Anti-Diversion and Anti-Counterfeiting

For thousands of years, counterfeiting has been a problem. In the past this was mainly aimed at forms of currency, particularly when it was man made, such as coins. Today, counterfeiting extends beyond currency to products, especially high volume and high-ticket items. 

The industries that seem to be the most attractive for counterfeiters are automotive/aerospace, luxury items (high end watches, etc.), pharmaceuticals, and fashion apparel. It is estimated that the current economic loss caused by counterfeit products approaches $1 trillion. While much of the damage is purely economic, products such as bogus aerospace parts and pharmaceuticals have tragic consequences.

Examples of efforts to use technology to detect counterfeit products, and product diversion from authorized channels, are in the fashion industry and in aerospace, specifically spare parts. The first example involves a leader in denim apparel. Over thirty years ago, this company, suffering from significant sales losses due to counterfeiting, implemented a process that tracked every single garment from point of manufacture. The method they employed involved looking at the fiber makeup of each that was attached to the garment. This process was extremely accurate and did result in a large increase in counterfeit and diversion detection. However, the technology was very time consuming and expensive. 

Another example is aerospace. In 1954 SPEC 100 was implemented in the aerospace industry with the intent to track spare parts and provide a common form of documentation that would allow manufacturers and airlines to have more accurate information for parts acquisition and tracking. In the late 1990’s, SPEC 100 was replaced by SPEC 2000. This new specification incorporates machine readable codes, specifically 2D data matrix, in order to meet fiscal requirements of the spec and to provide a very accurate method for track and trace.

The liability of counterfeit failure, product remarking and product diversion is an increasing problem for industrial equipment companies. Their reputation is on the line with every component sold. A large multinational electrical-equipment manufacturer has for years channeled substantial resources into fighting gray-market and counterfeit products, often via litigation. Recently the company adopted a preemptive strategy based on making counterfeiting more difficult and illicit supply chains easier to trace.

Today, counterfeiting and diversion have grown to extreme levels. This, and the desire to protect a wider range of products requires new technologies and methods. Having been involved in anticounterfeiting and anti-diversion projects for over thirty years, I have looked into many of the solutions currently available. In my opinion, the very best is the technology provided by iTrace Technologies ( ). iTrace uses a proprietary symbology that is able to be marked and read in a space as small as 100 microns. It allows for billions of item/part numbers and is even more accurate than Data Matrix ECC200. One of iTRACE Technologies’ clients, a global design, marketing, and distribution company specializing in consumer fashion accessories, suspected product diversion was occurring within their distribution channels. Proof was hard to come by and the losses were hard to estimate, and the client needed an effective brand protection solution that would seamlessly fit into their production environment and development cycles. iTrace’s solution has been protecting this client products for over 10 years, and working together they have identified the sources of diversion, cut off product supply to violators, prevented future diversion, and protected and boosted Fossil’s revenue streams across 17 brands.

For more information, I invite you to contact Global automation and Identification Group or ITrace directly: