2nd March 2007

Paula Nelson General Counsel - Intellectual Property

IP Management @ Nestlé
 IP Management @ Nestlé - 2nd March 2007

Nestlé in the Global Food Market

1.5% 98.5%
• Nestlé Sales (2006)
CHF 98.5 billion
USD 80 billion

Nestlé
Others

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 IP Management @ Nestlé - 2nd March 2007

The World's largest Food and Beverage

Company in 2005
80
Food Sales (in billion USD)

70
60
50
40
30
20
10
0

Kellogg's
Kraft Foods

ConAgra
Coca-Cola

Schweppes
Unilever

Cadbury
Nestlé

PepsiCo

Mills
Danone

General

Sara Lee
Mars

Facts and figures

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 IP Management @ Nestlé - 2nd March 2007

Nestlé in Figures 2006

• Worldwide Sales: CHF 98,458 mio
• EBIT: CHF 13,302 mio
• Net Profit: CHF 9,197 mio
• Factories: 487
• Employees: Around 265,000
• Organic Growth: 6.2 %
• R&D Expenditures (F&B): CHF 1.7 billion

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 IP Management @ Nestlé - 2nd March 2007

Our Line of Products

• Soluble Coffee
• Infant Nutrition
• Confectionery
• Dairy
• Chocolate Milk Beverages
• Bottled Water
• PetCare
• Ice Cream (co-leader with Unilever)
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 IP Management @ Nestlé - 2nd March 2007

6 worldwide strategic
corporate brands

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 IP Management @ Nestlé - 2nd March 2007

Sales by region
Percentage of total F&B sales in 2006

Europe
38.3%

AOA
19.3%
Americas
42.4%

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 IP Management @ Nestlé - 2nd March 2007

Nestlé R&D
An interactive Network covering four Continents
Nestlé Research Center (NRC)
Lausanne (CH),Tours (FR),

8 Product Technology Centers

(PTCs): Konolfingen, Orbe (CH),
Beauvais, Lisieux,
Nestlé Waters (FR),St Louis (US),
York (GB), Singen (D)
8 Research and Development
Centers: Amiens (FR), Marysville,
Solon (US), Shanghai (CN),
Singapore(SG), Sderot (IL), Casa Buitoni (I),
FS Bev. Centre Orbe

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 IP Management @ Nestlé - 2nd March 2007

The Group Intellectual Property

Department Manages IP Rights
Worldwide

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 IP Management @ Nestlé - 2nd March 2007

Organisational Intellectual Property Department

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 IP Management @ Nestlé - 2nd March 2007

Strategic and local brands are

protected & managed by IPD
Brands Protections
Managed by 17 Regional
Local IP Advisers (RIPA's) for
27'000 local Nestlé Operating
Companies

6'000
Managed by Center IP
82'000 Department in co-
operation with the
Strategic Business
Strategic Units ('SBU's) and the
365
RIPA's
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 IP Management @ Nestlé - 2nd March 2007

Nestlé has a substantial

patent portfolio
The Nestlé patent portfolio contains as
at 26.02.2007:
• 9'516 granted patents
• 6'826 pending cases which may result in the
grant of a patent

The top 5 patenting territories for

Nestlé are: USA, Europe, Australia, Canada,
and Japan
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 IP Management @ Nestlé - 2nd March 2007

Nestlé's IPRs are centrally owned &

licensed to local Nestlé Companies...
 Société des Produits Nestlé S.A. is the registered
trademark and design owner and Nestec SA is the
registered patent owner, in both cases acting as
nominee for Nestlé S.A., who is the beneficial
owner
- Central ownership applies to trademarks linked to
strategic as well as to local brands
 These rights are licensed, together with know-
how, to the Nestlé Operating Companies who pay
royalties for their use
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 IP Management @ Nestlé - 2nd March 2007

What is Intellectual Property ?

OUTPUT OF SYNERGISTIC INTERACTION

BUSINESS TECHNOLOGY

Intellectual
Property

LAW

Must be integrated to generate strategic value

A long term strategic investment
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 IP Management @ Nestlé - 2nd March 2007

Sources of Technology

 Internally generated

 Externally sourced

Licensing-in complements internal R&D

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 IP Management @ Nestlé - 2nd March 2007

Proper Defence is fundamental

We defend our rights against any infringements, e.g.
Imitations including counterfeits
Unauthorised use of patented processes
Internet & domain name misuse
Cybersquatting
Examples: maggi.com, rowntrees.com
Derogatory use of our trademarks
For instance use of our brands in pornographic sites

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 IP Management @ Nestlé - 2nd March 2007

... Infringements are frequent ...

Example:

Trademark infringement
+ Unfair competition

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 IP Management @ Nestlé - 2nd March 2007

... in various parts of the world

...

Example NESTLE PURE LIFE Pakistan/Afghanistan

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 IP Management @ Nestlé - 2nd March 2007

Russia
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 IP Management @ Nestlé - 2nd March 2007

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Russia
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 IP Management @ Nestlé - 2nd March 2007

Counterfeiting is a
multi-faceted issue ...
• customer safety
• brand protection
• corporate reputation
• profits (loss of revenue &
government taxes)
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 IP Management @ Nestlé - 2nd March 2007

What Nestlé is Doing

• Protect our intellectual property
• Work with government organisations

• Enforce our rights

AND SO
• Keep our promise to our consumers
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 IP Management @ Nestlé - 2nd March 2007

Illustrative split of Nestlé Value

(as a % of market capitalisation)
Recorded balance sheet
values
31.8%

Non-recorded values
68.2%

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 IP Management @ Nestlé - 2nd March 2007

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Finance
& Control
& Control