Authentication Technologies for Brand Protection

Transcription

1 Authentication Technologies for Brand Protection

2 Authentication Technologies for Brand Protection Published by National Electrical Manufacturers Association 1300 North 17th Street, Rosslyn, VA Copyright 2009 by National Electrical Manufacturers Association All rights reserved including translation into other languages, reserved under the Universal Copyright Convention, the Berne Convention for the Protection of Literary and Artistic Works, and the International and Pan American Copyright Conventions.

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4 Contents Acknowledgements... v 1 Executive Summary Introduction The Counterfeiting Problem The Impact of Counterfeiting Counterfeiting Case Studies Schneider Electric Underwriters Laboratories Eaton Corporation Solving the Counterfeiting Challenge Formulating a Comprehensive Strategy Authentication of the Product Authentication Built into the Design of the Product Authentication by Labels on Products Authentication of the Product Packaging Tracking and Tracing of the Product Cooperation with Authorities Available Brand Protection Technologies Technology Selection Guide Selection Tools Selection Factors Impact on Product Price Impact on Manufacturing Additional Capabilities Serialization and Embedded Information Audience Authentication Placement Appearance Considerations Environmental Factors Authentication Layers References and Experience of the Authentication Vendor Mixing and Matching Authentication Vendors and Technologies Likelihood of the Technology Being Copied An Ongoing Relationship with the Vendor Further Information...25 Notes...26 Authentication Technologies for Brand Protection iii

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6 Acknowledgements The following report was commissioned by the Emerging Technologies Panel of the National Electrical Manufacturers Association. NEMA gratefully acknowledges the input and guidance provided by the following individuals and organizations during the preparation of this report. Ed Dietrich Senior Vice President, Sales & Marketing North America, Hologram Industries Tracy Garner -- Manager, Anti-Counterfeiting & Unauthorized Distribution, Square D/Schneider Electric Tom Grace Aftermarket Product Sales Manager, Eaton Electrical Inc. Tom Worm Marketing Manager, Security Systems Division, 3M Company In the course of preparing this report, NEMA also benefitted from discussions with others in the authentication products industry including: Brian Nicholas, Sales Director, Brand Protection, SICPA Securink Corporation Randall Burgess, Business Development Manager, Security & Identification, Tesa Scribos, GmbH P.A. (Phil) Viggiani, Vice-President Sales & Marketing, IDGlobal Corp. NEMA also directs the reader to the website of the International Authentication Association (IAA), internationalauthenticationassociation.org. This website contains additional valuable information about the authentication technology industry and its products, and was useful in the preparation of this report. The IAA website page, contains a useful glossary of terms used in this report. Authentication Technologies for Brand Protection v

7 1 Executive Summary Product counterfeiting, a form of intellectual property theft, has been on the rise in many industries. The International Chamber of Commerce estimated in 2007 that counterfeit products comprise 5 to 7 percent of world trade, representing almost $500 billion. The electroindustry has felt the sting of counterfeiting as well. Information gathered by NEMA to date has revealed that counterfeiting occurs in a number of NEMA product areas, but only a few have thus far been significantly affected to the point where member companies in those areas have implemented comprehensive strategies to protect their brands and customers. Many such strategies have involved the use of technologies for product/ packaging authentication to determine counterfeiting or tampering activity. Some technologies also support tracking and tracing, very beneficial in dealing with counterfeit or tampered product. This report s primary emphasis is on these technologies, but also discusses the problems and solutions relating to counterfeiting in the electrical industry, along with the factors an electrical product manufacturer should consider when selecting appropriate technologies to support its brand protection strategy. Brand protection technologies can be mainly categorized as overt, covert, forensic, and digital, each having their purpose and role in brand protection. Overt technologies on products allow a customer to readily see a mark of authenticity. Some, however, will be semi-overt in that they are also viewable by eye, but typically need some type of special lighting or viewer to be read. Covert technologies will not be visible at all, and will require a special tool for detection. Forensic technologies will likewise not be visible, and will require very specialized laboratory equipment and analysis for detection. Digital technologies can only be detected via electronic means, and are particularly well suited to track-andtrace activities. Most companies employ layered solutions for their product authentication, with different levels of protection (e.g. overt, semi-overt, and covert) applied and intended for different audiences, and to best ensure the ability to detect between counterfeit and genuine product. 1 Although not as yet found widely on electrical products, anti-tampering technologies such as overt closures and labels are available that, when found intact on a product, provide evidence that the product has not been adulterated or replaced, and is thus likely to be genuine. Technologies for packaging include security tapes and seals, markings, brandings and specialized inks. These technologies allow ready recognition of product authentication by those other than the end user, such as distributors or customs inspectors. Often, however, specialized package security labels will have overt, semi-overt and covert layers in order to present the highest barrier to counterfeiters. In cases where authentication of the product is difficult due to factors such as product geometry or cost, technologies suited for packaging may be the only means of authentication. Technologies for product tracking and tracing include the use of overt or covert bar codes, serialization, third-party databases, and radio-frequency identification (RFID). In some cases, devices are distributed into the supply channel to allow customers to read hidden data on the product or package that is used to verify the authenticity of the product on a secure website. 2 Many brand protection strategies combine the use of product (and/or product packaging) authentication technology with product tracking and tracing technologies. 4 Authentication Technologies for Brand Protection

