. Successful brand protection programs will include all of the following elements. Centralized Program Management Intelligence Gathering Web Monitoring, Intelligence and Enforcement Hotline Management Diversion Control Programs Counterfeiting Enforcement Data Management Domain Name Management Training Authentication Solutions Program Integration

7. Four Pillars of Brand Protection • Intelligence and Enforcement • Metrics • Barriers to Entry • Training

8. Intelligence and Enforcement • Investigative Resources • Training • Case Management • Generating Actionable Intelligence • Life Cycle • Methodology • Identifying Sources • Enforcement Actions

9. Metrics • Defining Success • Return on Investment • Formula for valuing seized product • Sizing the Problem • Market Survey • Availability of Illicit Product • Number of Incidents

10. Barriers to Entry • Legal • Product Engineering & Design • Packaging • Security Labeling • Tying Authentication Tools to Lead Generation • Supply Chain Auditing

11. Training • Who to Train • Investigators • Law Enforcement • Sales Force • Channel • In-house Counsel • What to train them in; • Authentication Tools • Expectation of Action • Brand Awareness

12. Identifying External Risks

13. Counterfeiters Business Partners Investigators Lawyers PSS Providers Media Government Agencies Supply Chain Informants Law enforcement Where Does Risk Reside? _________________________ In Short - Everywhere

14. Overcoming External Risks

15. Corrupt and Unethical Practices • Bribery and kick-backs • Corporate policy violations • Conflicts of interest • Use or threatened use of violence • Extortion or blackmail • Same violations by third parties

16. Corrupt and Unethical PracticesAdvice • If you don’t have a corporate ethics or corruption policy – write one • Make sure all third party vendors review and are contractually bound by the same policies • Audit work product and expenses periodically to insure compliance • Do not bend the rules for results • Manage vendor selection and procurement by committee

17. Governmental Backlash • Government-protected infringer organizations • Active participation and support of your competition • Political bias based on the nationality of your company • Potential revocation or non-renewal of registered trademarks or licenses • Unfair competition and judicial corruption • Criminal charges for willful negligence or agent misconduct

18. Governmental BacklashAdvice • Work closely with your public affairs, legal, investigative and PR staff to expose corrupt practices and collaborate with honest government officials • Be politically neutral and sensitive • Utilize politically and economically-connected resources in-country • Identify and stress the areas where your interests are aligned with government and the society • Use the local media to promote good corporate citizenry and fight corrupt practices • Know and control what your business partners are doing

19. Managing Sources • Informants • Law Enforcement • Other Gov’t. Officials • Yours and host country • Tipsters • Estranged Parties • Disgruntled former employees or biz partners • Competitors • Ex-significant others

20. Managing SourcesAdvice • Don’t try and do this in-house. This is potentially treacherous work that should only be undertaken by experienced professionals • Train and establish relationships with police whenever practicable • Leverage government and embassy assets for information, advice and support • Listen to all comers, but validate the information, source and motive • Never let them close to you or the company • Need to know basis • Test their honesty • Be generous, but only upon success • Do not encourage illegal activity • Beware of theft of trade secrets • Don’t burn your information sources

21. Wrongful Arrest and Seizure • Creates liability for your company • Destroys law enforcement relationships • Devastating to public opinion

22. Wrongful Arrest and SeizureAdvice • Trust but verify • Measure twice, cut once • During seizures follow the “when in doubt, leave it out” rule • Review all evidence and complaints before they are submitted to law enforcement • Do your homework on the target (e.g. make sure he’s not a licensee)

23. Evidence Handling & Destruction • Theft • Tampering • Biohazard materials • Pollution issues • Sale of donated items • Negative perception from law enforcement for refusing to donate

24. Evidence Handling & DestructionAdvice • Use secure storage • Always retain some evidence until the case is fully adjudicated • Set strict guidelines for the destruction of products with biohazard or polluting elements • Ask your agents to videotape and supervise destruction • Locate trustworthy charities in each of your critical markets where product can be safely donated, if possible • Dispose of evidence as soon as legally possible

25. Infringer Retribution • Stalking • Threatening calls • Kidnapping • Assault • Battery • Murder

26. Infringer RetributionAdvice • Know your enemies. Make sure your investigations are thorough • Report any violent history or dangerous affiliations to law enforcement • Stay behind the scenes • Let professional risk-takers take the risk • Report all threats to corporate security and/or law enforcement • Institute a travel safety and intelligence system • Instruct your vendors to proceed with their work quietly and professionally.

