The GOOCI problem. Can technology give a Blue Tick here?

Invisible signatures, 3D Printing, AI, software piracy,

image recognition and NFTs- which side is technology on –

helping counterfeits or curbing them?

DAVE, KATKOT and ADDIDAS. The list goes on and does not stop at soaps, chocolates and sneakers- and of course, handbags. The problem of counterfeiting is rampant in most industries- especially fashion, pharma, and IT. For instance, recently HP found out Rs. 30 crore worth of counterfeit ink and toner cartridges that were illegally brought to the Indian market in the period between November 2022 and October 2023. A report by ASPA and CRISIL pegs that in India 25-30 percent of products sold are spurious with counterfeiting. Turn to what the ‘2023 Review of Notorious Markets for Counterfeiting and Piracy’ from the office of the US Trade Representative unfolded – there is a clear trend with social commerce platforms being used to facilitate sales of products openly known to be counterfeited. But several platforms have also invested in artificial intelligence (AI) and machine learning technologies as a way to scale up and quickly adapt traditional anti-counterfeiting measures. A 2023 report from Michigan State University Center for

Anti-Counterfeiting and Product Protection showed that 52 percent of consumers bought counterfeits at least once that year- and non-deceptively. Those who were deceived in doing so were about 68 percent. In fact, 21 percent turned out to be frequent buyers and 38 percent decided to keep a counterfeit even after learning it was fake. Can technology help to solve this blurry problem, especially when it has contributed to its easy growth in a large way? Padmakumar Nair, CEO and Co-Founder of Ennoventure, Inc. lets the cat out of this look-alike bag on how technology can help to knock out the knock-offs.

How serious is the problem of counterfeiting today?

The COVID-19 crisis increased the preference for contactless purchases and delivery methods. Going digital has led to higher risks of counterfeit products entering the market, which are often difficult to detect. Counterfeiting significantly affects sectors like FMCG, currency, medicine, alcohol, and automobiles in India, with an estimated annual financial impact exceeding INR 1 lakh crore. Particularly, counterfeit medicines pose severe health risks and can damage the reputation of pharmaceutical companies. It is reported that over 30 percent of drugs purchased online are counterfeit, potentially causing over a million deaths.

How much role is technology playing as a part of the problem? Especially with the ease of e-commerce, speed/scale given by the Crypto industry etc.

Technology has made it easier to replicate product designs and packaging through advances in computer vision and machine learning, complicating the detection of genuine products for consumers. In response, companies have been investing in anti-counterfeit technologies, though these solutions often do not reach consumers effectively. Increased internet penetration in India suggests that more consumers are informed and seek current information about their purchases. However, existing sticker-based technologies in the market often lack transparency and reliability.

To address these issues, companies need to adopt advanced technologies that ensure trust, transparency, and integrity for stakeholders. At Ennoventure, we aim to empower brands and consumers by offering our patented technology that is invisible to the human eye and accessible via smartphones.

Is the problem limited to certain kinds of products? Any specific categories (like pharma, luxury products) or regions that are more prone to this?

Counterfeiting is not limited to specific kinds of products but can affect various industries and regions. However, certain categories are more prone to counterfeiting due to their high value or demand.

Pharmaceuticals and luxury products are indeed among the most commonly counterfeited goods due to their profitability and the potential risks associated with using counterfeit items. In the pharmaceutical industry, counterfeit drugs pose significant health risks to consumers. Similarly, counterfeit luxury goods can deceive consumers into purchasing low-quality imitations while damaging the reputation of the original brands. The other notable sectors that face a massive counterfeit issue are Automobiles and FMCG. Genuine automotive parts are crucial for the automobile industry as they directly impact the safety of its customers’ lives. FMCG also places a lot of importance on safeguarding its products from the clutches of counterfeiters.

Certain regions, particularly those with weaker intellectual property protection laws or enforcement, may experience higher rates of counterfeiting. Developing countries often face challenges in combating counterfeiting due to limited resources and regulatory frameworks.

Do software/services also fall in this ambit?

While physical goods are more commonly counterfeited, software and digital services are also susceptible to piracy and unauthorized distribution. Software piracy, for example, involves the unauthorized copying, distribution, or use of software without proper licensing, leading to revenue loss for software developers and potential security risks for users.

How can technology play a part in the solution? What can Blockchain, invisible signatures, water-marks, time-stamps, holograms, bar codes, micro-printing etc. do here?

Technology can play a crucial role in combating counterfeiting by providing innovative solutions to authenticate products and track their supply chains.