8 2 Introduction 2.1 The Counterfeiting Problem The Impact of Counterfeiting In any discussion of the counterfeiting problem, it is helpful to state what is meant by a counterfeit product. As generally acknowledged, a counterfeit product is a product (including its packaging and valuable product-related information on the product and packaging) which bears a trademark or certification mark, for which authorization had not been obtained, that is either identical to, or substantially indistinguishable from, a trademark or certification mark that has been validly registered (15 U.S.C defining counterfeit under federal trademark law). Counterfeiting then refers to the manufacturing and distribution of products bearing counterfeit marks. In the electrical sector, there are two types of marks that can be important to commercial, industrial and household consumers in recognizing the quality of an electrical product. First, the manufacturer s brand trademark, which identifies the source of the product and is recognized by customers as reflecting the manufacturer s quality control, engineering skills, and testing practices to deliver consistent quality and safer products. Second, electrical products are often required by local codes to be listed, meaning they are evaluated by a third-party test lab, who not only tests the product to specified standards prior to entering the market, but also has the right to randomly enter factories and evaluate manufacturing and quality control and conduct market surveillance and evaluate products after they are in the distribution channel. These listed products bear the certification mark of the third-party testing organization. A variety of electrical products have been found in the U.S. to bear counterfeit third-party test laboratory certification marks without authorization. Counterfeiting constitutes a serious and growing problem that is not specific to any industry. While hard data about the size of this market in illicit trade is hard to determine because criminals who traffic in counterfeits do not keep financial records or report their sales, according to the International Chamber This counterfeit power strip can be easily detected by the misspellings on the package instructions. of Commerce, counterfeiting is growing exponentially in terms of volume, sophistication, range of products, and countries affected. The International Chamber of Commerce estimated that, by 2007, counterfeit products would constitute between 5 and 7 percent of all world trade, valued at almost $500 billion. Over the next several years, global trade in counterfeits is expected to grow 20-25% annually, reaching more than $900 billion in value in In a separate study completed in 2007, the Organization for Economic Cooperation and Development (OECD), estimated that international trade (i.e., trade between nations) in counterfeit and pirated products in 2005 was approximately $200 billion. The OECD study, which only estimated counterfeit trade between countries and did not include trade in counterfeits within a given country such as China or the United States, underscores the magnitude of the global networks and channels of trade involved in this illicit activity. In terms of this trade in counterfeits reaching the U.S. border, products categorized by U.S. Immigration and Customs Enforcement (ICE) as consumer electronics comprised 5% of total counterfeit seizures in 2006 with a value of $7 million. In 2007, seizures in that category jumped to 8% with a value of $16 million. This category includes electrical products and does not include toys and computer products that are Authentication Technologies for Brand Protection 5

