Anti-counterfeiting and Anti-piracy Strategy

Due-Diligence Awareness Partnership

Munish Sudan Senior Manager, IP Cell

TATA STEEL LTD. munish.sudan@tatasteel.com

Counterfeiting is just not lost of revenues

39th $18.16 Billion

Tata Steel – portfolio of more than 600 patent families

50 registered trademarks

1. Lost tax revenue 2. Cost of Enforcement

3. Safety 4. Negative Impact on Innovation

1. Safety 2. Cost

1. Cost to failures 2. Lost sales 3. Brand Value

4. License revenue

Government

Customer

Industry

It is not only Industry which gets Impacted…..

Innovation is key to India’s economic growth and development

“...the future prosperity of India in the new knowledge economy will increasingly depend on its ability to generate new ideas, processes and solutions. The process of innovation `shall convert knowledge into social good and economic wealth. In a globally competitive world, India has to unleash its innovation potential to increase capacity, productivity, efficiency and inclusive growth.”... Hon. President Pranab Mukherjee

Counterfeiting and Piracy Discourage Innovation…….

IP Enforcement

R&D/Innovation

IP

Commercial Exploitation

Differentiation in the market

If there is counterfeiting,

there is no differentiation

possible

Product Life Cycle…….

Sales

Time

Development/R&D

Introduction Growth Maturity Saturation Decline

Phase more prone to counterfeiting

Why Counterfeiting Happens?

“If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” Albert Einstein

Research & Development

Manufacturers Customers

Three Important elements of the Value Chain

Supply Chain

Counterfeit and pirated products, previously largely distributed through informal markets, are infiltrating legitimate supply chains, with products now appearing on the shelves of established shops. OECD Report 2007

Eighty-three percent of all the counterfeit items discovered by the respondents‘ organizations came from approved vendors. Construction Industry Institute (CII) Report

Counterfeiting ….……. Consumer perspective

35

21

21

6

5

5 3 2 1 1

% Cannot afford the genuine product

They think genuine products areoverpriced

They don't know it's not genuine

Because they don't have access to thegenuine products

CF product "do the job" just as well asgenuine ones

It would be ridiculous or stupid to paythe full price of genuine Products

They are constantly offered thoseproducts by sellers

CF products are more easily accessiblethan genuine

They want to help CF products sellers

CF sellers are more willing to serve theircustomers than regular Retailers

Source: BASCAP Study

Counterfeiting ….……. Manufacturer perspective

Increasing due diligence, Visibility & Control

Suppliers

X

X

X

X

Un-Authorized Distributors/Retailers

Y Y

Authorized Distributors/Retailer

Customer

Decreasing due diligence, Visibility & Control

Confidentiality is not used as strategic tool to retain long term advantages in the market.

No Processes to Measure

Losses

Counterfeiting ….……. Supply Chain perspective

No robust mechanisms to trace product throughout the life cycle

Weak enforcement standards – easy to hide your identity and restart

Free trade via Internet: The proliferation of Internet auction sites has resulted an Exponential increase in the volume of counterfeit sales

Weak alignment of distributors and retailers with manufacturers’ vision

Key Factors driving Counterfeiting

Market Institutional Technology Consumer

Large potential market size and very high profitability per unit – risk is very low

Low risk of discovery and

prosecution – easy to conceal

Shortage of feasible

technologies to differentiate

between genuine and counterfeit

product

Awareness towards healthy,

safety and quality is low

Genuine power of brand

Legal and regulatory

framework - Weak Enforcement

Counterfeiting via Internet Auction

Inability to comprehend

difference between counterfeit and original product

Non-availability of Genuine Products – small towns

Socio-Economic

factor

Low regard for IPR

Research & Development

Launched world’s first branded cold rolled steel (CRS) called ‘TATA Steelium

Commodities to Brands

TATA Steelium – how we are doing it

AC

TIO

N

I

MPA

CT

2007

Tata Steelium Logo embossed every metre of length, Unique packaging with bar code, location-wise floor price

Authenticity

Brand Awareness, Customer Trust Customized Brand Management via email,

examples, comparative studies

Distributors, dealers and customers Meet Brand Care, Brand Ethics

Rewards and Punishments Brand Vision maintained

Research & Development

TATA Steelium – how we are doing it

Extending Due Diligence from Inside to out

Level 1 Screening

List of potential Candidate

Level 2 Due diligence from

business and product knowledge perspective

Level 3

Interviews with senior officials

Phase 1 Criteria

Willingness to be exclusive to Tata Steel

Registration with Tax authorities

Market Reputation – Involvement in any unethical, Criminal/ counterfeiting activities

Investment Capabilities

Developing Win-win Strategies with Supply Chain partners

• Licensing Partnership of a large company with a SME (Jyoti Cera Rubber ) – Strategic Alignment

• 3% royalty • 3 million INR (1st year), 12 million INR (4th year).

Invention (Application No. : 404/KOL/2009 ): Developed a hybrid idler, specially designed with a coating of high alumina ceramic powder with polymer (called JCR-1000 CERO ZIP).

An indirect approach to ensure Anti-counterfeiting and alignment with manufacturer’s vision

Confidentiality IP Protection Strategic

Alignment

Conduct a due diligence of your distributors/retailers/suppliers at regular intervals. Know your supply chain intimately, from top to bottom (use technology)

Adopt Zero tolerance strategy

Secure your Supply chain and maintain confidentiality at highest level

Develop a feasible mechanism for reporting counterfeiting

Due Diligence

Make Customer Aware of Counterfeiting Hazards – Safety, Quality, Longevity etc.

Develop processes to record losses

at organizational level

Track performance of your Products/Brands at regular intervals

Register your Trademarks and Educate employees on Confidentiality

Awareness Develop a strong alignment with your distributors/ retailers/ suppliers – exploit employee Network to maximum

Engage with customers via interactive social media/rewards platform to spread awareness and report incidents of counterfeiting

Engage with enforcement agencies and government to curb counterfeiting

Partnership

Anti-counterfeiting and Anti-piracy Strategy

= Business Excellence

Research & Development