Today’s emphasis on globalization and outsourcing offers many cost reduction benefits to enterprises that manufacture or use electronic components. But this business is not just a bed of roses – there is a significant proliferation of counterfeits and sales through unauthorized channels.

1. Resourceful Revenue Recovery
when experiencing
Enterprise brand and intellectual property risk
Author: Robert A. Malone
Editor, forbes.com; Author: Chain Reaction; Columnist, Managing Automation and Inbound Logistics
Contributed by: New Momentum, Inc.
Introduction
Today’s emphasis on globalization and outsourcing offers many cost reduction benefits to enterprises that
manufacture or use electronic components. But this business is not just a bed of roses – there is a significant
proliferation of counterfeits and sales through unauthorized channels. As enterprises expand their operations
globally, quality issues can begin to appear in customers’ products. Research into these problems can show that
remarked or counterfeit parts were used. This problem can lead to a serious loss of both reputation and revenues.
Companies have identified it as a significant problem but in many cases they don’t have the data they need to
determine the extent of how counterfeiting is affecting their business.
Loss of revenue caused by counterfeiting and gray market incursions into an enterprise’s brand status and
intellectual property rights has become serious business. It has taken on new importance in a business world that
operates under globalization. Enterprise brand and intellectual property risk can act like a computer virus, which, if
left uncorrected, can eat out the very substance of a company’s revenue stream. It is estimated that the sales of
counterfeit products worldwide hovers around $600 billion a year. Not to be sneezed at. U.S. Customs & Border
Patrol has seen a significant 83% increase in the amount of confiscated goods between 2005 and 2006. Just think
how much they do not catch. They also state that the amount of seized counterfeit hardware has increased by a
staggering 1,142% (this is not a misprint). One tier 1 networking company estimates that competing gray market
sales show a loss of revenue to the company between $200 and 300 million during FY 2006.
Forget Yahoo and Google
The cases are growing at an alarming rate and so are the losses. Surprisingly, the common recovery methods used
by high technology companies are often publicly available free search tools like Google and Yahoo. This method
provides millions of rows of unstructured data that companies need to cleanse, organize, and prioritize. This
common method is also the least productive for revenue recovery.
The only way to find fraudulent parts and products is by systematic planning, searching and evaluation. The blood
hounds may get you to a spore track but you have to be prepared to analyze the options. This means not only good
deep data but an agile process for detection, confirmation as in testing whether a product is original or a knock off
(some knock offs actually work while others are placebos at best). The goal should be revenue recovery not just
coming to know where an enterprise has lost advantage. This means finding and recovering revenue from
counterfeit and gray market practice. When we are confused we often call for a map.
Where is the map?
The solution to these problems asks for more than a bloodhound. It calls for a revenue recovery process roadmap,
and can ask for a partnership as well. Both are available in a combination of Corporate Risk International (CRI) and
New Momentum. The roadmap consists of a revenue recovery structure that consists of: visibility, plan
development, plan implementation, and the measurement of results. We will examine this road map in detail with
helpful commentary from Tom McWeeney, who is the senior VP of CRI. CRI is a midsized investigative company in
the revenue recovery business and the crisis management business. It specializes primarily in the IT,
pharmaceutical, and Law arenas. Tom McWeeney says, "We feel CRI is more agile than some of its competitors.

2. We are able to work with our clients and offer customization and beyond the normal and available open source
domain."
Tom has this to say about New Momentum, "The New Momentum tool lends itself to high technology industries and
this is one area that CRI concentrates within. New Momentum’s data recovery is uniquely good in the high
technology recovery processes.” “ New Momentum has the ability to gather unstructured information from a variety
of open market sources and provide access to several kinds of data including email-based data, which is important
because this problem is bigger, more multi-dimensional, and more at the street level than management had
previously thought. This ability to quickly tune our data, change formats, search in different ways, etc. makes it
easier for the customer’s intelligence team to get the different kinds data they need rapidly.” Here is the road map!
Visibility
Step one on the map is a concentration on visibility. That means visibility into the counterfeit and gray markets that
require seeing who is doing what where and how much. This search can isolate data that weeds out duplicate
offerings, separates the players (counterfeit, gray, suspect, etc.) and formats this information into meaningful
metrics and this is exactly what CRI does and with New Momentum’s help. Tom McWeeney says, "They drill down
not like a Google search or other search companies. New Momentum takes it to the next level, and takes it to a
dashboard and beyond to compilation. When people in this business are exposed to New Momentum’s solution
their eyes are opened."