9 categorized separately, and reflects a trend consistent with what NEMA is learning about counterfeit electrical products in the U.S. market from lawsuits and other anecdotal evidence. The ICE data does not include counterfeit goods that remain undetected after they have entered the United States, or are detected and subject to private civil enforcement and seizure by private rightsholders. Lamp ballasts (fluorescent lamps) Lighting fixtures (luminaires); Small electric motors Motor control centers Welding electrodes and other welding consumables Wire and cable (including telecommunication wire and extension cords) In June 2008 NEMA conducted a survey of its membership with regard to product authentication for brand protection. One of the purposes of the survey was to gauge the perceived impact of counterfeiting on member companies. Approximately 30% of the sampled membership indicated that counterfeiting was a significant issue, with 26% already having implemented one or more product authentication technologies. These numbers, however, should not be viewed statically. Typically, when one manufacturer takes action against counterfeiting, the counterfeiters will move on to another manufacturer or perhaps to another electrical product. Over time, the expectation is that these numbers will increase. NEMA s research, including interviews with its member companies and research from public sources of information such as reported legal decisions and publicly available literature, has documented that a number of electrical products have been impacted by counterfeiting. The list includes products used in industrial and commercial applications as well as consumer products: Counterfeiting has an impact on the electrical industry in ways not experienced in many other industries. The major distinguishing factor is that counterfeit electrical products that fail to perform properly can cause significant public health and safety issues, and this characteristic of the counterfeit electrical product is unfortunately much too common as documented by NEMA on its website. 4 Pharmaceuticals, auto and aviation parts, food and hygiene products present a similar risk profile. To achieve a lower cost point than branded products, a counterfeit product will typically be substandard in its design, materials and/ or manufacturing quality. Thus, there is a much higher likelihood of a counterfeit electrical product malfunctioning or otherwise failing to perform as expected. This can lead, and has led to, shock, burns, fires, explosions and other incidents causing property damage, injury or death. Conduit fittings Circuit breakers Control relays Control switches Extension cords Dry-cell and cell-phone batteries Electrical connectors Electrical receptacles Fuses Ground-fault circuit interrupters Ground rods High voltage surge arrestors Lamps (light bulbs) A cutaway comparison with a genuine power cord shows the counterfeit product to have dangerously thin insulation. 6 Authentication Technologies for Brand Protection

10 For manufacturers and distributors and installers of electrical products there are legal risks for even unwittingly trading in counterfeit products or being victimized by counterfeiters. NEMA is aware of at least one electrical manufacturer who was named in a product liability lawsuit only to find that the allegedly defective product was a counterfeit version of its product made in China. When a product is determined to be counterfeit, however, the manufacturer can generally avoid liability for a product it did not make or sell. The focus is then shifted to others in the supply chain such as distributors, retailers, contractors and installers. Distributors and installers of counterfeit products may remain on the hook for the defective product they in fact sold. Product authenticity and its determination thus become very important considerations to the manufacturer in product liability risk assessment and perhaps prevention Counterfeiting Case Studies Schneider Electric Schneider Electric, headquartered in France, is a leading global provider of energy management products, systems, and services for residential, commercial, industrial and OEM markets. In the U.S., Schneider Electric s North American Operating Division markets Square D brand NEMA-type devices for industrial control, electrical distribution and circuit protection. As a market leader, Square D circuit breakers are a visible target for counterfeiting. Circuit breakers have been among the more than one million counterfeit electrical products that the U.S. Consumer Product Safety Commission (CPSC) has estimated to have been recalled in recent years. Schneider Electric has therefore had to take an aggressive approach in combating counterfeit circuit breakers which can do irreparable harm to consumers trust and loyalty to the Square D brand. Circuit breakers, which protect electrical circuitry from overcurrent or short circuits, are no different than many electrical products in that the counterfeits typically consist of substandard materials and components that will not perform basic electrical functions. Indeed, Schneider Electric has shown captured counterfeit breakers to NEMA in which there are no internal parts that would terminate the current to a wire in danger of overheating or arcing. A circuit breaker with substandard parts may well not operate properly to protect a home or building s electrical system from an electrical fault, significantly raising the likelihood of an electrical fire. In a catastrophic failure, a circuit breaker could explode and anyone nearby would be injured from the sprays of molten metal and extreme heat released. Having marked safety as a number one priority, Schneider Electric s North American Operating Division has made significant efforts toward eliminating counterfeit circuit breakers. In May 2007 Schneider Electric launched a counterfeit dangers awareness campaign warning distributors and end users of the potential risks of counterfeit circuit breakers, as well as providing tips on how to identify them since the exterior of a counterfeit breaker can look nearly identical to an authentic one. These tips included the need to purchase circuit breakers through authorized sales points and distribution channels, to examine a breaker for a genuine third-party certification mark, to be aware and cautious of companies being sued for counterfeit sales, and to be aware of counterfeit product pricing methods. The awareness campaign also included the creation of a website ( com/ counterfeits) that provides information on counterfeits and allows the reporting of suspicious or counterfeit circuit breakers. A Square D circuit breaker seized during a raid on a Chinese counterfeit products factory. Authentication Technologies for Brand Protection 7

