Product counterfeiting is a huge problem, costing manufacturers an estimated $450 billion each year, yet pursuing criminal charges against counterfeiters is tough.
Many European and North American companies off-shore their manufacturing operations, often to Asian countries where anti-counterfeiting laws are weak to non-existent. These contract manufacturing locations sometimes copy or counterfeit branded products, knowing there is a great deal of profit to be made with little potential penalty. These counterfeiters often have label copies printed locally to add an aura of authenticity to the products.
The cost to manufacturers is heavy: Not only do they lose sales revenue, but the integrity of the brand is compromised when inferior products that masquerade as the real thing fail to live up to consumer expectations. The Department of Homeland Security is the law enforcement agency in charge of counterfeiting cases; however, brand integrity cases aren’t topping DHS’s to-do list these days.
To combat the problem, manufacturers send representatives around the world to examine products sold under their brands to try to determine whether they are authentic. If the goods are counterfeit, the employees try to track down the sources and, if possible, put together a case that can be handed to the authorities on a silver platter in order to improve the chances of prosecution.
There are often telltale signs that a product is counterfeit, and experienced brand investigators have traditionally looked for poorly copied labels as well as inferior manufacturing or items that are available in colors that the company doesn’t officially manufacture. Some differences jump right out, while other fakes are simply unauthorized overruns, making detection difficult or impossible.
Technology is catching up to the counterfeiters in the form of asset tagging, which employs the application of a security mark to a product. The security mark is a unique identifier that provides proof of ownership or source and can facilitate the detection of fraud or theft. Security marks range from the overt, such as holograms and ultra-violet luminescent material; to invisible, inorganic substances; to organic DNA codes.
Taggants are substances that can be incorporated into a wide variety of liquid and solid materials, such as fibers, inks, varnishes, paints, plastics, metals, fertilizers and even explosives. They can be used to identify items as varied as pharmaceuticals, apparel, consumer goods, sporting goods, petroleum products, antiques, documents, stamps and currency. Taggants can be used for inventory control and tracking and tracing in addition to brand authentication.
The costs vary, depending on the type of taggant used and the scope of its application. DNA marking is the most expensive, both because the technology itself is expensive and because laboratory evaluation adds to the cost. Synthetic DNA is the most costly method, with a cost of about 2 cents per item, while DNA runs about 1 cent per item.
Both coded taggants and RF-fibers, which are added to paper pulp, carry a price tag of about 1 cent per item. Other taggants cost anywhere from one one-hundredth of a cent to one-tenth of one cent, to 1 cent per item.
Creo, a subsidiary of Kodak, manufactures the Traceless™ taggant, which can be used to create unique optically and forensically invisible identification codes that are identifiable only with the use of special readers. The company has forged an exclusive agreement with label stock manufacturer Acucote Inc. to produce security label printing stocks, which combine the Traceless taggants into the adhesive layer of Acucote label materials. These stocks are sold to label converters for the manufacture of product labels.