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  • 1. Auto-ID Technologies and their Impact on Counterfeiting Elgar Fleisch Institute of Technology Management (ITEM-HSG), St.Gallen University Department Management, Technology, and Economics (D-MTEC), ETH Zurich MIT Convocation January 23-24 2006
  • 2. Agenda
    • The Need for Secure Authentication Technologies
    • Research Questions and Anticipated Challenges
    • Preliminary Results
  • 3. Counterfeiting is a severe threat to the economy
    • Impact on users:
      • Physical injuries
      • Financial losses
      • Less secure environment
      • Possible short-term financial benefit!
    • Impact on the economy:
      • Impact on foreign investments
      • Impact on employment
      • Loss of tax
      • Important source of income for some countries
    • 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
    • High level of security using a combination of high-tech non-electronic 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
    • Low-cost solutions for objects
    • with a sufficient level of security
    • allowing for automated
    • authentications are not yet
    • available.
  • 5. Mission
    • “ 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
    • The Need for Secure Authentication Technologies
    • Research Questions and Anticipated Challenges
    • Preliminary Results
  • 7. How can Auto-ID technologies reduce illicit trade?
    • Research questions and practical challenges:
    Problem Description Impact of Illicit Trade Requirements of a Technical Solution Impact of Auto-ID Technology Q2: How to quantify the impact of illicit trade? Q3: What are requirements for a solution based on Auto-ID technologies? Q4: What is the impact of an Auto-ID based solution? Q1: What is the economy of illicit trade?
  • 8. Agenda
    • The Need for Secure Authentication Technologies
    • Research Questions and Anticipated Challenges
    • Preliminary Results
  • 9. Strategies to combat illicit trade
    • Illicit products “encounter” at least two licit actors: End-users and Customs
    •  An efficient strategy to combat illicit trade should utilize at least one of these actors
  • 10. Reasons for buying faked products
    • 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
    Source: Own survey, N=152
  • 11. Reasons against buying faked products
    • Bad expected quality and no purchase due to missing opportunity are the main reasons for not buying faked products
    Source: Own survey, N=152
  • 12. Q4: What is the impact of an Auto-ID based solution? Automated product authen- tication Revenue Liability Reputation Return Number of faked products High res. data on illicit actors Frequency of checks Cost per check Optimized enforcement strategies Optimized product strategies Standard procedures to treat cases Outsourcing (AC service provider) Cost per action Better relation to customs Extended competitor strategy
  • 13. Two solutions based on RFID
    • 1. Basic EPC tags
      • Track & trace data allows to assemble a products’ history
    • RFID tags with secure authentication mechanisms
      • Based on challenge response authentication
    Cost to break a feature >> Financial gain (or possible harm) due to a counterfeit within the products lifetime Digital Finger- print Product History One infrastructure for various levels of security! But: What does this mean for the Network?
  • 14. Secure Authentication Mechanisms
    • 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
    Manufacturer Distributor Retailer EPC-IS EPC-DS EPC-PAS Local ONS Root ONS EPC-IS Product with EPC+ Request / Response Address Update 2 1 3 1 Digital Finger- print ID K = Key(ID) A = f(K, RAND) A RAND B = f(K, RAND) A = B ? Tag Channel Server
  • 15. Auto-ID Technologies and their Impact on Counterfeiting and Product Piracy Thank you for your attendance.