11 Concurrent with the awareness campaign, Schneider Electric pursued counterfeits throughout its distribution chain, tracking them down through unauthorized distributors and suppliers. Legal action was taken, resulting in 13 lawsuits against 32 entities, demanding a halt to the importation, distribution, and sale of counterfeit breakers. Schneider Electric has inspected the inventory of all those sellers who have been required by the CPSC to conduct recalls of counterfeits they have sold. These inspections have resulted in the seizure of more than 225,000 counterfeit breakers and a CPSC-administered recall of another 144,000. Finally, Schneider Electric has partnered with government agencies such as the Department of Justice, U.S. Customs and Border Protection, Immigration and Customs Enforcement, and the Federal Bureau of Investigation to examine criminal rather than just civil prosecutions in the United States. In China, the source of many counterfeits, Schneider Electric has been working with NEMA and Underwriters Laboratories to obtain enforcement proceedings from the Chinese government against local counterfeiters Underwriters Laboratories In the 1990s, Underwriters Laboratories (UL) recognized a growing concern with products using counterfeit versions of its registered certification mark, primarily imported from China. Significant safety and electrical performance issues were identified with many of these counterfeit products. UL evaluated various anti-counterfeiting strategies in terms of their potential to keep more of these counterfeit products out of the marketplace. Three strategies were considered: (1) go after the sources in China; (2) work with North American border protection authorities to prevent the counterfeits from entering the market; and (3) challenge importers and retailers who were selling the infringing product in North America through court proceedings. The first and third strategies, while they could not be ignored, were not optimal in UL s case because it involved significant resources and would arguably achieve limited results, one case at a time. UL did not have a significant presence in China during the 1990s and finding the underground operations that produced the counterfeits in a country as large as China was a daunting task. Going after the importers in the United States meant winning small battles here and there that only many lawsuits would bring about a significant outcome over time. Furthermore, the counterfeit product may have already penetrated the wholesale and retail marketplace as well as the installed base by the time the infringing product was identified. The border protection strategy, if properly pursued, had the potential to block entire shipments representing large volumes of counterfeit product and represented a more efficient allocation of UL resources. It required the establishment of a publicprivate partnership to protect the UL mark from counterfeiting, and therefore it required an investment of time and financial resources by both UL and US Customs. The three key components of the publicprivate partnership included a significant training program on the part of UL staff to educate port officials and staff identifying the types of products bearing counterfeit certification marks and common indicators of suspect marks; assuring Customs officials that UL was a reliable partner who could be counted on to identify correctly that the suspect product was counterfeit product so it could be legally seized; and creating resourceful tools for both Customs and consumers to use in looking for counterfeits. One of those tools was an authentication tool --- a holographic version of the UL mark, first developed in The cost of the hologram label was greater for UL s customers than the cost of the traditional paper version of the label, and to justify this expense UL selectively identified seven products with higher safety-risk profile and a higher volume of counterfeit experience to apply the label initially. Customs enforcers understood that if these products did not have a hologram they were suspect. A second tool was a confidential training program that advised Customs staff what to look for on genuine products in order to authenticate them or label them as suspect. UL s marking requirements in connection with its certification mark vary from product to product, and it was important to understand these requirements. UL has an online database by which Customs officials and other law enforcement officials can verify who is authorized to apply the UL mark and for which products they are authorized to use it. 8 Authentication Technologies for Brand Protection

12 UL trains import specialists and IP enforcement officials at over 40 ports per year (both on the coast and inland ports). UL staff frequently retrains port staff because of employee turnover, but as its authentication techniques evolve, port staff also needs to be aware of what is new. Finally, when Customs calls about a suspect product, UL has to respond quickly and accurately that the product is either genuine or counterfeit. Customs staff does not have time to make mistakes and fix them because of a misidentification. UL requires certainty in its identification of a counterfeit mark, which builds trust in this public-private partnership. As a measure of the success of its IP protection program, UL reports that it has trained over 1800 US Customs officers, resulting in over 45 million counterfeit items seized with a retail value of over $150 million. Repeating pattern of floating UL symbols, a distinctive burst pattern around one of the floating UL symbols and wavy lines Additional covert security features to assist with the authentication of a UL holographic label Additionally, UL added another level of security via the UL Authenticator, a special credit card-size device that authorities can use to better identify counterfeit products. UL also expanded the list of products required to use the new hologram to 32 categories ( marks_labels/hologram.html). Over time UL expanded its enforcement program by working internationally with law enforcement and border protection personnel, resulting in seizures abroad and criminal prosecutions Eaton Corporation UL holographic label on a power cord. UL has updated its authentication tools as new technologies became available. Since UL first introduced a holographic label in 1996, the organization has continually redesigned it and added security features, each time making it increasingly difficult for potential counterfeiters to reproduce. Distinct features of a new hologram label introduced in June 2008 include: Gold background to help U.S. Customs officers and other law enforcement agencies, distributors, retailers and consumers quickly identify the new label Color shifting ink similar to that in the new U.S. paper currency Eaton Corporation is a leading power management company selling products in more than 150 countries. Eaton s diversified products include: electrical systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace, hydraulics and pneumatic systems for commercial and military use; filtration, truck, and automotive drivetrain and powertrain systems for performance, fuel economy and safety. As with many companies, the recent dramatic increase in counterfeit products entering the global market has prompted Eaton to establish processes for preventing counterfeits from entering its markets and maintaining its customer relationships built on trust in quality products and services. Many of these counterfeits pose a serious threat to the health and safety to people and property wherever they are sold. The counterfeits, primarily manufactured in China, have most seriously affected Africa, the Middle East, Eastern Europe, Asia and South America. However, these counterfeit products are also finding their way into every market including the U.S., Canada, and Western Europe. Authentication Technologies for Brand Protection 9