The effectiveness of technology in combating counterfeiting depends on a holistic approach that considers factors such as degree of security, cost-effectiveness, interoperability, regulatory compliance, and industry collaboration. By leveraging a combination of these technologies tailored to specific use cases, stakeholders can enhance product authentication, strengthen supply chain integrity, and protect consumers from counterfeit goods.

While legacy technologies have been in the market for decades, their evolution is a must. Cryptography is a huge leap in this respect. Our Invisible Signatures are an example. We can encrypt product labels and provide better security, cost-efficiency, scalability, and sustainability in the long run.

Are NFTs a problem or an answer here?

NFTs are becoming more accessible due to a growing ecosystem. We’re yet to see its full potential being recognized. However, since it is a relatively new technology, there are still some challenges that need to be addressed before they become mainstream solutions.

What would be the most ideal technology to address this problem?

A comprehensive anti-counterfeiting solution that leverages advanced technologies. These technologies can create a multi-layered security system that makes it extremely difficult for counterfeiters to replicate or tamper with genuine products.

Our Invisible Signatures technology requires no process change, no CAPEX, and is easily scalable. It also provides additional services, such as engagement with the brand and analytics to combat the counterfeit menace.

Can consumers contribute through crowdsourcing/blacklisting apps here?

Crowdsourcing and blacklisting apps enable consumers to report suspicious or malicious issues in real-time, harnessing collective intelligence for enhanced digital security. Users report scams, counterfeit products, or inappropriate content, providing valuable data for analysis. This collective input helps identify emerging threats and patterns, feeding into machine learning models to improve their accuracy over time. Brands benefit by swiftly addressing reported issues, demonstrating a commitment to consumer safety and brand protection. Ultimately, these apps empower users and contribute to a safer online environment.

What have you been doing in this area? Any brand examples?

In an era dominated by online transactions and a projected global economic counterfeiting value of $2.3 trillion, ensuring the authenticity of goods has become imperative for safeguarding brand trust and investments.

Distinguished by our patented technology, we offer a cutting-edge approach to authentication. By embedding cryptographic signatures directly onto packaging artwork, we transform traditional packages into digital entities. These covert signatures, invisible to the human eye, can be effortlessly verified using any smartphone, providing unparalleled protection against counterfeit threats.

Why is it unique?

What sets us apart is our cloud-based platform, which leverages artificial intelligence and cryptography to authenticate products. Unlike conventional solutions, our technology requires no modifications to existing manufacturing processes and eliminates the need for specialized equipment. Moreover, our commitment to sustainability is evident in features such as eLeaflet, which reduces paper usage by replacing traditional instruction booklets, no use of specialized equipment or ink, and reducing carbon footprint for brands globally. Ennoventure empowers companies to protect their brand reputation, mitigate financial risks, and provide consumers with genuine, high-quality products.

Would AI compound this issue with the rise of deep fakes and 3D printing?

The rise of AI, deep fakes, and 3D printing indeed introduces new challenges in the fight against counterfeiting. AI can potentially compound the issue by enabling more sophisticated methods of creating counterfeit products, including deep fakes that mimic authentic brands or products with alarming accuracy. Similarly, advancements in 3D printing technology allow counterfeiters to produce replicas of physical objects with intricate details, making it increasingly difficult to distinguish between genuine and counterfeit items.

However, it’s essential to recognize that AI can also be leveraged as a powerful tool in the fight against counterfeiting. AI-powered algorithms can be deployed to detect counterfeit products more efficiently, analyze patterns of counterfeiting behavior, and develop predictive models to anticipate future threats. Additionally, AI can enhance authentication processes by enabling the rapid and accurate verification of product authenticity through image recognition and other advanced techniques.

Does the ‘Right to Repair’ movement help counterfeiters? How can consumer activism towards repair, no-more-closed-systems and sustainability etc. align well with the measures necessary to curb counterfeiting? Is it a tough balancing act?

This movement has been going on for over a decade. It points to the consumers’ rights to have more control over what they own and advocates for their ability to repair their own products. This aligns more with the goals of sustainability and reducing waste. However, it is up to the manufacturers and brands to make a unanimous decision on the same. More research and analysis would be required to completely comprehend the relationship between the “Right to Repair” movement and efforts to combat counterfeiting, to strike the right balance between consumer rights and anti-counterfeiting measures.

Padmakumar Nair

CEO and Co-Founder of Ennoventure, Inc

By Pratima H

pratimah@cybermedia.co.in