Blockchain: The Super-Powered Technology

Brand owners may not be taking full advantage of available technology, but that does not mean it is not out there or up to the task. In recent times, there has been a proliferation of new technology that can be leveraged to fit a brand’s anticounterfeiting strategy.

One technology that regularly hits the headlines, with its myriad advantages seemingly talked about at every industry conference, is blockchain.

“Blockchain is an organizing technology. It’s a set of entries into a ledger where the participants can agree on the data and the state of the data in that ledger,” explained Mr. Collen.

“Blockchain’s ‘superpower’ is its ability to help people organize ... so that consumers and companies can have more confidence in what comes out at the other end, and that a legitimate good has been procured by the owner.”

The technology is helpful for tracking the provenance of goods, ensuring that goods produced in a brand’s facilities are tracked throughout the supply chain and find their way to the right places.

Mr. Collen added: “By incorporating blockchain and being able to track a good or service through all the checkpoints and see that there’s an unbroken chain of custody around that particular good will help increase the end consumer’s trust in the fact that they have a legitimate good.”

One real-world example of blockchain that is making waves is the blockchain-based platform established by container shipping firm A.P. Moller-Maersk A/S (Denmark) and IBM Corporation (US). Aimed at helping manage and track shipping containers globally, the platform digitizes the supply chain process from end to end.

Over the past few years, numerous new partners have joined the platform, including other shipping container companies, ports and authorities around the world, and, in 2020, a financial institution.

This is a great example of how blockchain technology can be used for shipping generally, said Ms. Tunstall, adding that brand owners who are interested in preventing counterfeiting can leverage this type of approach.

For Ms. Tunstall, blockchain is “workhorse” technology, which runs in the background and allows people to keep track of many kinds of data—but only if it has been set up properly.

“It’s definitely something that can be very effective. The challenge in getting it implemented is adoption, and figuring out who is running the software, and so on. There are many pieces to the blockchain puzzle,” she said.

While blockchain on its own is a powerful tool, the technology is strongest when used with other, more widely used, technologies.

According to Mr. Kaufman, “Blockchain is no doubt a good pairing for enforcement and protection efforts. A blockchain service can be tied to products, adding an extra layer of protection … but it can also be used to track the realization of those efforts themselves, adding immutability and proof of work at each step.

“If a measure is being regularly skipped, or not adding much to the entire protection process, blockchain tracking can help tell you that, and adds an extra facet to its overall value. Blockchain services are a ‘Holy Grail’ when it comes to authenticity tracking and authentication process tracking. Employing it can significantly evolve your enforcement effort in both respects.”

However, as Mr. Collen warned: “The blockchains are only as good as the data going into them. If you put garbage in, you’re going to get garbage out.”

Having reliable data, such as a QR code or radio frequency identification (RFID) scan, to add to the blockchain is a key part of ensuring the system works best. Brands are regularly using QR codes and RFID scans, with or without the addition of blockchain technology.

There are also some novel approaches available. For example, non-fungible tokens (NFTs) are being sold in tandem with high-dollar value products such as collectible shoes and luxury items.

Ms. Tunstall offered one example: When you buy a pair of shoes, you receive an NFT and that token carries the specific information that ties into the shoes. If you then wish to sell the product, you can demonstrate that it is an authentic product by also transferring the NFT.

“If a seller doesn’t have the NFT to transfer, that’s a good indication it may not be the real product,” she said.

It is an interesting use case, but it does have its challenges. “In order to receive an NFT, you must have crypto wallet, and you need to go through a cryptocurrency exchange. This has all the Know Your Customer and anti-money laundering requirements you would expect,” Ms. Tunstall said.

“It’s not quite as easy as it could be but it’s very interesting and potentially very effective, particularly for people who like to buy collectibles,” she added.

Partnering and Potential

New technology, directed at, or potentially adapted to, anticounterfeiting efforts is being developed constantly. How can you tell what will work and what is all style, but no substance? Do you invest in a range of different technologies, or do you focus your efforts on one single source?

Mr. Kaufman suggested: “Don’t get lost in the technology forest of potential, and, especially for more extensive anticounterfeiting programs, don’t be afraid to approach tech companies for help in coming up with a good technology package.”

He explained that it can be easy to lose sight of the practicability of new technology by focusing on its flashy potential.

“For example, should you embed or tag the product package? How about the product itself? Why not both? Spending without proper application can ruin your team’s experience with the new tech and leave a bad taste in everyone’s mouths,” said Mr. Kaufman.

