Counterfeit Goods

1. In addition to Seller’s other warranties, Seller warrants the Goods delivered pursuant to this Order shall: (i) be new; (ii) be and only contain materials obtained directly from the Original Material Manufacturer (OMM), Original Component Manufacturer (OCM) or the Original Equipment Manufacturer (OEM), (collectively, hereinafter, the Original Manufacturer (OM)) or an authorized OM reseller or distributor; (iii) not be or contain Counterfeit Items; (iv) contain only authentic, unaltered OM labels and other markings; and (v) conform to all design, performance and production requirements of this Agreement and those of the OM. In addition to other remedies available to 3M, if Seller delivers Goods to 3M that do not conform to the forgoing warranty, at 3M’s election, Seller shall bear the expense of remedial costs including repair, rework, and corrective action.

2. A “Counterfeit Item” includes, but is not limited to (i) an item, material or component that is an illegal or unauthorized copy or substitute of an OM item; (ii) an item, material or component that does not contain the proper external or internal materials or components required by the OM or that is not produced in accordance with OM specifications or design; (iii) an item, material or component that is used, refurbished or reclaimed but Seller represents it as being new; (iv) an item, material or component that has not successfully passed all OM required testing, verification, screening and quality control but that Seller represents as having met or passed such requirements; or (v) an item, material or component with a label or other marking intended, or reasonably likely, to mislead a reasonable person into believing a non-OM item is a genuine OM item when it is not.

3. This section (c) is only applicable to the extent Seller is acting as, or obtaining Goods from, one or more Brokers. A “Broker” is a supplier that is not authorized by, or under the oversight of, the OM with respect to such Goods, and shall include, without limitation, independent distributors, non-authorized distributors, non-franchised distributors, non-authorized suppliers or non-authorized resellers. In addition to the requirements set forth in sections (a) and (b) above, Seller warrants that it will only act as a Broker in delivering Goods pursuant to an Order if 3M provides prior written approval to do so. If Seller acts as a Broker in connection with Goods delivered pursuant to an Order, Seller shall implement an internal Counterfeit Item control process for Goods delivered pursuant to an Order in accordance with the standards or instructions set forth in 3M’s specifications or other provisions incorporated into an Order, or, if no additional standards, instructions or provisions are included, in accordance with AS-5553 for Goods that are electronic parts or in accordance with the general principles of AS-5553 for Goods that are not electronic parts. 3M shall have the right to audit Seller’s process and to require changes in it to meet its customers’ requirements. When requested by 3M, Seller shall provide documentation that authenticates traceability of all the materials used in Goods to the applicable OM, including all supply chain intermediaries.

4. If a Good delivered is discovered to be a Counterfeit Item or suspected to be a Counterfeit Item:

   1. 3M shall have the right to impound the Good for further investigation of its authenticity.  3M’s investigation may include the participation of third parties or governmental investigative agencies as required by law, by 3M’s customer, or by 3M, in its sole discretion.  Seller shall cooperate in good faith with any investigation conducted by 3M, including, but not limited to, Seller’s cooperation with respect to the maintenance and disclosure of all design, development, manufacturing, and traceability records with respect to the Goods delivered to 3M by Seller.   Upon 3M’s request, Seller shall provide to 3M certificates of conformance with respect to the Good under investigation.  3M shall not be required to return the Good to Seller during the investigation process or thereafter.  3M shall not be liable for payment to Seller of the price of any suspect Counterfeit Items under investigation.  At 3M's direction, Seller shall hold in place or impound any pending shipments until 3M completes its investigation.

   2. 3M shall have a right to conduct destructive examinations to verify the authenticity of any Goods delivered under an Order. 3M shall not be liable to Seller for the price of any Goods destroyed by examination if the Good is later found to be a Counterfeit Item.

   3. 3M shall have the right to permanently impound Goods determined, in its sole discretion, to be Counterfeit Items.  3M shall not be liable for payment to Seller for the price of any Goods permanently impounded.  If, after investigation, 3M concludes, in its sole estimation, that a Good is a Counterfeit Item, 3M may file a Government-Industry Data Exchange Program (GIDEP) report announcing its findings.  In addition, 3M shall have the right to disclose its findings publicly or to third parties.  3M’s findings shall be the sole property of 3M. Seller waives all claims, remedies, and causes of action, whether legal or equitable, arising from or related to any such report.

5. Seller shall include the substance of sections (a), (b), (c) and (d) above and this section (e) in lower tier subcontracts and supplier agreements for procurement of Goods or items, materials or components used in Goods for delivery to 3M.