13 Eaton s anti-counterfeiting strategy relies on global activities that include vigilant awareness and detection, trademark enforcement, marketing, communications (e.g. brand management, and engineering. Partnerships with the public, customers, suppliers, law enforcement, government agencies, as well as engagement with organizations and coalitions such as NEMA, Underwriters Laboratories, Canadian Standards Association, International Anti-Counterfeiting Coalition, Electro Federation of Canada, and BEAMA Ltd. ensure the success of this strategy. For more than seven years this strategy has resulted in the seizure of over 500,000 Eaton brand products. In 2008 alone, over 2,500 counterfeit Eaton molded case circuit breakers were detected and seized in the U.S. by immigration and customs enforcement. The detection of these counterfeits was a direct result of public awareness and manufacturing marks Eaton integrated into the products for authentication. The criminal investigation of this case (still ongoing) has determined the extent of the counterfeiting to be international. 2.2 Solving the Counterfeiting Challenge Formulating a Comprehensive Strategy In discussions with NEMA members and others in the electrical industry, an effective brand protection strategy revolves around these four countermeasures: Legal actions against counterfeiters and other unauthorized players in the supply chain; Private investigations and cooperation with enforcement agencies; Public information and education; Technology-based authentication. In many cases, a successful strategy needs to employ all four countermeasures (the first two obviously come into play when counterfeits have been detected). This part of the report particularly discusses the technologybased authentication countermeasure Authentication of the Product Authentication Built into the Design of the Product Manufacturers have sometimes used subtle means in the design of their product that allows them to readily identify their product and distinguish it from a copycat product made by others. For example, the chemical composition of a product may include a unique element or compound that may or may not be useful to a product but represents a unique identifier. The unique identifier may simply represent the product formulation itself. In August 2008, US Customs and Border Protection announced that Procter & Gamble scientists developed a guidebook detailing their consumer products that are subject to counterfeiting such as toothpastes, shampoos, conditioners, creams, perfumes, anti-bacterial soaps and laundry detergents. The guidebook included information on composition of authentic products and analytical methods for identifying key ingredients were discussed in addition to the guidebook. Nuclear magnetic resonance is used to analyze the ingredients of the products to determine if they are genuine. Not unlike the situation faced with counterfeit electrical products that incorporate inferior materials or designs, many of the counterfeit versions of Procter & Gamble products pose health and safety threats to American consumers. These counterfeit products are not produced to the same standards as legitimate products and could contain potentially harmful ingredients such as caustic chemicals or bacterial contaminants. In other cases, the unique identifier may be as simple as a notch in a piece of plastic or some other design feature inside the product that is not readily visible to the counterfeiter or the consumer. In the latter case, authentication primarily serves the manufacturer s interest in identifying its genuine products. This may prove useful in defending against warranty and personal injury claims. It may also prove easy to copy once the counterfeiter detects the design element. 10 Authentication Technologies for Brand Protection

