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In the video tutorial, Catherine Dinolfo, an American Orthodontics product manager, demonstrates how to effectively remove watermarks from instruments. She suggests using a pencil eraser to clean up marks, applying pressure for better results. If marks persist, she recommends using Shine Renew, a liquid or wipe product, to gently scrub and remove stains. Wear gloves when using Shine Renew and rinse the instrument with water after scrubbing. Reapply Shine Renew if stains are still visible.