27. Legal System Variances • Many countries have very strict laws governing investigation work • Courts in many countries often side with local infringers against multinational companies • Non-local vendors and counsel may not fully understand the realities of the local system • Local vendors and counsel may take advantage of your lack of knowledge • The legal process in certain countries can be slow and expensive

28. Legal System VariancesAdvice • Hire experienced multi-national vendors and counsel with direct experience and resources in your key markets • Reach out to your colleagues in the industry for recommendations and advice • Choose criminal over civil remedies when operating in an unfamiliar area. • Choose your battles carefully • Allocate budget based on impact to the business and likelihood of success

29. PSS Failures • Theft • Quality, performance, sourcing, or integration issues • Exact duplication • Practical compromise • Inability to act at “law enforcement speed”

30. PSS FailuresAdvice • Keep very tight controls on access, sourcing and distribution to keep legit PSD’s off the black market • Apply and distribute the device uniformly throughout your supply chain, even if the packaging varies • Choose a solution that is unique to your company and avoid buying “off the rack” • Make sure the device contains overt features that are easily recognizable, but not easily defeated • Build in multiple layers of covert features - don’t divulge them all at once – it is cost effective and will extend the life of the device • Update at least the covert features on your device every 3-4 years

31. Negative Public Relations • Damages brand and/or company reputation • Can invite political intervention • Reflects poorly on the value brand protection brings to the business

32. Negative Public RelationsAdvice • Avoid making public statements against infringers • Arrange for your PR Dept. or the Police to make all statements • Arm your PR Dept. with local facts designed to turn public opinion against counterfeiting • Remember that nothing you do is worth damaging the brand image

33. and worst of all … Failure to Act • Infringers are not brand-loyal. If you are an easy target you will be a victim. • Can lead to the erosion of your company’s IP rights. • Threatens your market position and reputation. • Consumers of IS counterfeits are your core target market. • Depending on the market size, a 1% counterfeit share can cost up to $100 million per year in lost sales.

34. Case Studies

35. Buenos Aires Actions • Tens of thousands in counterfeit packaging interdicted • Case originated from a previously executed enforcement action which identified an illicit packaging source in Argentina • Multinational approach allowed our agent to penetrate target and associates in Sao Paulo and Bogotá • Excellent ties to LE facilitated the speed of action necessary to shut down multiple operations simultaneously • The availability of counterfeit product in Brazil dropped precipitously immediately after this seizure. Main

36. Buenos Aires Actions

37. Singapore / PRC Syndicate • Sophisticated counterfeiting operation headquartered in Singapore with operations in Hong Kong, Mainland China, and the USA. • Their organizational structure and operations were identified and mapped through months of comprehensive investigation and research. • Product was being shipped all over the world.

38. Singapore / PRC Syndicate

39. Internal Warehouse Singapore / PRC Syndicate External Warehouse

40. Singapore / PRC Syndicate

41. Brazil Actions • Included different businesses in Londrina and Maringa (PR), and Sao Paulo (SP) • Imports refilling equipment and supplies from China through a legitimate business in Maringa, and prints counterfeit flat packaging at a local printer in Maringa, sending to Londrina • Took advantage of interstate commerce laws to conduct intra-company shipments to Sao Paulo, avoiding taxes at the State border • Focused on supplying local, State and Federal Government bids • Main shipping points were Londrina (PR) and Sao Paulo (SP)

42. Call Center Subject c Subject B Subject c Subject d Subject c Subject e Brazil Actions Public Tenders Wholesale Retail Maringa, Parana State • Legitimate refilling company imports supplies from China • Printer provides counterfeit flat packaging Londrina, Parana State • 3 subjects (A,B, C) were identified individually through Hotline selling in public tenders • Investigation identified Call Center in Londrina servicing all 3 subjects. Subjects also sold direct. • Confidential source provided PCC location Sao Paulo, Sao Paulo State • The owner of Subject A was found to also own a company in Sao Paulo, Subject D • Subject D was found to be co-located at the SP branch of a large refilling operation known to be involved in counterfeit • Subject C has a branch in SP, also co-located with Subject D • Subject E was identified through the sale of counterfeit products to the SP Revenue Service - the owner is nephew of the owner of the legit refill/reman Subject A PCC Packaging Supplies Refiller (Maringa) Illicit Printer(Maringa) Legitimate Refiller/Reman Nephew SP Branch Same Owner

43. Brazil Actions 15 search warrants were issued and executed Business, residential and informal locations associated with all linked targets, both belonging to the organization or known to be business partners The operation was orchestrated by Maringa Civil Police, with support from Londrina and Curitiba Civil Police Departments Seizure included: Brand 1 11,850 toner flat boxes 239 toner cartridges 180 toner finished product 1,010 ink finished product 2,500 ink security labels Brand 2 3,000 toner flat boxes 2,000 toner security labels (counterfeit) 5,000 toner security labels (OEM) Stolen from China manufacturer in 2009, resurfaced in Brazil during raids Similar amounts for at least 3 other brands Call Center PCC Subject c Subject b Subject a Owner B

44. Brazil Actions Toner Cartridges For Remanufacturing Counterfeit Flat Boxes Counterfeit Flat Boxes Toner Drums forRemanufacture Counterfeit Flat Boxes

45. Thanks!Questions? Vaughn Volpi vvolpi@pica.net 813.831.1999 Please visit our website www.pica.net Rudy Diaz rdiaz@pica.net 305.477.7702