Vision and Challenges for Realising the Internet of Things

4.1 Anti-Counterfeiting and
how to deal with it in an IoT
SToP Project
Harald Vogt, Nina Oertel / Thorsten Staake, Mikko Lehtonen
SAP Research Karlsruhe, Germany / ETH Zürich Zürich, Switzerland
Abstract: In the emerging Internet of Things, it is easy and cheap to make information available
about virtually all physical objects as this information can be automatically created, distributed,
and processed with the help of automatic identification systems. Thus, virtual counterparts of
physical objects are being created, which provides links to services around these objects. Together
with specialized technologies for the detection of physical tampering, software-supported systems
for product authentication become universally available. This is a critical component to protect
consumers, distribution channels, and markets against counterfeit products. We demonstrate
how a prototypical system for product authentication can be integrated to existing business processes
and be applied in various fields.
1 Introduction
The counterfeiting problem is growing worldwide, affecting more and more product categories
and industry sectors. Counterfeits damage the reputation of brand owners, produce economic
losses, promote inferior working conditions, and put the safety and health of consumers at
risk. Though one might argue that counterfeiting and piracy have positive societal effects, such
as giving more people access to (what appears to be) luxury hand bags, counterfeiting is never
a win-win-win situation between the consumer, the brand owner, and the affected government.
Moreover, there seems to be a natural demand for counterfeit goods that will almost always be
matched by a supply. Parallel markets for many such goods exist, driven by huge financial
incentives. Some counterfeit goods are targeted at end-customers, while others are distributed
in specialized business areas.
In industries such as the pharmaceutical and aviation industries, the targeted customers of a
counterfeiter are typically composed of pharmacists and buyers of spare parts. Since elaborate
control mechanisms exist in these areas, counterfeit products can only be injected into the
supply chain if they comply with the quality test requirements. End-customers would be
strongly interested in the use of high-quality products only. Injection of counterfeit products is
therefore likely to happen from within the (otherwise legitimate) supply chain.
The market for luxury goods, including products such as clothing and accessories, is quite
different. Customers are non-experts, and products are purchased usually not for functional
reasons but for the “experience” and interpersonal value they provide. These aspects at the
same time provide a motivation to buy counterfeit products consciously for customers for
which genuine products are otherwise out of reach.
The liberalization and globalization of markets is often regarded as a threat to the integrity of
supply chains. Globalization is still an ongoing process, so consumers might be exposed to an
increasing number of counterfeits in the future. Some activities have been initiated on the
political level, which target consumer protection but which also aim at facilitating the enforcement
of rights in cases of copyright violations and counterfeiting. This will most likely
lead businesses to implement measures, mostly based on standard technologies and off-theshelf
solutions. One of the results of the SToP project has been the drafting of guidelines that
CERP-IoT – Cluster of European Research Projects on the Internet of Things
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