Fake tech gear has infiltrated the U.S. government
This counterfeit microchip for military use was seized by U.S. Customs and Border Protection. It’s one of a growing number of fake tech products inadvertently bought by the government. A record number of tech products used by the U.S. military and dozens of other federal agencies are fake. That opens up a myriad of national security risks, from dud missiles to short-circuiting airplane parts to cyber espionage. Despite laws designed to crack down on counterfeiters, suppliers labeled by the U.S. government as “high risk” are increasing their sales to federal agencies. Their presence in government’s supply chain soared 63% over the past decade, according to a new study released by IHS, a supply chain management consultancy. Suppliers with the high-risk branding are known to engage in counterfeiting, wire fraud, product tampering and a laundry list of other illicit and illegal behaviors. Last year, 9,539 banned businesses were found to have sold technology the government. Roughly 10% of those incidents involved counterfeit parts or equipment.”What keeps us up at night is the dynamic nature of this threat, because by the time we’ve figured out how to test for these counterfeits, they’ve figured out how to get around it,” said Vivek Kamath, formerly the head of Raytheon’s (RTN, Fortune 500) supply chain operations. “It’s literally on almost a daily basis they change. The sophistication of the counterfeiting is amazing to us.”The number of fake tech products floating around in the market quadrupled from 2009 to 2011, according to IHS — and they’re sneaking into some high-profile places. In September 2010, the Missile Defense Agency found that the memory in a high-altitude missile’s mission computer was counterfeit. Fixing the problem cost $2.7 million. Had the bomb launched, it most likely would have failed, the agency said. Two years earlier, the FBI seized $76 million of counterfeit Cisco (CSCO, Fortune 500) routers that the Bureau said could have provided Chinese hackers a backdoor into U.S. government networks. A number of government agencies bought the routers from an authorized Cisco vendor, but that legitimate vendor purchased the routers from a high-risk Chinese supplier. China continues to be the largest source for counterfeit and pirated goods found in the United States, accounting for 62% of the $178 million in products (with an estimated retail value of $1.1 billion) that the U.S. Customs and Border Protection agency seized last year. Some in Congress have pushed for a crackdown.”Counterfeit parts pose an increasing risk to our national security, to the reliability of our weapons systems and to the safety of our men and women in uniform,” Sen. John McCain, a Republican from Arizona, said last year in support of anti-counterfeiting regulations.
http://money.cnn.com/2012/11/08/technology/security/counterfeit-tech/
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Military Uses DNA to Tackle Counterfeit Gear
Cutting corners with substandard or counterfeit electronics won’t be as easy for suppliers whose parts end up with the U.S. military, as the Department of Defense turns to DNA “barcodes” to track components. In the next month, certain kinds of electronic components sold to the military will have to be tagged with an artificial DNA sequence, which will, its designers say, make it well nigh impossible to ship a fake piece of equipment. For the military it’s a big issue, because the chips that go into a fighter jet, helicopter or infrared night vision goggles are built to exacting specifications. If the circuits don’t work, a plane might not fly — or worse, fly with a malfunctioning piece of vital equipment. In November 2011, a Senate Armed Services Committee investigation found 1,800 instances of suspect parts, and the committee grilled contractors about their supply chains. Stony Brook, N.Y.