It is estimated that the sales of counterfeit products worldwide hovers around $600 billion a
year.
New Momentum’s brand protection evaluation depends upon loading products and prices data. Using their
advanced technology, they gather unstructured data from market web sources, XML data sources and gray market
emails and in addition data which could include duplicates, market echoing, misnamed products, and other
products that aren’t the customers’ products but show up anyway. At this point, New Momentum cleanses the data,
filtering out the "noise" and confirming the visibility of their products. They then combine any results around the
designated product family. Recently, a whole new dimension of advanced searching by ‘features’, or ‘capabilities’
rather than chip names or product family codes has been added to the offering.
Visibility depends upon data analysis and consequently cost analysis. This means identifying the scope of the
violations and the first step is to identify where and with whom your products are being sold. This translates into
identifying counterfeit activity and gray market activity and their estimated loss to the enterprise. Part of the loss
may be unquantifiable as the public perception of a brand is critical. The accuracy and speed of this information is
critical. The technology needs to find the comprehensive and unstructured market data from websites, email, file
transfers as it incorporates the information from your ERP data, PLM data, transactions history and run it though
data filtering and cleansing. The right market intelligence will help your team focus on where you will get the
highest return on your efforts. You will need to incorporate specific technology solutions that will allow you to load
your products and prices, allow for data analysis, identify the scope of the violations and be able to report the return
on investment (ROI) to management. Tom McWeeney states that, "A core need in revenue recovery is being able to
offer tools that get to the enterprise’s ROI and New Momentum is moving there."
Plan
Step two in revenue recovery is to develop a plan. When CRI works with a client they would expect them to
subscribe to New Momentum’s Enterprise Brand Intelligence and thus establish the means to have the visibility and
the intelligent data structure for creating a plan. Many organizations underestimate the significance of the proper
plan development. The more time and effort the enterprise places in creating a comprehensive plan the better the
implementation and results. Like any strong plan, the enterprise will need to set goals and measure frequently. Its
goals need to be realistic and cover a one to two year timeframe. A concentration on due diligence investigations
comes next. McWeeney says, "Our due diligence investigation has New Momentum input. Each company we
investigate for has a different system and we work back and forth with them in a customized manner.” An
enterprise will want to plan every aspect of its program including test purchases and due diligence. After reviewing
the data, they will decide exactly how they will go about approaching the seller that can lead to a buy. Initial

3. questions that need to be answered include: Is this a massive problem? Is it long-term? How much does the
enterprise want to buy it for? What quantity will allow it to become evidence if the enterprise decides to take
civil/criminal action? Do they need to purchase at a certain price? Is there a price that will strengthen their role as
evidence in future civil/criminal action? Should they get customs, FBI, Customs and Border Patrol (CBP), and
Immigration & Customs Enforcement (ICE) involved?
How should they maintain the evidence and for what time period? A test purchase can lead to the need for test
purchase engineering examination and in time to either civil action or criminal action, or both. The enterprise may
need to set goals for each of its sellers. The goal does not always need to be civil or criminal action. An enterprise’s
goal may be to make life so difficult for the counterfeiters that they drop their product and move on to something
else.
Implement plan
The third map step revenue recovery is an implementation plan that carries out the conclusions of the planning
process. During this activity Tom McWeeney says, "We use New Momentum for actionable intelligence. This leads
to whether to do buys or not. New Momentum provides that critical data background.” With the right information
as background, the implementation is ready to begin. In this phase, the enterprise will need to prioritize targets,
follow-through on plan, and incorporate the ability to consistently add new data that could alter the actions that are
to be taken. The enterprise should not be afraid to outsource certain parts of their implementation to corporate risk
specialists to the extent that such a decision makes sense. With a comprehensive plan in place, the enterprise
(with assists from CRI and data and analysis from New Momentum) can start assigning due diligence investigations
and conduct strategic under cover test purchases in regard to high volume targets. This process identifies whether
the subject in question is legally registered, has a history of counterfeiting, or has a questionable general business
profile. This step may also include engineering analysis, civil action, and criminal action. The enterprise may want
to do some of this work with inside capabilities but outsourcing is a viable alternative. When doing a test purchase,
CRI recommends a wire transfer because it allows the enterprise to have access to valuable data on the
counterfeiter’s financial institution. This information may be helpful when taking civil and criminal action.
