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May 14, 2015

The typical approach for counterfeiting authentic goods was to first find a manufacturing facility; this was generally attempted in countries like China, Pakistan, Vietnam, Turkey, and South Africa. Connections had to be made to start a clandestine relationship. There were many considerations including cost per piece and international shipping rates. 

The factory creating the items had to be set up, and orders of the counterfeit items that came from that factory had to most likely have some minimum quantity numbers. It took a sneaky underground process, a good amount of start-up funds, the right interactions, partnerships of trust, and a secret money trail; a number of people had to be involved. The manufacturing plant was in a permanent physical location that could be traced if an investigation ensued, and there were risks and issues inherent in this type of operation for everyone involved.


The Technology of 3D Printing Changes Everything

Things have changed today. Additive Manufacturing (AM) – more commonly known as 3D Printing – is making a major difference. The hardware needed can be easily acquired and is reasonably priced in the neighborhood of $500 for a basic printer system; the materials for making counterfeit items are readily available, making it possible for counterfeiters to get up and running for a very minimal outlay of expenses. AM also creates the avenue to manufacture knock-off products in smaller numbers of limited runs to create the supply only as needed, and thus eliminate inventory storage concerns. 

Tracing the individual counterfeiters can be tricky because there is no physical facility, and they can be extremely swift and agile, moving around to multiple locations; all the necessary gear could fit into a small vehicle. There is no need to involve a large contingent of personnel, nor are there any international issues to deal with, including shipping costs and language barriers. The key question is: What does a brand have to do to prevent 3D counterfeiting of their products?


Trademarks and Patents

There are two main components to legally protect a brand’s products – Trademarks and Patents. They are distinguished in simple terms as this:

  • Trademark: Is a descriptive term that identifies one’s brand – an example of Trademark infringement would be using a brand’s name on a counterfeit item.
  • Patent: The functionality of an item - an example of Patent infringement would be the manufacturing of a gun whose functionality is exclusive to that company.

Gartner, a very well respected research firm, projects that counterfeit trademarked goods in 2018 to be at the 100 billion dollar per year mark. That could be a conservative estimate. There are also other ways for a brand to protect themselves. Anti-counterfeit technology has advanced tremendously and offers a variety of ways to identify the genuine article from the fake recreation. Quantum dots – tiny nanocrystals made from semiconductor material – can be embedded into the authentic item. These dots, which are so small in fact, that they have quantum mechanical properties, cannot be replicated by a counterfeit operation, and thus provides an excellent identification system. 

Other countermeasures include a DNA signature that can be identified to determine what products are bogus items, as well as shape memory polymers that enable hidden numbers, letters or shapes that will show up under heat, and anti-erasing ink that can be used on packaging material. Incorporating the best type of this available technology into the brand’s products will enable law enforcement to determine which goods are counterfeit.


The Blueprints / CAD Files / Illegal Distribution

A major acquisition for a successful counterfeiting process is the possession of the ‘blueprints’ to make the fake item from. Once the desired materials purchased, a CAD file can be easily transferred online, put into the 3D printer, and manufacturing can commence; this creates a whole other level of intellectual property protection needed for brands. Anything that can compromise the security of the blueprints for products being made needs to be identified and dealt with ASAP. The design needs to be locked down. 

It also means that 3D printing counterfeiting moves into the cybercrime environment because hacking into a company’s data can have a new goal – to steal product design documents. Distribution of a CAD file can happen instantly – not only from the source to the counterfeiter but also from the counterfeiter to others involved in their operation. In addition, a concern is the direct transfer of the CAD file to multiple unrelated individuals who can accomplish the counterfeiting themselves on their own 3D printing systems. 

“With 3D printing, as soon as the CAD file is obtained, it can be immediately distributed, and anyone with a 3D printer can print out the infringing good themselves. This also means it is very difficult to track down how many infringing goods were printed because it may involve thousands of end users.  And similar to the recording industry in the Napster battles, companies will only spend the time and resources to track down the most egregious infringers.” – Christopher Higgins | Orrick, Herrington & Sutcliffe LLP | Patent Attorney & Litigator in Federal Court Actions & International Trade Commission Section 337 Investigations 

Security for brand product blueprints has to be at the highest level, including an increased vetting of employees who have physical or cyber access to the information that counterfeiters covert. There is potential for a whole black market of CAD files being distributed, and monetary gains offered to those identified as having knowledge of, or accessibility to, the manufacturing specifics. Additionally, if inferior items are produced that look identical to the authentic product, but without the safety standards of the original, there can be safety liability issues that raise the question: who is responsible? 

