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Paula Nelson General Counsel - Intellectual Property

IP Management @ NestlWIPO 22nd September 2005

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IP Management @ Nestl

Finance & Control2

Nestl Sales (2004)

CHF 86.8 billion

USD 69.9 billion

Food is a (3.5 trillion)

USD 3,500,000,000,000

global industry

Nestl in the Global Food Market

98%2%

Nestl

Others

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Finance & Control3

The World's Leading Food CompanyThe USD >10 billion Food Companies in FY 2004

0

10'000

20'000

30'000

40'000

50'000

60'000

70'000

N estl K raft Fo ods PepsiC o U nil ever C oca-C ol a M ar s Dano ne C onA gr a C adbur y

Schweppes

General

Mills

Sara Lee

Food

a

es

(in

ioUSD)

On y Food(inc .petfood) & Beverages(exc .a cohol)

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Finance & Control4

Nestl in Figures 2004 Worldwide Sales: CHF 86,769 mio

EBITA: CHF 10,970 mio

Net Profit: CHF 6,717 mio

Factories: 500

Employees: Around 247,000

Organic Growth: 4.5 %

R&D Expenditures (F&B): CHF 658.5 mio

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Finance & Control5

Our L ne of Products Soluble Coffee

Infant Nutrition

Confectionery Dairy

Chocolate Milk Beverages

Bottled Water PetCare

Ice Cream (co-leader with Unilever)

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Finance & Control6

6 worldw de strateg c corporatebrands

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Finance & Control8

Nestl R&DAn nteract ve Network cover ng four Cont nents

7 Research and DevelopmentCenters: Am ens FR), Marysv lle,Solon US), Shangha CN),S ngapore SG), Sderot IL), Casa Bu ton I)

9 Product Technology Centers

PTCs): Konolf ngen, Orbe CH),

Beauva s, L s eux,Nestl Waters FR), New M lford,St Lou s US), York GB), S ngen D)

Nestl Research Center NRC)

Lausanne CH),Tours FR),

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Finance & Control

Nestl and IP Management @ Nestl

9

The Group Intellectual PropertyDepartment Manages IP R ghtsWorldw de

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Finance & Control10

A genu nely global funct on

In 2002 the team which had been splitbetween the Centre and the NOCs wasreorganised as a Corporate/Centre servicein keeping with the Nestl LicensingSystem

Advisers serving the SBUs are located withtheir SBU and advisers serving an NOC orgroup of NOCs are located in the markets

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Finance & Control11

IP

sers

rgan sat nal Intelle t al Pr ert

De artment

Gener l

nsel

Inte llec t l r ert

ead f

rademar s

Head f aten ts

2 I !

dvisers

CEREALS

I Support 2 I Advisers

COFFEE&

BEVERAGES

I Support

2 I Advisers

CHOCOLATE &

CONFECT IONERY

I Support

2 I Advisers

DAIRY

I

Support

2 I Advisers

FOOD

I Support

2 I Advisers

FOODSERVICES

I Support

2 I Advise rs

ICECREAM

I Support

2 I Advisers

NESPRESSO

IPSupport

2 IPAdvisers

NUTRITION

IPSupport

2 IPAdvisers

PETCARE(St. Louis)

IPSupport

"

ATERS

IPSupport

1 IPAdvise r

MACH INERY

& PACKAG ING

IPSupport

2 IPResearchers

4 IPCounsels

IPSupport

4RIPA'sAMS

6RIPA'sEUR

6RIPA'sAOA

Administrative

Assistants

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Finance & Control12

A

A = IP Adviser Petfood and RIPA Petfood located in St Louis

Special arrangements for Israel, South Korea, Japan and Swiss NOC

The 6 RIPAs are located in all 5 continents

4 in Z-AMS

6 in Z-EUR

6 in Z-AOA

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Finance & Control13

The RIPA is the first point ofcontact in the NOC / region

Gives advice on all IP matters to businesses in the

region including

clearance searches for new trademarks, designs, domain

names and enquiries regarding patents

monitors IP infringements and manages / resolves

conflicts & litigation

ensures that the Nestl Group IP Policies are applied

supports IP issues in local M&A and R&D Activities

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Finance & Control14

Mission of the IP Department Our mission is very concise - to generate

competitive advantage through development

of Intellectual Property Rights (IPRs)

To ensure that IP provides a competitiveadvantage for each of our businesses, weapply the WHW Test:

WHAT can we protect to gain a competitive edge ?

HOW do we get the best protection ?

WHERE do we protect ?

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Finance & Control15

Nestl is a brand driven company...

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Finance & Control

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Strategic and local brands areprotected & managed by IPD

340Strategic

Local

Brands

6'000

28'000

Protections

75'000

Managed by 6 Regional

IP Advisers (RIPA's) for

local Nestl Operating

Companies

Managed by Center IP

Department in co-operation with the

Strategic BusinessUnits ('SBU's) and theRIPA's

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Finance & Control

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Nestl has a substantialpatent portfolio

The Nestl patent portfolio contains as

at 8.03.2005: 9'0 8 granted patents

6'127 pending cases which may result inthe grant of a patent

The top 5 patenting territories for

Nestl are: USA, Europe, Canada,Australia and Mexico

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Finance & Control

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Nestl's IPRs are centrally owned &licensed to local Nestl Companies... Socit des Produits Nestl S.A. is the registered

trademark and design owner and Nestec SA is the

registered patent owner, in both cases acting asnominee for Nestl S.A., who is the beneficialowner- Central ownership applies to trademarks linked to

strategic as well as to local brands

These rights are licensed, together with know-how, to the Nestl Operating Companies who payroyalties for their use

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Finance & Control

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ProperDefence is fundamentalWe defend our rights against any infringements, e.g.

imitations including counterfeits

unauthorised use of patented processes

internet & domain name misuseCybersquatting

Examples: maggi.com, rowntrees.com

Derogatory use of our trademarksForinstance use of our brands in pornographic sites

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... Infringements are frequent ...

Trademark infringement

+ Unfair competition

Example:

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... in various parts of the world...

Example NESTLE PURE LIFE Pakistan/Afghanistan

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Finance & Control

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... and touch all our productsCAF PEL soluble coffee

before after

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Counterfeits are a serious problem

and a crime in most countries!

Example NESCAFEin Russia

Trademark

infringement

+ Unfair competition

+ Fraudulent actwith penal sanction

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Finance & Control

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NESCAFE PLATINUM in Russia

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Finance & Control

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Counterfeiting is amulti-faceted issue ...

customer safety

brand protection

corporate reputation

profits (loss of revenue & government

taxes)

Counterfeits account for10% of world trade

(Source Trademark World 12.2000)

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Finance & Control

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Recorded balance sheet

values

42%

Non-recorded values

58%

Illustrative split of Nestl Value(as a % of market capitalisation)

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Finance & Control

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Finance & Control

nestle - zaka (81)

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