Focusing on a technology’s “flashy potential” and not considering the application of it can also lead to problems in utilizing the technology, in view of the lack of standardization globally.

According to Ms. Tunstall, technology standards are different in markets throughout the world. For example, certain ports receiving the goods may not have a scanner that can read RFIDs or other technology.

“You may have spent a lot of time investing in technology to fight counterfeits and then not be able to have it work effectively in a number of your key marketplaces,” she warned.

For brand owners, said Mr. Yao, “It’s vital to look for a technology that helps consumers authenticate their products in an easy and quick manner. This can ensure that consumers who want to buy genuine products cannot be cheated by fakes,” he said. “The pitfall to watch out for is technologies that can be easily copied or bypassed by counterfeiters.”

Clients in different industries have been using very different technologies for anticounterfeiting purposes. Some technologies are very high-tech but complicated and therefore not user-friendly, and some technologies are easy to use but also readily copied by counterfeiters.

Unfortunately, easily copied or bypassed technology is just one of the many potential pitfalls brand owners face when implementing anticounterfeiting measures.

For Mr. Collen, brands need to invest in technology that will “at least give them a fighting chance against the technology that the counterfeiters are using.”

He added that it is very difficult for end users to sort out what is a legitimate good and what is not, so very sophisticated systems need to be in place to help brand owners manage that.

“Look for someone with a good reputation and a sophisticated set of tools to help weed out and discover where counterfeiting may be taking place and help you take action. Or funnel that information to an in-house team that can take action on behalf of the brand,” he urged.

On collaboration, Mr. Kaufman suggested brand owners look for technology companies and partners to help “identify the specific artificial intelligence services and disparate products that can be matched up to create one formal strategy and process.”

He added: “You can probably go it alone, but assistance can be a valuable shortcut to help you leverage new tech, get your anticounterfeiting program up and running faster, and deliver a smoother transition to the new tech for your entire enforcement team.”

New Solutions

Looking to the future, there is optimism on many fronts, with a focus on building bridges through collaboration, interoperability, or linking up technology.

Mr. Yao believes there will be technologies that can help “brand owners to track every product they sell, and for consumers to differentiate genuine products from fakes very easily.”

He added: “I would love to see brands working together with the online platforms to develop a technology/mechanism whereby consumers can easily report suspicious online listings with a few clicks.”

Mr. Kaufman hopes to see vendors offering more of these technologies together as standard packages, such as a blockchain service that comes with RFIDs or near field communication (NFC) tags for an entire supply chain, with little to no customization required.

“Brand owners can already work with technology companies to fold these different measures into one process, and it will become easier when providers start folding these into formal packages themselves,” he said. “Then, enforcement practitioners of all sophistication levels will be able to enjoy these technologies without the need for much consultation.”

Mr. Collen focuses on the interoperability of blockchain technology where, instead of having a specific blockchain/protocol built for each application or by each company, there would be an agreed-upon standard and companies, working together, would then build on it.

Initiatives in this area are already taking off. In April, LVMH Moët Hennessy Louis Vuitton (France) joined forces with Prada Group (Italy) and Cartier, part of Compagnie Financière Richemont S.A. (Switzerland), to develop Aura Blockchain Consortium, the world’s first global luxury-brand blockchain.

“That model is promising but I’m hoping it goes beyond the luxury vertical and into a more general use blockchain protocol for tracking goods and anticounterfeiting purposes in particular,” said Mr. Collen.

With the pace of development of new technology and collaborations regularly being formed, it is entirely possible that these hopes for the future will become reality sooner rather than later.

Ms. Tunstall concluded: “Technology is changing all the time. Keep watching and pay attention to what other brands are doing; I believe there is going to come a point where a solid solution that can be reproduced across brands will arise.

“I expect the solution to be developed in the next five years. But for now, don’t put all your eggs into one expensive basket—try different things until something really works.”

Find out more at Leveraging Technology to Fight Fakes: Promises and Perils (today, November 17, 12:45 pm–1:45 pm EST).

Moderator: Bennett Collen, chief executive officer, Endstate, and adjunct professor, Blockchain, Boston College Carroll School of Management (US)

Speakers:

• Addam Kaufman, senior corporate counsel, Oracle Corporation (US)
• Matthew Owen, associate general counsel, Global Trademark & Copyright Strategy, Caterpillar Inc. (US)
• Mercedes Tunstall, partner, Loeb & Loeb LLP (US)

The Enforcement and Anticounterfeiting Education Track is supported by Strategic Sponsor—Enforcement and Anticounterfeiting, WANHUIDA Intellectual Property.

Video courtesy of Envato Elements / brostock