“3D printing is starting to tip into the mainstream. My prediction is that everything will change when YOU can make anything. (It can be) the future and demise of intellectual property. We can get to a time where companies are selling designs – not products – and the company who makes the bicycle helmet specifies that it can only be made on a certain printer, with certain materials, and can only be printed by certain companies that are qualified to do it. What if that helmet design gets shared peer to peer, and then people just start printing it and it looks just like the one it’s supposed to look like. How do you know it’s the one printed to the authentic specifications? There is a real potential mess coming in the product liability area!” John Hornick | Partner Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P | Intellectual Property Law Attorney & Expert Speaker on 3D Printing


Law Enforcement – Guns and Toys

Generally for law enforcement, the priority is on crimes that impact public safety. During the holiday season, unauthorized sales of children’s toys, compared to perceived worse crime, is not a priority. 

There is only so much law enforcement bandwidth. Counterfeiting usually does not fit into that higher level category, but with 3D printing capabilities, there will be more law enforcement concern. If a counterfeiter is manufacturing unauthorized poor quality car parts, they could fail and cause accidents. So crime that previously was perceived as somewhat minor now moves into areas that can be considered criminal acts. Another even greater implication of 3D printing is the manufacturing of plastic, fully functional guns that can easily be put into the hands of criminals. Even at the lower, unorganized levels, kids – just out of curiosity – can find the public source CAD for a weapon online, get access to a 3D machine, and all of a sudden a minor, who otherwise would not consider trying to acquire a gun on the street, can print out the parts, put it together, score some ammo and become armed.


Thwarting 3D Printing Crime

Because of these developments, the FBI has gotten more involved in domestic counterfeiting, encouraging a re-evaluation of legal enforcement. Investigations have to be similar to those involving the drug trade. The small fish are not the prime targets, but can they can be leveraged to ensnare the counterfeiting kingpins. Reactive measures like the use of quantum dots is a great security addition, but one that will only assist in identification of products after the fact. The restriction of CAD file sharing is a way to keep counterfeiting from initially even happening. 

Law enforcement’s focus on money tracking and identifying high value targets (HVTs) is crucial. If items, for instance, are listed on eBay at a low price and the seller has a high inventory & traffic - that will certainly draw attention from the authorities. Customs only inspects about 4% of imported goods, but now with 3D printing, domestic counterfeiting will increase tremendously, and more resources will be dedicated to investigations and countermeasures. It is time for everyone to be proactive. Brands and law enforcement need to assimilate. More investment from brands into cybercrime prevention and anti-counterfeiting measures need to happen right now before getting way behind the curve. 

The counter technology is well advanced, but brands have to take the potential threat seriously and not wait until sales suffer to develop and incorporate a viable, actionable plan. Brands should be reaching out to all law enforcement – local, federal, customs. It is recommended to schedule symposiums, wherein organized joint meetings and discussions on projected issues are shared with authorities in an effort to determine what policies are needed to deter counterfeiting crime. Multi-faceted programs that lock down design specifics, incorporate signatures into manufactured products, and limit a company’s risk of cyberspace crime are all necessary. 

Technology to thwart counterfeiting will certainly be exploited by the determined criminal mind. It all will be a cat and mouse game that needs a fluid approach with constant re-evaluation; staying one step ahead is so important. Brands need to adapt to all changes in the infringement market, and become both serious and realistic. Training is also key, particularly bringing law enforcement up to speed with the tools and scanners that can detect copies that are not authentic.


Protect Your Brand from the Threat of 3D Printing

It’s a lot to deal with and be aware of – much more than brands can generally handle internally. Consultation and assistance from professional security agencies who specialize in this area will be a major plus to deter 3D printing crime for your brand. Technology and recommended security measures will constantly change, so a comprehensive, agile 3D printing security strategy needs to be customized for, and implemented by, your brand while potential threats are still in their initial stages.

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