14 A specific color of paint on a product or the distinct color of the plastic resin used on the product can uniquely identify products. While easily copied, counterfeiters do not always get the color right and even subtle differences can be the basis of detecting counterfeits. Some NEMA members laser etch their trademark onto the product, a process that adds incrementally to the product cost that counterfeiters, who merely print the trademark on the product, may avoid. Sometimes the counterfeiter will print the trademark on the product and make it look like it is etched. 5 In any case, the printed mark can be detected as inferior in appearance to the laser etched mark. Apparel manufacturers are known for placing a dozen or more different tags on products, some bearing trademarks and some bearing information about the fiber, country of origin, and washing instructions that a counterfeiter may avoid just to avoid the extra cost of production. More sophisticated authentication technologies incorporated into products include taggants or forensic markers that can be scanned and detected with 100% accuracy to authenticate a product. One vendor to the apparel industry describes the use of the following microscopic molecular markers, which can be organic or inorganic, as invisible and undetectable and can be applied to any of the following fashion, apparel and footwear items with no impact to either appearance or performance: 6 Soft brushed, next-to-skin fabrics Soft surfaces with moisture management ingredients Woven garments All multi-directional or four-way stretch fabrics without affecting breathability Laminations Any polyurethane fabric with a membrane Abrasion resistant face fabrics Extruded products Adhesives Finishing including buttons, threads, labels Multi-dimensional support, padded or compression rated groupings Authentication by Labels on Products Information applied to a label on the product, including bar code information, can be deployed to authenticate a product as genuine. These labels may include information about the type of product (that should match the product to which the label is applied), date and batch codes indicating production data that will identify when and where the product was produced, which should align with information on the bar code. At the factory, some companies require that operators stamp codes on the product indicating what assembly line it came from and who tested the product during quality control. This information may be viewed as extraneous to the counterfeiter, but it is in fact valuable quality control information that can be useful for warranty claim and recall purposes and also used to authenticate the product. Any omissions of these types of markings or discrepancies in the type of information on the product can indicate that the product is not authentic and therefore counterfeit. 7 Holographic labels on products are applied to enable consumers to identify easily genuine product. To the extent that the hologram can be easily replicated, and they can, this technique for identifying genuine product is defeated. However, many of the most advanced hologram manufacturers now offer new levels of technology which are both easier to detect and verify, and much more difficult to counterfeit or simulate. The absence of a hologram does allow the consumer to identify non-authentic or unlicensed product. To stay ahead of the counterfeiters, hologram manufacturers look to introduce new and different optical effects that are harder to match. Holograms can also incorporate semi-covert or covert features such as information that is only readable with extreme magnification or taggants that are machine-readable. 8 There are even holographic bar code labels available commercially Authentication of the Product Packaging As previously stated, authentication technologies for packaging typically have an overt component and include holograms, security tapes and seals, markings, brandings and specialized inks. Incorporating semi-overt or covert features such as machinereadable taggants into a security tape or seal can Authentication Technologies for Brand Protection 11

15 be accomplished. 10 These technologies allow ready recognition of product authentication by those other than the end user, such as distributors or customs inspectors Tracking and Tracing of the Product Track-and-trace is the process of monitoring and recording the past and present whereabouts of a shipment, as it passes through different handlers on its way to its destination, through a distribution network. Tracing refers to where the product has been, while tracking refers to where it is going next. 11 A GPS transmitter on a freight container is an obvious and early example of a track and trace technology, but applying this technology to smaller units of shipments on the pallet, carton or case, or unit package was the next challenge, in substantial parts because the tags were expensive. Radio frequency identification devices (RFID) were developed for this purpose. RFID typically uses small microchips containing, or able to contain, unique and individual information related to the item to which the chip is attached. The chip, and therefore the information, is addressed by means of radio waves which are conveyed to the chip by means of an attached antenna. These devices are now so small that they can be neatly implanted into plastic cards or paper. They can typically be detected at distances ranging from a few millimeters to several meters. Long range detection requires large antennae. 12 Some semi-covert or overt strategies described above have a track and trace capability to them. 13 Commercial impetus for RFID technology came from large retailers who were not motivated by brand protection goals, but were interested in having instant access to information about products in their ships, trucks, warehouses, and retail stores, primarily for merchandising, sales turn, and inventory control purposes. For these entities, the RFID chip was simply an enhanced bar code. 14 One advantage that RFID offers to both manufacturers and distributors over a bar code is the unique identifier for the pallet, carton, or unit package, and this allows suppliers to ensure that the right product is in the intended location. 15 The RFID chip also contains information relative to the time and place of production, inspection and testing, who it was originally produced for and shipped to and information relative to when and where it was shipped. When read-write tags are used, information about the arrival and location of the product can be added to the electronic tag. While track and trace systems can be a source of intelligence for anti-counterfeiting and anti-diversion enforcement purposes, these systems are primarily a supply chain management tool, not an authentication tool. For the manufacturer s brand protection program, track and trace systems might be more appropriately evaluated in terms of product integrity programs, because the information on the tags could prove valuable in terms of warranty claims, recalls, and the like. 16 The RFID chip does not allow a consumer or installer to authenticate a product visually. The value in the information is limited to those who have access to it. A counterfeit set of batteries easily distinguished by its logo announcing Guaranteed in Singapore. Energizer does not use such a logo for any particular country. RFID technology is not limited to silicon tags or chips. A barcode label that contains an RFID transponder embedded in the label is called an RFID smart label. Data is transmitted to the transponder by transmission from an RFID encoder in a printer. Since the label is able to store information and communicate with an RFID reader, it is considered smart. Chipless RFID tags (also known as RF fibers) have been developed that do not make use of any integrated circuit technology to store information. The tag uses fibers or materials that reflect a portion of the reader s signal back; the unique return signal can be used as an identifier. Since the tags cannot transmit a unique serial number, they are less usable in the supply chain. 12 Authentication Technologies for Brand Protection