-based Applied DNA Sciences, working with the Defense Logistics Agency, offered a solution that was originally applied to textiles: plant DNA. The DNA is incorporated into the ink that gets printed on the top of the chip. Shining a laser light on it makes it fluoresce, or glow, so it’s easy to see that the chip was tagged. But that isn’t all: the DNA tags can’t be duplicated – at least not easily – so it’s a pretty good indicator that the component came from the right factory. The reason it’s so hard to copy is the nature of DNA sequencing. DNA sequences are made of four different molecules: adenine, guanine, cytosine and thymine. They can only be connected in pairs, called base pairs, that are written as GC or AT. The base pairs line up to make the familiar double helix of DNA. To sequence DNA, one has to “amplify” it – basically dissolving it in a solution and then adding chemicals to make the sequences duplicate themselves. In a living organism, DNA sequences come in certain patterns – the placement of GC and AT molecular structures are not random. When they are sequenced, a scientist can figure out what order they are supposed to be in. From there, she can say what proteins the DNA codes for. Applied DNA Sciences took the base pairs and scrambled them so that the order is essentially random. With enough base pairs, it yields millions of possible combinations. “We’ve assembled it to break all kinds of natural law,” said Karim Berrada, director of DNA formulations at Applied DNA Sciences.The number of possible combinations is quite large even for a small number of base pairs: For any bit of A, G, C, or T there are four possibilities for the molecule connected to it, so a string of, say, ten bases would have just over a million possible combinations. Berrada noted that a string of 100 base pairs have on the order of 10 to the twenty-third power arrangements.If one were to try and sequence it without knowing the proper order of base pairs, the results would be meaningless.Rory King, director at IHS iSuppli, noted that while it’s a great technology, it isn’t clear what kind of a dent it will make in the market for counterfeit consumer electronic gear, since the military makes up a relatively small part – about 1 percent — of the market. But it does help address the problem of counterfeiters using the same distribution system as legitimate manufacturers.“It gets to the issue of authentic and quality product,” King said.
http://www.foxnews.com/tech/2012/11/05/military-uses-dna-to-tackle-counterfeit-gear/
Lear MoreTanzania: State Insists TPI Made Counterfeit HIV/Aids Drugs
The government insisted that the Arusha-based Tanzania Pharmaceutical Industries (TPI) manufactured the fake anti-retroviral (ARV) drugs that were discovered in August, this year. The Deputy Minister for Health and Social Welfare, Dr Seif Rashid, told the National Assembly here that the TPI, which had its production activities suspended by the Tanzania Food and Drugs Authority (TFDA) following the allegations, sold fake ARVs branded TT-VIR 30 to the Medical Stores Department (MSD). “The documents that have been found at the MSD show that the TPI sold fake TT-VIR 30 drugs that were manufactured in batch number 0C.01.85,” he said. He said that the fake life saving drugs batch was made of tablets with three different colours, yellow, white and belayed tablets (white and pink). “Tablets with yellow colour were made up of Efaverenz instead of Nevirapine, Lamivudine and Stavudine which were supposed to be the genuine contents of the drug. The white and the combination of pink and white (belayed tablets) drugs had genuine contents (Nevirapine, Lamivudine and Stavudine) as shown in the label,” he said. The government’s statement in the House comes days after the TFDA Director General, Mr Hiiti Sillo, told journalists in Dar es Salaam that contrary to TPI’s denials, his authority has documents and exhibits that prove that the company was behind the production of the ARVs. “The documents and exhibits have been submitted to security organs for further action,” he stated. He reassured the public that the company has been suspended from manufacturing ARVs through a letter with reference number CA/C.80/222/01A/47 of October 4 this year. He also said that the authority has suspended the supply of the drugs through a letter with reference number CA/C.80/222/01A/55 of October 10, this year. Mr Sillo also denied reports that TPI is continuing with production of the drugs, noting that inspection conducted by TFDA on October 23, this year, confirmed that there was no production of the drugs. For all this time, the TPI has been insisting that it did neither manufacture nor selling of the said fake drugs. “We would like to categorically distance ourselves from the allegations. The said drugs did not emanate from TPI and are made using technology which we do not have in our factory,” said TPI Executive Director, Mrs Zarina Madabida. She said that TPI produces TT-VIR 30 in the form of oval shaped tablets whereas the fake drugs are round TT-VR 30. “We do not have the technology that can produce tablets in a round shape and in two colours. The product is simply not ours,” she said. The government has also suspended three officers pending investigations at the MSD.
