May 23, 2018 Uncategorized 0 Comment

How brand owner slowly becomes option-less against nexus

“Owning a premium global brand but being option-less against nexus of counterfeiters, insiders, private investigative agencies and packaging vendors”, this is something becoming more common and what is even worse that brand owners can not register this concern on record.  This nexus becomes so strong and deep rooted that eventually business aligns with the nexus loosing direct control of their supply chain. Slowly even authorized distributors start becoming beneficiary and official channel of counterfeiting. With online businesses growing, this nexus is getting even more effective.  With anticounterfeit packaging market size is estimated to grow with double digit rate till 2020 crossing 150 USD billion and penetration of new technologies like smartphone/internet/e-commerce is increasing , it is worthwhile to examine whether brand owners are ready.

Nexus starts from security feature vendors those keep claiming that their feature is very hard to replicate and somehow manages to get the business from brand owner with no accountability,  if features are replicated. Slowly from packaging feature vendor the information gets leaked and quite often same machinery that is doing official production for brand owner is also doing un-official production for counterfeiters. Sometimes un-official production may also happen without knowledge of top management.

Counterfeited packaging equipped with those security feature becomes even more authentic and it becomes harder to prove fake as fake.

Being smarter sometimes, brand owner executive take some feature from packaging vendor and some feature developed in-house and private detectives are communicated to discover fake products. Actually this works other way. From field agents of private detectives information gets leaked to counterfeiters and their packaging also becomes equally authentic.

Now private detectives are being paid and they have to show some result to continue their contract. They sponsor some fake packaging and show market discovery and under cover they earn more from counterfeiters than contract amount  from brand owner. It may be worthwhile to take a look at this coverage,

Cycle does not stop here, upon discovery of fake items inside packaging that appears authentic, same or another packaging vendor will again approach brand owner for more fancy overt/covert features promising higher security and same cycle again continues, Private detectives meantime stage manage seizures or shifting of counterfeiting from one brand to another OR one location to another to prove their worthiness. During seizures private investigative agencies will stooge somebody to take blame and hide real culprit OR make sure that legal evidences are weak. So in practice full cycle of packaging-security, market-inspection, seizures , legal actions and everything else continues but in parallel brand duplication also continues. Private investigative agencies always like counterfeiting to continue. Brand owner has no credible tracking of market-inspection activities on ground performed by their investigative agencies despite spending top dollars.  No wonder counterfeiting is fastest  growing industry.

While technology seems to be the answer, a deeper analysis reveals technology void with existing ones

Known anti-counterfeit stuff like layers of overt/covert features are fundamentally non-unique, non track-able and very easily duplicable thus actually helping counterfeiters to make their packaging equally authentic.  There are per-piece unique non clonable technologies but those are not fully automated and requiring human intervention or special purpose devices. With number-system (verifiable on web/SMS) any number of successful authentication can be done from different location without having access to packaging and just by knowing genuine number. Multiple authentication on same number causes false alarms hogging bandwidth of brand protection team for nothing. If subsequent authentication are marked as suspect, then fakes sold earlier  will leave genuine one marked as suspect, defeating the primary goal.

If subsequent authentication are marked as suspect then fake those got sold earlier will leave genuine one marked as suspect, making system useless. Some people may argue that number-system being easiest track-able method solves problem up-to good extent and known weakness can be resolved but these small weaknesses become biggest counterfeit-enabler. Scratch layer hiding numbers can be easily seen through under UV/IR illumination. Whole exercise is reduced to public posturing. Having said that it is important to note that randomized number-system with hierarchical relation between tertiary, secondary and primary packaging is something very different than number-system in isolation.  Brand protection team is confused when anti-diversion ( product geographical diversion) technologies are presented as anti-counterfeit. For example number-system can be excellent choice if problem is only about geographical diversion of genuine product. Similarly barcode/qrcode are more effectively a tracking and identification technology but not a security technology. Holograms/overt/covert technologies can not fight counterfeiting in connivance with vendors and even giving benefit of doubt that these are not 100 percent duplicable problem does not reduces in requirement of credible authentication .  Traditional technology used to be effective in older days or better said those were best option available then. Non clonable NFC tags are new age solution though requires NFC enabled smartphone but are costly and still have a vulnerability that dead look-alike tags without visually evident damage can be applied on fakes without any accountability and further fakes can be returned to brand owner unless they have a mechanism to test each unit in reverse logistics. Also applicability on metal or curvy surfaces is another issue.  So specially end-consumer product can not be tagged with technology that has non-visual scanning like NFC/RF. NFC/RF can be very good choice for tracking and integrating sensors( for example temperature/shock in specialized supply chain on secondary packaging) but not for core counterfeit use-case.

So the right technology which can guarantee anti-counterfeit with accountability and liability in case of failure to meet its commitment should be such that –

  • Despite having access to identical & genuine labels, fakes can not be branded
  • Successful authentication should not be possible without having access to original packaging.
  • Per-piece uniqueness and fully automated instant machine verifiability without requiring special purpose device.
  • More than just being non clonable and track-able, visually evident damage is necessary to make tags non-authenticable
  • Tracking such that even market inspection activities of investigative agencies can be monitored.
  • Cost-effective,easily adoptable and preferably single point solution for both counterfeit-evidence and tamper-evidence

To summarize, deployment of an anti-counterfeit technology should be to drive revenue growth, ensure authenticity of products received by consumer/customer and detecting counterfeits in the market with credible track and trace in an Unified Holistic purpose-built solution. Brand protection teams will be able to achieve definite results with right strategy hybrid of technology-focus with limited market surveillance.