16 Research is also underway to apply invisible nanoscale bar codes directly to unit packaging and products. 17 Like RFID, this technology would not permit a consumer or installer to authenticate a product visually Cooperation with Authorities As discussed above in the anti-counterfeiting efforts by Eaton, Schneider Electric, and Underwriters Laboratories, authentication strategies can play a role in more effective border and law enforcement. Companies deploying authentication technologies are already providing US Customs staff with their proprietary readers to determine whether the product contains the covert or semi-overt codes and images during an inspection of imports. Authentication Technologies for Brand Protection 13

17 3 Available Brand Protection Technologies There are a wide variety of technologies available today that support brand protection strategies. These technologies are applied in the three main areas of anti-counterfeiting, anti-tampering, and tracking and tracing. The common feature of anti-counterfeiting technologies is that they assist in identifying a product as suspect. Some anti-counterfeiting technologies go further, however, and allow a product to be verified as genuine. Found more in the food and pharmaceutical industry than in the electrical industry, anti-tampering technologies are used to protect a product from adulteration or replacement. An anti-tampering device that is intact on a product is a sign that the product is likely to be genuine. Tracking and tracing technologies are used to determine where and when a product (taking its components into account) was manufactured, where it has been and when, and its current status in the supply chain. Some technologies allow for determining where a product is supposed to go. Thus, tracking and tracing technologies are used to fight unauthorized distribution, which is frequently linked to counterfeiting. All these technologies can be categorized as either overt, covert, forensic, or digital. Overt technologies, such as holograms or color-shifting inks, are readily visible, requiring no special tools for detection. Some technologies are semi-overt in that they are not readily visible, but by orienting the product in a certain way without tools, or by using simple, readily available and economical tools, the technology then becomes visible. Covert technologies, such as crystal taggants (microscopic particles blended into inks or coatings), are not readily recognizable and require special tools such as readers or detectors to verify their presence and validity. Some of these technologies are designed for use in the field; however, those using these technologies will require training, the amount of which will depend upon the particular technology as the ease of detection and validation varies among the technologies. Forensic technologies, being covert, are not readily recognizable and require special tools for detection and validation. Whereas covert technologies can be detected and validated in the field, forensic technologies must often be taken to a laboratory with specialized equipment. Digital technologies may be either overt or covert, but all require an electronic means for detection and validation. Digital technologies are most associated with RFID tags or with serialized numbers that can be compared to a remote database. A growing trend is for vendors to supply solutions using a combination of technologies. Combining technologies ( layering ) allows a vendor to provide the product manufacturer with a single solution that addresses multiple objectives of the manufacturer s brand protection strategy. Table 1 summarizes the available brand protection technologies, listing them by technology area (and further broken down into sub-areas) and by the four categories mentioned above. The table is not intended to be a definitive tool for selecting a particular technology or technologies, but merely serves as a guide for those responsible for a brand protection strategy to assist them in their investigations of technology solutions. 14 Authentication Technologies for Brand Protection

18 Table 1 Matrix of Available Technologies for Brand Protection ANTI-TAMPERING TECHNOLOGIES Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database Tamper Evident Closures A sealing material for a package or bottle that is typically irreparable once opened, indicating tampering. Shrink sleeves or films Plastic sleeves that are placed around packages (common in bottle sealing) that shrink tightly around the package when heat is applied. Induction seals Heat sealed closures usually used to seal the neck of a bottle. Can carry additional authentication technologies but are a good basic layer to indicate tampering. Tamper Evident Labels A sealing material for a package or bottle that is typically irreparable once opened, indicating tampering. Tear tapes A narrow strip of oriented polypropylene (OPP) film with pressure-sensitive adhesive (PSA) made of acrylic emulsion; it has to be torn off to open a package. Delaminating films Films comprised of multiple layers that destruct when removal is attempted, can contain hidden patterns or text. Patterned Destruct Films / Labels Labels which are constructed with special layers of adhesives and varnishes to break apart and provide a recognizable pattern if an attempt is made to remove them. Authentication Technologies for Brand Protection 15

