Anti-Counterfeiting Technologies


Assuming that the general concept of parallel importation, both legal and illegal, is common knowledge, one would like to discuss the growth of technologies which seek to provide fool-proof mechanisms against counterfeit products. The need for such technologies is driven by the fact that the counterfeit market is valued at $500 billion and costs the government exchequer a sizable amount.

It is estimated that 7% of the world trade is in counterfeit goods. Music, software and luxury goods suffer heavily, but the ones which bear the brunt are auto sector, pharma sector and toys. Counterfeit products could be dangerous for consumers for there is no assurance of quality not to mention the fact that they get cheated. As for the companies, they are faced with unjustified liability claims, loss of reputation, revenue and returns on R&D.

Technologies in the past relied upon visual confirmation to recognise counterfeit products which had their own drawbacks for they required trained eyes, to know the difference between the real ones and the counterfeits. Watermarks, imaging devices, counterfeit-proof documents, tamper-resistant labels, miniature security marks, 2D barcodes, colour-shifting inks and optical storage media having visible logos are examples of such technologies. However, these technologies have their limitations in sectors where the supply chain of products is so fraught with loopholes that counterfeiting becomes easier. The “grey market” i.e. secondary wholesalers as they are normally referred to, is where the legitimate supply chain’s vulnerability is exposed. More importantly, these technologies may prove to be fool-proof against wholesale purchasers or dealers, but they do not stand a chance in cases of personal importation where the end consumer is the one who resorts to illegal parallel importing. This has led to increased reliance on Smart technologies which have ensured a higher level of security, are suited for automated checks, lowered costs provided they are mass-produced, which would mean global uniformity, and are suitable for use by the end-consumer.

Readers may recall Mr.Basheer’s post on the Bilcare Indian patent (197823) which successfully withstood a post-grant opposition at the office of the Controller of Patents. Bilcare seems to have quite a number of patents and applications on anti-counterfeiting technologies as is wont to be, given the fact that its core competence lies in pharma packaging research. One such application by Bilcare for an Indian patent which was brought to my notice by Mr.Basheer is titled “Interactive Smart Package-Associated Device for Anti-Counterfeit and Compliance Measures”. Before I move on to discuss the technology, there is something which struck me as odd. The title mentions a “device” whereas the abstract begins thus: “The present invention relates to a smart system”. The title of an invention is required to be indicative of the subject-matter of the application and one would have expected the title to speak of a system instead of a device. Though the title need not be so precise so as to succinctly capture the minutiae of the invention, it should atleast give the reader sufficient indication of what to expect from the invention, which does not seem to be the case here.

As I understand from the abstract of the patent application, the invention is a system where the product packaging is done in such a manner that the removal of the product from the package triggers or alters the signal in a signal-generating means which is detected by a signal sensing means. In addition this interactive smart set-up has an associated device which, according to the abstract, ensures “user registration and identification, authentication & registration of the package, user interactive capabilities for real time feed back to and / or by the user and/or with an integrated system connecting various user entities to ensure effective and secured user compliance measures”.

The Bigpatents site does not have the complete application; however it appears that Bilcare has filed a PCT application (PCT/IN2007/000040) on the same invention. Most of us know that in most cases PCT applications tend to have broader claims and this could be the case with this invention too. This PCT application is titled “A Package-Companion-User Interactive System” and the abstract too starts off with a concise encapsulation of a system. Evidently, the applicants were much more meticulous with the PCT application which is reflected in the description of the invention in the abstract.

The written description first goes on to establish the need for such a system using statistics on the value of the global counterfeit market and it was shocking to note that between 1990-95 when the world trade grew by 47%, counterfeits skyrocketed by 150% which certainly indicates the potential benefits which both consumers and producers may reap from such technologies. Also, according to the description, there exist several technologies which individually cater to product authentication, user registration and drug delivery management system, however, the invention is a system which provides an integrated set-up that performs all the aforesaid functions.