Engineering analyses of test purchases may lead to civil actions (cease and desist letters, lawsuit, etc.). The
outsourced undercover purchase of a product or part may require setting an undercover company. When engaging
in pursuit of criminal action there may be a liaison with FBI, or CBP and ICE or all three. Whatever actions are taken
need to be coordinated in-house and outside counsel. In the long run purchasing may require re-purchasing to
ensure that the counterfeiters have actually ceased their illegal activity.
Measure results
Step four is measure the results. Revenue recovery happens by intelligent discovery or as a famous detective once
said, "Just the facts Ma’am.” The measurement of the revenue recovery is an outtake, a result of the process
undergone. Part of any revenue recovery program needs to include a method to consistently measure results. On a
weekly basis for instance, an enterprise has to determine the value of the product on and off the market. They will
want to record the amount recovered through test purchases and document progress. They will take note the
criminal and civil actions taken and their results.
The enterprise’s management team needs to take an active role in the revenue recovery process - continually
reviewing results data and determining changes when needed. Or as Tom McWeeney reminds us, "Not all sales in a
gray market reflect back upon the OEM or legitimate distributor.
The price has to be seen in the context of market price and manufactured price.
Data value requires close examination and there are not necessarily experts in each part or product. New
Momentum helps CRI in recovery process to a great degree by quantifying.” Tom says further that, "We look for sale
prices that are not reasonable. We may do a buy, or not, depending upon the discount. Is it a price that can lead to
profit? We use New Momentum’s input to help us measure these results."
"When people in this business are exposed to New Momentum’s solution their eyes are opened.” Tom McWeeney|
the results have to be presented to enterprise management. At the customer’s request, New Momentum can

4. implement a monitoring process around an analysis designed to produce a standard set of outputs that are
‘meeting’ or ‘boardroom’ ready. Armed with these outputs, an intelligence group can attend high level or even
board level meetings to discuss changes in the gray market landscape, new brand, IP, or counterfeiting risks which
may be appearing. These risks can then be reduced with follow up or on-going legal action and an overall strategy
for setting priorities based on product families or technology groups. These reports, which are provided in both a
summary and detail level, consist of: trending charts across all product families; by customer assigned product
family types showing change in market activity; by individual part or part family within the product family; by
geographical region for quantity, number of buy/sell offers and number of new companies interested in the
customer’s products. The reports also include top ten-style rankings of individual companies who trade in the
largest quantities of the customer’s products and who do the most number of transactions, regardless of total
quantity. All of the summaries and analytics above can always "drill" back to the original open market buy/sell
transaction that contributed to the total or summary. This data is maintained historically and archived so that as
patterns of activity or risk emerge in the analytics, record by record research can be done back to the original time
period where the pattern started.
An ongoing activity
Protecting brands and intellectual property is not a once in a life time event. It is an ongoing activity. The steps
above make it clear that an enterprise has to first understand its problem and then it must develop a plan to
mitigate the problem and this means getting a management buy-in. Given the go ahead the plan must be
implemented and after the findings and action the plan should be evaluated for its effectiveness. With the data the
New Momentum solution provides, a customer can approach partners who are selling unauthorized products,
brokers buying and selling on the gray market or companies buying/selling counterfeits and makes an effort to turn
them into legitimate distributors selling authorized products at the appropriate price and quality levels. The result
can be that the violators either become authorized distributors or they know they’ve been found out, and they cease
operations. By way of review a New Momentum solution builds specific search agents that empower organizations
to search hundreds of thousands of pages per night including open market web servers, franchise web servers, gray
market sites and even trade board email blasts.
The advanced web mining and reporting technology quickly provide global visibility via a user defined dashboard
view– allowing an enterprise’s team to manage the entire operation from one powerful screen. New Momentum’s
web based solution is helping companies get the visibility they need to start an aggressive revenue recovery
program and take back control of their business.
New Momentum provides brand protection solutions for manufacturers who make or use electronic components.
With a focus on supply chain risk management, New Momentum’s software solution allows manufacturers to
constantly monitor the open marketplace through the collection of global buying and selling transaction data from
Web sources. The San Clemente, California based company also provides services for supply interruption, partner
compliance, and asset valuation applications.