Anti Counterfeiting - Playing Roulette Or Chess?

Anti-counterfeiting Playing roulette or chess? Innovation Day 2009 Dr Frances Metcalfe Group Leader Industrial & Scientific Products

Agenda Counterfeiting – the problem 1 How do we design an effective approach? 2 The role of technology in the solution 3 Looking to the future 4

Historically associated with forging of bank notes, counterfeiting has spread into other potentially less challenging but more lucrative areas

Who cares? Who is responsible for implementing anti-counterfeiting? Product companies/brand owners are concerned due to Reduced market share, revenue and ability to benefit from innovation & IPR Increased liability and warranty claims (real and spurious) Negative impact on brand value and reputation Governments are concerned due to The threat to the welfare of the public Negative impact on the knowledge economy from IPR abuse Reduced tax revenues Substantial resources channelled to organised crime and terrorist groups Consumers are concerned due to Health & safety risk

What is the impact of counterfeiting? It’s a BIG problem - Impact on world trade estimates range from $200B to $700B The SCOPE is increasing – there is a notable shift from luxury to common products Increasing REGULATION & increasing emphasis placed on IPR protection

Further trends in counterfeiting Increasing infiltration of legitimate supply chains Counterfeit goods are no longer restricted to informal markets Increasing use of the internet as a distribution channel Increasing consumer awareness and demand for transparency Opportunity to use authentication as a marketing tool

Introduction 1 How do we design an effective approach? 2 The role of technology in the solution 3 Looking to the future 4

System level thinking enables us to plan to stay ahead of the counterfeiter Technologies provide us with different levels of defence Technology without process can significantly limit our effectiveness How do we structure our approach? Effective anti-counterfeiting approaches derive their strength from a combination of rigorous system level thinking and technology

The logistics and supply chain ‘system’ Legitimate Illicit

An effective approach requires a clear understanding of the requirements Cost effectiveness – money spent on an anti-counterfeiting approach has to be proportional to the value of the item to be protected Robustness – features employed need to be robust to normal usage and determined attack by a counterfeiter Ease of authentication – features have to provide a rapid, robust and reliable authentication at low cost using overt or covert features Brand protection – approach should be neutral or have a positive impact on brand image Granularity – understanding of the scale of the item to be protected (pallet, packet or pill?) Ability to detect and trace counterfeit activity – approach can enable information gathering to support further improvements

An effective approach also needs to understand the capabilities and nature of the counterfeiter and the users We don’t know what the counterfeiters are developing and when it will be available Need to plan for the features being compromised Need to detect when this occurs Authentication approaches need to be “user proof” Users must be able to easily authenticate genuine products Need to understand what users do, rather than what they should do

Agenda Introduction 1 How do we design an effective approach? 2 The role of technology in the solution 3 Looking to the future 4

Effective solutions use a combination of technologies to deter, defend against, and detect the counterfeiter Single technologies provide a potential single point of failure Multiple technologies can be layered to provide additional protection typically a combination of overt and covert features We can learn from other industries about how they have tackled similar problems Evolution of automotive security systems Protection of sensitive defence communication equipment We can identify where significant effort is being employed Protection of banknotes and documents Protection of pharmaceuticals

A combination of overt and covert features can be used to provide us with good coverage of the set of requirements Examples 1D and 2D Bar Codes Holograms Optically Variable Devices (OVDs) Colour Security graphics Radio Frequency Identification (RFID) Overt Features  Visible deterrence against copying x Needs to be robust against attack  Typically easy to authenticate from factory to end-user x Typically easy to duplicate causing Denial of Service – “which one was the correct one?”

A combination of overt and covert features can be used to provide us with good coverage of the set of requirements Covert Features x Limited deterrence effect at the outset x Potential impact on robustness if secrecy lost x Requires custom reading hardware  Potentially more difficult to duplicate  Can be embedded at the highest level of granularity Examples Ink properties (UV and IR) Embedded features (images and substrates) Hidden marks and digital watermarks Taggants (chemical, biological and micro-)

The development of portable, low-cost instrumentation is a key factor in the success of a number of covert authentication systems Instrumentation typically has challenging performance targets with the addition of low power consumption and use by unskilled staff Assumption is that these devices will fall into the hands of the counterfeiter We need to ensure that the technique cannot be easily reverse engineered We can engineer the solution around principles and components of secure systems Ideally we need to retain flexibility in the design to allow evolution if all or part of the technique is compromised

Bayesian signal processing and information theory approaches provide significant benefits to authentication systems Bayesian processing techniques can be used to provide optimal detection algorithms Reliable detection of features at low signal strengths These techniques enable a number of system level benefits Allowing sensor hardware parameters to be relaxed (lower cost) Providing improved sensitivity (increased covertness of features) Provides a rigorous approach to system assumptions within signal processing

Radio Frequency Identification (RFID) technology provides the ability to securely encode a serial number within a device and store a trace history Significant growth in Near Field Communication (NFC) devices in the consumer market Continued drive to reduce the costs of the devices Security and privacy issues need to be carefully balanced with brand protection

Counterfeit products are becoming increasingly prevalent requiring a structured game plan - so is it roulette or chess we want to play? If you play roulette your luck will run out sometime… A single technology alone may not be sufficient to protect a product The competition is not standing still Chess provides an ability to stay a step ahead Technology is an enabler for the brand owner as well as the counterfeiter System level thinking enables technologies to be used in combination We can learn from other’s successes and mistakes Looking to the future

For more information about the work in Authentication Systems at Cambridge Consultants please contact Ruth Thomson +44 (0)1223 420024 [email_address] Questions?

Contact details: Cambridge Consultants Ltd Cambridge Consultants Inc Science Park, Milton Road 101 Main Street Cambridge, CB4 0DW Cambridge MA 02142 England USA Tel: +44(0)1223 420024 Tel: +1 617 532 4700 Fax: +44(0)1223 423373 Fax: +1 617 737 9889 Registered No. 1036298 England [email_address] www.CambridgeConsultants.com © 2009 Cambridge Consultants Ltd, Cambridge Consultants Inc. All rights reserved. Commercially Confidential This Presentation contains ideas and information which are proprietary to Cambridge Consultants Limited and/or Cambridge Consultants Inc: it is given to you in confidence. You are authorised to open and view any electronic copy we send you of this document within your organisation and to print a single copy. Otherwise the material may not in whole or in part be copied, stored electronically or communicated to third parties without the prior written agreement of Cambridge Consultants Limited and/or Cambridge Consultants Inc.

Anti Counterfeiting - Playing Roulette Or Chess?

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Anti Counterfeiting - Playing Roulette Or Chess?