Auto-ID Technologies and their Impact on Counterfeiting

Transcription

1 Auto-ID Technologies and their Impact on Counterfeiting Institute of Technology Management (ITEM-HSG), St.Gallen University Department Management, Technology, and Economics (D-MTEC), ETH Zurich January

2 Agenda Page 2 The Need for Secure Authentication Technologies Research Questions and Anticipated Challenges Preliminary Results

3 Counterfeiting is a severe threat to the economy Page Worldwide Merchandise Trade [bn USD ] Counterfeit [ bn USD ] Impact on the economy: 400 Impact on foreign investments 300 Impact on employment 200 Loss of tax Important source of income for some countries Impact on users: Physical injuries Financial losses Less secure environment Possible short-term financial benefit! Impact on companies: Loss of revenue Unjustified liability claims Quality perception Negative impact on the brand / loss of goodwill Negative impact on the ROI of R&D

4 Future authentication of identification documents can be seen as a best practice in averting cloning attacks Page 4 High level of security using a combination of high-tech nonelectronic and electronic techniques Extremely difficult to duplicate Secure match of document and entity to be authenticated Privacy must be maintained Key management is an issue Î Low-cost solutions for objects with a sufficient level of security allowing for automated authentications are not yet available.

5 Mission Page 5 The Special Interest Group Anti-Counterfeiting will identify the true potential that RFID / EPC technology offers to combat counterfeiting For the Anti-Counterfeiting Initiative is interesting for many reasons: - Business Impact - All Network Issues - Focuses on currents shortcomings of the EPC Network, e.g. Security - Cross Industry

6 Agenda Page 6 The Need for Secure Authentication Technologies Research Questions and Anticipated Challenges Preliminary Results

7 How can Auto-ID technologies reduce illicit trade? Page 7 Research questions and practical challenges: Q1: What is the economy of illicit trade? Problem Description Impact of Auto-ID Technology Q4: What is the impact of an Auto-ID based solution? Q2: How to quantify the impact of illicit trade? Impact of Illicit Trade Requirements of a Technical Solution Q3: What are requirements for a solution based on Auto- ID technologies?

8 Agenda Page 8 The Need for Secure Authentication Technologies Research Questions and Anticipated Challenges Preliminary Results

9 Strategies to combat illicit trade Page 9 Illicit products encounter at least two licit actors: End-users and Customs Luxury Goods Intended Suppy Chain Licit Gray and Illicit Market Factory Illicit Manufacturer Pack Center Packaging Distribution Center Special sales to employees Distribution Company Boutiques Retail Distribution Center Licit trade Retail Backstore Retail Backstore Retai l Shopfloor Retail Shopfloor Consumer Illicit Retail: Illicit Stores, Flea Markets Consumer Illicit Retail: ebay, Internet Shops Theft Licit gray trade Illicit gray trade / smuggle Counterfeit / piracy trade Return flow Source: Thorsten Staake, Auto-ID Lab St.Gallen/Zurich Î An efficient strategy to combat illicit trade should utilize at least one of these actors

10 Reasons for buying faked products Page 10 In case of perceptive counterfeiting, cost of the original product as well as a good cost performance ratio of the counterfeit are the most important motives for buying fakes 22.8% 17.5% 42.1% 50.9% 28.1% 31.6% 28.1% 15.8% 19.3% 8.8% 12.3% 12.3% 5.3% 12.3% 12.3% 15.8% 5.3% 3.5% 3.5% 1.8% 29.8% 8.8% 1.8% 10.5% Strong impact / main reason Considerable impact Moderate impact Some impact No impact / no reason Not answered Good costperformace ratio Original too expensive Just for fun Spontaneous bargain Source: Own survey, N=152

11 Reasons against buying faked products Page 11 Bad expected quality and no purchase due to missing opportunity are the main reasons for not buying faked products 13.6% 18.2% 36.4% 13.6% 31.8% 27.3% 27.3% 27.3% 27.3% 18.2% Strong impact / main reason Considerable impact Moderate impact Some impact No impact / no reason 13.6% 31.8% 18.2% 18.2% 4.5% 18.2% 4.5% 13.6% 18.2% 18.2% No purchase due to bad quality of fakes No purchase due to missing guarantee No purchase due to missing opportunity No purchase due to attitude Source: Own survey, N=152

12 Q4: What is the impact of an Auto-ID based solution? Page 12 Automated product authentication Liability Cost per check Frequency of checks Number of faked products Revenue Return Better relation to customs High res. data on illicit actors Optimized enforcement strategies Reputation Optimized product strategies Extended competitor strategy Standard procedures to treat cases Outsourcing (AC service provider) Cost per action

13 Two solutions based on RFID Page 13 Cost to break a feature >> Financial gain (or possible harm) due to a counterfeit within the products lifetime 1. Basic EPC tags 2. RFID tags with secure authentication mechanisms Track & trace data allows to assemble a products history Based on challenge response authentication Product History Digital Fingerprint One infrastructure for various levels of security! But: What does this mean for the Network?

14 Secure Authentication Mechanisms Digital Fingerprint Page 14 The EPC network forms the IT infrastructure The EPC network has to be extended by an authentication service (EPC- PAS) The communication infrastructure does not have to be updated Local ONS Tag ID A = f(k, RAND) A Root ONS Channel Server K = Key(ID) RAND B = f(k, RAND) A = B? Request / Response Address Update EPC-IS EPC-PAS EPC-DS Manufacturer EPC-IS Distributor Product with EPC+ Retailer