Though the invention has several inventive and in fact extremely useful features, the one which concerns this discussion is the means of product authentication. The invention comprises of a housing which has an array of signal generating means on one side and on the other a parallel signal sensing and reflecting means which are activated by the presence or absence of the product(s). In addition, the product may be embedded or affixed with a smart data processor encoded with product details using unique protocol wherein user registration data is stored in the said processing means followed by displaying the user, information regarding his / her registration of the device for optional exclusive use. This data processor may be split into combinations of data decoding means, data processing, data storage means as well. The distinguishing feature of this invention which elevates it above the relevant prior art is need for a user password and interactive services with service providers to ensure the authenticity of the product. This broadly, however crudely, explains the embodiment concerning product authentication which is central to our discussion on anti-counterfeiting technologies.

The Bigpatents site reveals that there are 27 patents on anti-counterfeiting technologies and close to 32 patents on the USPTO. Of these about 6-7 do no relate to anti-counterfeiting in the context of illegal parallel importation or imitation of patented products. A good proportion of such anti-counterfeiting technologies are dedicated to pharmaceutical goods packaging for counterfeit drugs constitute 15-30% of the drugs consumed worldwide. In fact, the USFDA reveals that upto 40% of the drugs shipped from countries like Argentina, Mexico and Colombia are counterfeit. Readers may recall the incident involving Lipitor where 18 million counterfeit lipitor tablets were called in mid-2003 under directions from the USFDA. Concerted endeavours such as International Medical Products Anti-Counterfeiting Taskforce (IMPACT) along with the World Health Organisation (WHO) indicate that not only awareness about protection of IP is gaining prominence, but IP protection for technologies which protect IP too has a lot of takers.

Apart from the Bilcare technology explained above, there are several other technologies such Electronic Product Code (EPC) based Radio Frequency Identification (RFID) etc. RFID Technology has received an enthusiastic response from most manufacturers for the technology overcomes the problems associated with other Track and Trace systems as well. Aaron Graham, vice president and chief security officer at Purdue Pharma feels that technology has the potential to stop counterfeiters in their tracks. RFID involves track-and-trace and, when read, the tag will show where the product is at any given time. For example, it will show the product moving from the manufacturer to distributors, and everywhere else in between, until it reaches the pharmacy. He further adds:

“If the product doesn’t have an RFID tag that can be interrogated, and it doesn’t show the electronic pedigree all the way from the walls of the manufacturing site through each of the transaction points, with encrypted signatures, then it’s not our product.”

An article from contractpharma.com states that:

The FDA fully supports RFID as an anti-counterfeiting tool. In a speech given by the FDA’s associate commissioner, Randall Lutter, Ph.D., he summarized the steps that FDA has taken to remedy the problem of counterfeiting. This included the February 2004 Report on Combating Counterfeit Drugs, the May 18, 2005 Annual Update, and the FDA’s efforts to encourage the voluntary adoption of RFID during the stay until December 2006, of the pedigree regulations issued under the Prescription Drug Marketing Act (PDMA).

Nanotechnology too has found its use in this context wherein microscopic layers of covert markers are incorporated to create brand/ owner specific information on the products.

However, some are of the opinion that even such technologies do not offer lasting solutions for the rate of obsolescence of any technology these days is just about 12-18 months and anti-counterfeiting technologies are no exception. In other words, counterfeits to such technologies too exist meaning thereby that counterfeiters are becoming increasingly sophisticated. In addition, since we talk of a global market, unless and until such technologies are adopted universally, these technologies may not yield expected results. Repackaging is a common practice in drug importation scheme and in such a case, no authentication technology is of any use. In the RFID technology, the EPC tags are expensive and one would have to set up authentication services separately. Obviously, companies which rely on R&D for their growth feel the pinch more than generic manufacturers, for use of such technologies means increased costs. The UK and the US are most vulnerable due to high prices of drugs, increased penetration of internet pharmacies and higher levels of parallel importing.

As usual, most lobbyists feel that tighter legislative control is the only effective solution to the menace. The USFDA on the other hand advocates multi-pronged strategies involving the use of technology, streamlining regulatory and business practices, use of rapid alert and response systems, educating the public about dangers of counterfeits and finally international collaboration. In other words, there is no single “magic bullet” to counter counterfeiters; only respect for intellectual integrity can best protect the interests of the consumers and the producers.

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