As I shared in Part 1 of my article Business Intelligence – A Key Strategy in the Battle Against Counterfeit Goods in the Supply Chain, identifying counterfeit goods is the first step in the battle. But removing one batch of counterfeit goods won’t stop the next batch from appearing. In order to fight back, some manufacturers will take the next step and try to track down the manufacturer of the goods. Any complex product will have a supply chain and identifying the manufacturer of a key component of the counterfeit product may prevent others from being made.
Across the Specialty Services team at Ocean Tomo, a part of J.S. Held, we partner with in-house corporate intellectual property (IP) groups, outside counsel, and financial institutions to dig into complex systems.
With more than 10 years design experience and work on behalf of clients in the US, Germany, UK, Japan, Korea, and China, I have supported companies with business intelligence focused on tracing sources of counterfeit goods. I advised a multinational electronics company who became aware of counterfeit memory cards marketed with their tradename but not produced by their company or any known suppliers. In this project we were trying to discover the source of counterfeit memory cards which is much more difficult than simply detecting counterfeits.
In the case of memory cards, the counterfeit products often have less storage capacity than the labels indicate, contain inferior components, and be made with little to no quality control. The counterfeit cards will not store data correctly and may fail at any time. There are many business risks that may result from having counterfeit versions of a product in the market. If consumers feel that they may receive a counterfeit part when purchasing from the company, they may avoid the company’s products. Also, the consumer may not realize that the memory card is counterfeit and blame the company itself for a shoddy product.
Manufacturers grapple with identifying authentic components amidst a sea of counterfeits, highlighting the difficulty in discerning the true origin of these products. However, efforts to combat counterfeiting persist, with companies exploring various strategies to authenticate products and trace their origins.
The counterfeit memory card project involved multiple steps focused on identifying the designer of the controller chip or the fabrication (fab) that manufactured the chip. Since it is much more difficult to identify a designer of an integrated circuit (IC), the work focused on identifying the fab that manufactured the chip. The work involved:
- X-rays of the memory card to determine what was inside it before opening it.
- Opening the memory card to identify the components inside. Typically, there is just a memory chip and a controller chip.
- Looking for markings on the controller chip. In this case, they were shaved or ground off. Even if there were markings, they could easily be fake
- De-encapsulating the controller chip and inspecting the die through a microscope. In most cases there are die markings, but not in all cases. In some instances, there are die markings, but they are not of a known company.
- Attempting a “foundry ID.” This involves looking at key features of the chip itself (how common circuits like memory blocks are laid out, their design, and measurements). These studies can then be compared to ICs where the fab is known. If the fab is identifiable, a manufacturer may approach the fab and try and identify who the designer of the chip is. This is likely to involve the courts as fabs are unlikely to reveal who their clients are. However, even informing the fab that the chips they are manufacturing are being used in counterfeit parts may be enough to stop their manufacture and accomplish our client’s goals.
This experience emphasizes the importance of supply chain management in addressing this challenge, as counterfeit goods infiltrate not only finished devices but also individual components. Counterfeit goods involve components, manufacturers, packaging, and distribution and may be attacked at any point in the supply chain.
Collaboration and research play crucial roles in developing effective strategies against counterfeiting. The battle against counterfeit goods remains an ongoing struggle, necessitating continuous vigilance, innovation and partnering to reveal important business intelligence.
To learn more about this topic and how it can impact your business, please contact: David Fraser, MBA, MASc, BScEng, at [email protected] or +1 403 229 9192.
