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IN-HOUSE COUNSEL: Howard Malovany TITLE: Vice president, secretary and general counsel AGE: 52 FIGHTING PIRATES: To its top lawyer, the most important asset of the Wm. Wrigley Jr. Co. is not chewing gum, but intellectual property — world-famous trademarks like Juicy Fruit, Doublemint, Big Red and Spearmint and dozens of patents on its manufacturing processes, formulas and packaging. GC Howard Malovany has made protecting these trademarks and technology patents one of his top missions. After becoming Wrigley’s first general counsel in 1998, Malovany hired Jack Nimz, the company’s first in-house IP lawyer. Malovany and Nimz focus much of their IP efforts on China, where Wrigley has a manufacturing facility, a huge market and the bulk of Wrigley’s piracy problems, Malovany says. He says Chinese counterfeiting operations are getting “better and better every day” — to the point where he sometimes has difficulty telling fake gum packaging from the real deal. The ersatz product, while detectible by true gum lovers and lab technicians, sometimes cannot be distinguished by retailers and casual chewers. Wrigley has registered its brands as “famous marks” in China, which entitles them to broader protection, says Malovany. The company also actively participates in a Chinese anti-counterfeiting coalition of consumer goods makers, led by fellow piracy victim Procter & Gamble Co. The coalition works with Beijing to toughen Chinese counterfeiting laws, strengthen enforcement at the regional and local levels and to convince merchants not to hawk pirated goods. These efforts have had some success in dealing with China’s multilayered legal system, and “hundreds of years of culture” at odds with modern IP principles, says Malovany. Given the extent of the piracy problem in China, though, and the country’s current enforcement system, Malovany says his current goal is that the piracy problem gets no larger each year. THE WHOLE WAD: Founded in 1891, Chicago-based Wrigley has become the world’s largest chewing gum company, occupying about half the U.S. market and selling $2.5 billion worth of gum and other confectionary products annually. The 10,800-employee company markets its products in more than 150 countries. MALOVANY’S PIECE: Malovany supervises nine lawyers — six in Chicago; two in Munich, Germany; and one in Moscow — and is now recruiting a lawyer for a new post in China. Malovany estimates that he spends the largest share of his time on licensing deals and transactions. In major deals, such as last summer’s acquisition of the Velamints brand from Ragolds US and Ragolds GmbH, he works closely with outside counsel Skadden, Arps, Slate Meagher & Flom of New York in negotiating contract terms. Malovany is also involved heavily in securities matters, overseeing the preparation of Wrigley’s financial filings. Wrigley hired Malovany as senior counsel in 1996. At the time, the company’s four lawyers reported to the company’s nonlawyer secretary, a position Malovany assumed in 1998. He lobbied to be named general counsel as well, convincing senior management that the large, global company needed a chief legal officer. Malovany’s first months as Wrigley’s first GC were spent coaxing managers to break their expensive habit of calling outside counsel, rather than company lawyers, for legal services. Wrigley has more than doubled its in-house lawyers during his tenure, he says, because his staff has proven that “we’re adding value greater than our costs.” STICKY LITIGATION: Wrigley has avoided serious litigation during his tenure, the general counsel says, noting that no lawsuit is significant enough to warrant reference in the firm’s SEC paperwork. However, Wrigley was involved in a suit that made the newspapers in Canada. In July 2000, Wrigley and its Canadian advertising company, BBDO Canada Inc., reached an out-of-court settlement with Myriam B�dard, Canada’s double gold medal biathlete of the 1994 Winter Olympics. B�dard sued for $725,000 in damages over BBDO’s unauthorized use of her photo in print ads for Wrigley gum. A doctored photo showed the athlete shorn of her blonde hair, an image that B�dard said subjected her to ridicule and stripped her of her femininity. BBDO supplied the counsel and took the lead in the litigation and negotiation, Malovany says, with his role limited to monitoring the litigation and keeping his management informed. Both defendants were focused on resolving the case with a minimum of adverse publicity: “While it was a relatively small matter in the scheme of things, its notoriety [in Canada] made it the sort of thing that senior management would come by to ask what was going on,” says Malovany. He declines to discuss the confidential settlement, or whether BBDO indemnified Wrigley. However, Malovany says he is satisfied that the advertiser has reviewed its procedures and instituted precautions to prevent future botched ads. Wrigley has its own strict products liability safeguards, adds Malovany, starting with manufacturing processes that make it “nearly impossible” for foreign objects or contaminants to get into the final product. The company thoroughly investigates any product complaints, following a protocol reviewed by his office. Complaining customers are promptly contacted, and suspect products sent for laboratory analysis. One case, however, typifies how Wrigley handles cases it feels are unwarranted. Garry Hickman alleged that he bit into a stick of Big Red gum that contained a small screw, causing one of his teeth to fragment. He won an $8,000 default judgment after Wrigley failed to show up in court. The company lost its appeal, arguing unsuccessfully that the defendant’s absence should be excused because its local agent for service of process had failed to forward the complaint. Wrigley’s appeal of a four-digit judgment shows its reluctance to concede anything in products liability cases. “We typically don’t settle, because in most cases we believe we’re right,” says Malovany. PRINCIPAL OUTSIDE COUNSEL: Wrigley has no main outside corporate counsel, Malovany says, explaining that he starts with the premise that his in-house staff can handle most legal matters. When he needs outside help, Malovany calls on several firms in Chicago. He relies on the local office of Skadden Arps for acquisitions, divestitures and securities work. IP counsel are Bell, Boyd & Lloyd and Brinks Hofer Gilson & Lione. Sidley Austin Brown & Wood handles employee benefits, and Meckler Bulger & Tilson handle other employment matters. Wrigley retains local counsel overseas on an as-needed basis. ROUTE TO THE TOP: The Dayton, Ohio, native graduated from Ohio State University in 1972 with a B.A. in economics, and received a J.D. in 1977 from the University of Toledo College of Law. After law school, he joined NCR Corp., the business information systems company. He credits NCR with providing on-the-job training in securities, employee benefits, M&A and corporate finance — including an $80 million bond offering in Japan. In 1985, Malovany joined the in-house office at Outboard Marine Corp. of Waukegan, Ill., rising to become secretary and senior counsel. Malovany was the company’s main transactional attorney, he says, working on 31 acquisitions and divestitures worldwide worth more than $600 million, nine securities transactions totaling about $1.2 billion and the closure of OMC’s manufacturing operations in Belgium. FAMILY: Malovany is married to the former Cynthia Jane Shilt. LAST BOOK READ: “The Contrarian’s Guide to Leadership,” by Steven Sample.

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