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Enterprise: Grey Market and Secondary Market
"Nortel takes Grey market and Black Market fraud very seriously and takes aggressive actions to combat fraud against itself and as a thought leader in the industry as whole. Nortel will not hesitate to go after fraudsters and make every attempt to see them prosecuted to the fullest extend of the law."
Peter Hlavnicka, Nortel, Enterprise IP Licensing and Brand Management News
Westford Man Pleads Guilty To Defrauding Employer Of Equipment (The United States Attorney's Office, District of Massachusetts, FOR IMMEDIATE RELEASE TUESDAY, DECEMBER 16, 2008, WWW.USDOJ.GOV/USAO/MA) BOSTON, MA - A Westford man pled guilty today in U.S. District Court to scheming to defraud his employer of its equipment in 2003. United States Attorney Michael J. Sullivan and Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division, Tyrone G. Barney, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation - Boston Field Office, announced today that CHIN YAW TIEW, of Westford, pled guilty to an Information charging him with one count of mail fraud. The Information alleges that around July 5, 2003, TIEW defrauded his employer, Nortel Networks, Inc., of its computer equipment and its right to his and co-worker Rimba B. Handojo's honest services in connection with a shipment of equipment sent from Massachusetts to Malaysia. Handojo was previously charged in a separate case concerning the same and additional criminal conduct. TIEW faces up to 20 years of imprisonment, followed by 3 years of supervised release restitution, forfeiture and a fine of $250,000 or twice the gain or loss. The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service. It is being prosecuted by Assistant U.S. Attorney Scott L. Garland of Sullivan's Computer Crimes Unit. Nortel Chalks Up Latest Legal Win In Fight Against PiracyDow Jones Newswires - Ben Dummett - July 22
Nortel Networks Corp. has won $20 million from Alliance Telecom Inc. to settle a lawsuit against the closely held Texas-based company in its ongoing effort with other telecom-equipment vendors to shut down the pirated use of their equipment.
Nortel, the big Toronto-based provider of telecom gear, filed its suit against Alliance Telecom Inc. and its affiliate, Alliance Telecom Ltd., in 2006, accusing Alliance of using a pirated copy of Nortel's proprietary GenKey software. According to Nortel, Alliance, acting as a reseller of its equipment, used the software to illegally activate features on Nortel-made phones and then sold the phones without paying Nortel a licensing fee for activating the software features.
Nortel filed its claim with the United States District Court, Northern District of Texas Dallas division. It charged Alliance with copyright infringement, misappropriation of trade secrets, misapporpriation of product, unfair competition, conversion, or stealing, and tortious interference with Nortel's business relations. "This type of activity in the gray market is akin to downloading music from the Internet and not paying for it," Nortel spokesman Mohammed Nakhooda said. "We are committed to protecting our intellectual property," the spokesman said. A spokesman for Alliance couldn't immediately be reached for comment. This is third such case Nortel has won since 2006.
In May 2006, Platinmum Networks paid Nortel $42.4 million and in July 2007 SMC Electronics LLC and Allied Solution Technical Center LLC forked over $10 million after the Canadian company accused the resellers of selling pirated equipment. In 2001, Nortel, 3Com Corp, CISCO Systems Inc., Hewlett-Packard Co. and Xerox Corp. formed the Alliance for Gray Market and Counterfeit Abatement, or AGMA, to achieve two goals: educate the industry and their customers about the gray market for information-technology products and how the gray market undermines the profits of companies that follow the rules.
The value of gray-market products in 2007 averaged $58 billion, KPMG LLP, the audit, tax and advisory firm, and AGMA estimated in a report issued last month. That amount represents 5-30% of total IT sales and $8-$10 billion of the profits lost by legitimate industry players, according to the report. "The key to stemming the unauthorized flow of goods in the gray market is for IT manufacturers to establish strong partnerships with reputable distributors and resellers," along with implementing "proper checks and balances," KPMG and AGMA advised.
Grey Marketing Comes with a High Price Tag
Report Grey Market Activity Please report grey market activity. Report Sales Lost to Grey Market Please report sale lost to grey market. Please state the reseller, sales value, product, end-customer (optional). At Nortel, grey marketing to the Enterprise is defined as: "New authentic Nortel products being sold by unauthorized resellers and/or authorized business partners in violation of their distribution agreements, i.e., selling to unauthorized resellers or selling outside their authorized territories."
More importantly, the questionable integrity of grey market equipment undermines the authorized distributor's ability to provide manufacturer services. The end result is that your "great deal" may leave you without the support you need and may even result in service interruptions that could impact the operations of your business. Nortel is working on many different initiatives in parallel to make a difference in combating grey marketing to the Enterprise. One of the most stimulating initiative is Nortel's active participation in Alliance for Grey Market and Counterfeit Abatement*. AGMA is a non-profit organization, whose members' combined annual revenues exceed $296 billion, and with mission to ensure the highest product quality standards, uphold customer satisfaction, protect brand integrity, improve standards for intellectual property enforcement, mitigate the counterfeiting of branded products, and stem the unauthorized flow of goods into the gray market - globally. Since the formation in 2001 (Nortel is one of the founding members), AGMA membership has grown by more than 300% and includes some of the leading trademark owners across the hi-tech industry. AGMA provides a platform for sharing the best mitigation practices the industry can employ to reduce the unauthorized flow of products into the gray market.
Barcode Scanning & Tracking
We want you to be aware of the pitfalls of dealing with unauthorized resellers and provide you with an awareness and education to assist you in making informed decisions when purchasing Nortel products for the Enterprise.
Secondary Market Enterprise
The focus on reducing spending has, in many cases, led many businesses to sourcing previously used equipment from the secondary market. To generalize, the secondary market deals in equipment that has been previously used. For customers deciding to buy secondary market equipment, Nortel has put in place secondary market programs, such as the "Certified Remanufacture" Program, to enhance the value of these sales for the reseller, and to ensure the ongoing protection of the buyer in terms of software licensing and warranties. The "Certified Remanufactured" Program provides customers with Nortel branded Enterprise Data, Optical, Wireless and Wireline equipment directly from Nortel or Nortel Voice products from the Remarketing Partners - Novus LLC, Paragon and Williams Telecommunications. Nortel fully supports the secondary market through its "Certified Remanufactured" program. Only the products remarketed through the Nortel "Certified Remanufactured" program deliver the quality our customers deserve and can rely upon. Used and refurbished products are also sold on the secondary market, usually by independent (unauthorized) resellers or, in some cases, by Nortel authorized resellers as well. Nortel does not support secondary market equipment outside of the "Certified Remanufacture" Program. Only Nortel and its Remarketing Partners can participate in Certified Remanufacture. The independent secondary market vendors (ISMV) that deal in previously used and/or refurbished equipment or Nortel authorized reselles that have their own refurbishing operations are responsible for warranties and support of such secondary equipment. Nortel does not consider secondary market equipment sales to be grey marketing unless the resellers misrepresent their affiliation with Nortel concerning the sale of such secondary market equipment, or uses the Nortel logo or trademarks without prior written Nortel authorization. The capital savings netted through purchases of secondary market equipment other than "Certified Remanufacture" has to be weighed against other risk factors that many people may be unaware of, including:
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