Counterfeiting is an endemic problem affecting a wide range of industries, costing economies tens of billions of dollars every year. While the phenomenon is not new, it is so widespread that companies are obliged to spend large sums of money to prevent it. Specialists across different sectors are particularly focused on new innovative ways to tackle the issue and put measures in place to thwart counterfeiters.
It is a perpetual game of cat and mouse. In most commercial industries around the world, from clothing to medicines to banknotes, the problem of counterfeiting is perennial, and the proliferation of counterfeit and pirated products poses a significant threat to the global economy. Organised crime syndicates are increasingly involved in these illegal activities, reaping substantial profits from the trade of fake goods. In tandem, industry actors are constantly searching for new ways to protect their intellectual property and develop solutions to keep them one step ahead of criminal enterprises looking to profit from fakery.
The surge in counterfeit goods severely undermines the sales and profitability of legitimate businesses. According to Europol, it represents as much as 2.5 % of world trade, or $461 billion. This illicit trade not only affects companies but also has widespread repercussions for governments, the broader business community, and consumers. It diminishes tax revenues, undermines economic health, and jeopardises public health, safety, and security.
Innovation and technological prowess have therefore become paramount components of companies’ efforts to disrupt the production and distribution of counterfeit goods or currencies.
Fighting counterfeiting in the fiduciary industry
One of the oldest victims of counterfeiting is the banknote printing industry. For centuries, counterfeiters have worked tirelessly, despite the immense complexity of the task. In 2023, over 467,000 counterfeit euro banknotes were removed from circulation, although the number in public domain remains very low. Every year, numerous counterfeit operations are dismantled across Europe. These operations are not always orchestrated by major criminal organizations; the profiles of those involved are quite diverse. They range from international mafias operating on an industrial scale to students or mothers improvising with whatever resources they have at hand. In April this year, in a coordinated effort to fight euro banknote counterfeiting, Italian and French law enforcement agencies arrested 63 individuals suspected of forging over six million euros in cash.
But beating these criminal syndicates cannot rely on law enforcement alone. New, modern approaches using AI are being explored, but for now fiduciary experts like Giesecke+Devrient and Oberthur Fiduciaire are continuing to develop security features that minimise the criminal threat. G+D, for example, launched a new anti-counterfeiting authentication solution back in 2022 called SIGN, based on micro-optics technology. “We are pursuing the clear goal of combating brand and product piracy, which is becoming a worsening problem globally,” underlined Oliver Paul of Security Features Sales at G+D.
Oberthur Fiduciaire, the French giant in banknote and security printing, has been engaged in a fierce battle to stay ahead of counterfeiters of banknotes for decades, a battle that primarily requires maintaining a technological edge over organised crime syndicates, which often possess considerable resources. “The fiduciary industry is extremely competitive. There are few players compared with other sectors, but the need for innovation is pushed to the limit. We must innovate to ensure that we are always one or more steps ahead of the counterfeiters,” explains CEO Thomas Savare.
The company has therefore developed a number of state-of-the-art security features for banknotes that have enabled it to become a leading force in the fight against counterfeiting in the fiduciary sector. These combine both visible and invisible features, including holograms, security threads, watermarks and microtexts. Thomas Savare underlines: “I believe that intellectual property will be at the heart of the fiduciary sector of tomorrow and the day after tomorrow, since it is already important and it will continue to grow. As long as we have the drive to innovate and offer ever more effective products, we will play a major role in our industry.”
Protecting brands
Indeed, micro-optic technology is one field where the firm has placed much of its intellectual capital, even venturing outside of the world of banknote printing. Oberthur Fiduciaire owns, for example, 70% of the Swedish company Rolling Optics, which specialises in micro-optical security features that can be used in a wide range of applications and brand management programs. “Developing new solutions is more important than ever, which is why, in addition to our crucial in-house research, we decided recently to take control over the Rolling Optics,” explained Savare.
The problem is staying one step ahead. Criminal gangs are all too aware of the potential of technological innovation to thwart their criminal enterprises. “Frontline experts from key markets around the world fear that although emerging tech is indispensable in the fight against online fakes, it is evolving at such speed that brand owners may always be a step behind the counterfeiters,” according to World Trademark Review.
One sector where innovators are making strides is in the alcohol industry. Counterfeit alcoholic drinks pose a serious public health risk. In May 2020, approximately 100 individuals lost their lives in Mexico due to the consumption of toxic illicit alcohol. In December 2022, 39 people died and numerous others were hospitalised after drinking counterfeit spirits in Bihar, an eastern state of India where alcohol sales have been prohibited for six years.
To tackle this, several innovative companies, like the Texas-based firm Authentix, have been developing brand protection and supply chain security solutions. For the past 15 years, the company has produced a variety of covert inks, coatings, seals, and other marking technologies to assist wine and spirits brands in safeguarding against counterfeit and illegal trade across distribution points in Asia, Europe, the Americas, and the Middle East.
“Brand protection comes in many forms and has advanced over the last decade,” explains Authentix’s chief sales & marketing officer Kent Mansfield. “Several wine and spirit brand owners have become quite sophisticated in their targeting and toolsets used to combat this ever-growing fraud problem.
Moreover, the threat of “deepfake” technology is making the job of tackling counterfeiting even more complicated. Innovation is still helping brand owners make significant strides in tackling the issue, but the “world of counterfeiting is evolving in parallel”, according to Reinhard Fischer and Tamara Moll. “The spread of deepfake technology and increasingly sophisticated counterfeiting techniques pose a serious threat.” According to them, AI and blockchain technologies are leading the way, “helping to enforce trademark, patent and design rights”, while blockchain is “transforming enforcement” by providing secure, traceable product records. So, in this sense, AI is both a solution and a source of the problem.
Companies must continue to explore alternative innovations, such as nano-optics for packaging and product labels, which provide high-security holographic features that are nearly impossible to replicate. More globally, the best solutions may lie with the fiduciary industry, which is used to combating this phenomenon and is deploying ever more effective solutions to safeguard against forgeries.