19 Table 1 (continued) Matrix of Available Technologies for Brand Protection ANTI-COUNTERFEITING / AUTHENTICATION TECHNOLOGIES Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database Security Inks & Coatings Security inks are widely used technologies for overt brand protection and covert anti-counterfeiting. They are costeffective, relatively easy to apply, and provide an excellent base for some of the most advanced covert applications such as DNA markers and taggant integration. They are extensively used on labels and containers for primary, secondary and tertiary packaging and they are formulated for almost all substrates. Intaglio ink Ink that gives high definition and a recognizable feel to the document, commonly used in currency & passports. Fluorescent ink Colorless, transparent or white ink that is easily detected under UV light. Infrared ink Ink that becomes visible in infrared light. Thermochromic ink Heat-sensitive ink used for authentication. Its color disappears on heating and reappears on cooling; sometimes the color change is irreversible. Optically variable ink Ink that appears in different colors from different viewing angles. 16 Authentication Technologies for Brand Protection

20 Table 1 (continued) Matrix of Available Technologies for Brand Protection Pearlescent varnishes Based on mica, they are widely used to give surfaces a highly stylized appearance or for brand protection. They come in a variety of colors and finishes. A pearlescent varnish provides a base for adding highlights and depth to the printed area and they usually create a 3D effect. Tagged inks Microscopic or nanoscopic particles of taggant are put into ink, paper, laminates and labels. Some taggants are phosphors that reveal themselves with a light source tuned to the phosphor chemical make-up. DNA is added to ink, paint, polymers, adhesives, etc. Tagged inks require special authentication devices or solvent reactions. Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database Authentication Technologies for Brand Protection 17

21 Table 1 (continued) Matrix of Available Technologies for Brand Protection Machine-readable inks Contain chemical, magnetic or infrared taggants plus a growing number of compounds with very specific emission or absorption spectra. They are applied to products and labels, primary packaging and secondary packaging for anti-counterfeiting and track and trace. Machinereadable inks can be combined with overt security such as paper coatings, holograms, tear tapes, foils and film. Conductive inks Used to print RFID antennas on packaging. Photochromic inks Change color when exposed to UV light, other strong artificial lights or sunlight. Security Printing Specialized types of printing technologies which are difficult to mimic or copy. Microtext Text or an image that is so small it cannot be read by the naked eye, but can be read with low power magnification (less than 30x). Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Nanotext Text which must be read via high magnification (greater than 100). Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database 18 Authentication Technologies for Brand Protection

22 Substrates - Security Papers Optical Security Technologies Table 1 (continued) Matrix of Available Technologies for Brand Protection Guilloche A mathematically based design, that is, a hypotrochoid generated by a fixed point on a circle rolling inside a fixed circle. It has parametric equations. Paper designed for tamper resistance or contains security threads, fibers, or other security feature embedded in the paper for covert or overt security. Can also contain special chemicals or treatments that indicate tampering, altering, or determine authenticity. A range of visual security technologies widely used in anti-counterfeiting / brand protection applications. Optical technologies are the most commonly employed layer of an authentication / anti-counterfeiting program. Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database Holograms A micro diffractive image in 2 or 3 dimensions which is created in a laboratory through the use of lasers and sophisticated imaging technology. Typically delivered on a metalized aluminum substrate with a silver appearance. Images can contain sophisticated movement or dimensional effects as well as covert level or forensic level elements. Authentication Technologies for Brand Protection 19

23 Chemical and Molecular Taggants & Nanotechnologies Table 1 (continued) Matrix of Available Technologies for Brand Protection Zero Order Diffraction Devices Floating / sinking image films A nano-diffractive image emphasizing distinctive and binary shifts of color based on rotational viewing and orientation. Can be combined with Holograms or other first order diffractive devices. Can incorporate Covert and Forensic elements. Micro imaged films that contain images or text that appear to float above or sink below the surface of the film. Color shifting films Films that shift in color at different tilted viewing angles. Retroreflective films Films that contain hidden images revealed with a direct light source. An emerging class of covert and forensic level technologies which utilize unique and highly engineered particles to construct specific signatures which can be detected sometimes in the field, but more often in a laboratory. Overt Covert Forensic Digital Visible and apparent to the end user without the need for additional tools a device or special equipment to be visible or detected; Invisible to the naked eye detection by specialized equipment, usually done in a laboratory Electronic means of authentication, as in RFID tags or reading a serialized number and comparing to a database 20 Authentication Technologies for Brand Protection