http://allafrica.com/stories/201211060069.html
Lear MoreCoach Wins $257 Million Court Ruling against Counterfeiters
Coach Inc. (COH), the largest U.S. luxury handbag maker, said it won a $257 million default judgment in a lawsuit filed against businesses that operate websites selling counterfeit merchandise. The judgment also awards Coach ownership of 573 Internet domain names, the company said Nov. 2 in a statement. The docket in the case, filed in federal court in Chicago, shows that the decision was rendered Oct. 15. “This judgment should serve as a warning to everyone involved in any aspect of trafficking in counterfeit goods that Coach will find you and will seek to impose the harshest penalties available against you,” Coach’s general counsel, Todd Kahn, said in the statement. The judgment is the latest victory in Coach’s anti- counterfeiting campaign known as “Operation Turnlock,” the company said. Since the program’s inception in 2009, Coach has obtained monetary awards against manufacturers, wholesalers, flea market operators and other links in the counterfeit distribution chain, the New York-based company said. The case is Coach Inc. v. Does 1-573, 12-cv-01514, U.S. District Court, Northern District of Illinois (Chicago).
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Counterfeit incidents maintain record rate in 2012: IHS
Counterfeit parts are an escalating global supply chain challenge where a single occurrence represents widespread risk to product cost and quality, human safety, and national security. These new counterfeit report figures arrive at a time when the U.S. Department of Defense (DoD) is scheduled to update the Defense Federal Acquisition Regulation (DFAR) Supplement to the Federal Acquisition Regulation (FAR) on October 3, 2012. These updates are part of measures intended to regulate the detection and avoidance of counterfeit electronic parts as part of the National Defense Authorization Act (NDAA) of 2012. “Counterfeit parts represent a serious and growing risk to the electronics supply chain in general and to the aerospace and defense industry in particular,” said Rory King, director, supply chain product marketing at IHS. “Each month that passes, more than a hundred counterfeit incidents comprised of thousands of suspect parts are reported. That’s why the spotlight is shining squarely on tighter policies and procedures aimed at counterfeit detection and avoidance. The good news from all this attention is that an increasing number of supply chain participant companies are joining credible anti-counterfeiting organizations like ERAI – exclusive partner to IHS and an organization that monitors, investigates, and reports on counterfeit electronic components – and filing a greater number of reports that then serve as proactive alerts to others in the supply chain of real counterfeits in circulation.” Among all reporting entities in IHS figures, sources include the Government-Industry Data Exchange Program (GIDEP) and ERAI. Consistent with 2011, ERAI represents the significant majority of reports made – 88 percent of year-to-date 2012 totals. Counterfeit parts are an escalating global supply chain challenge where a single occurrence represents widespread risk to product cost and quality, human safety, and national security. These new counterfeit report figures arrive at a time when the U.S. Department of Defense (DoD) is scheduled to update the Defense Federal Acquisition Regulation (DFAR) Supplement to the Federal Acquisition Regulation (FAR) on October 3, 2012. These updates are part of measures intended to regulate the detection and avoidance of counterfeit electronic parts as part of the National Defense Authorization Act (NDAA) of 2012. “Counterfeit parts represent a serious and growing risk to the electronics supply chain in general and to the aerospace and defense industry in particular,” said Rory King, director, supply chain product marketing at IHS. “Each month that passes, more than a hundred counterfeit incidents comprised of thousands of suspect parts are reported. That’s why the spotlight is shining squarely on tighter policies and procedures aimed at counterfeit detection and avoidance. The good news from all this attention is that an increasing number of supply chain participant companies are joining credible anti-counterfeiting organizations like ERAI – exclusive partner to IHS and an organization that monitors, investigates, and reports on counterfeit electronic components – and filing a greater number of reports that then serve as proactive alerts to others in the supply chain of real counterfeits in circulation.” Among all reporting entities in IHS figures, sources include the Government-Industry Data Exchange Program (GIDEP) and ERAI. Consistent with 2011, ERAI represents the significant majority of reports made – 88 percent of year-to-date 2012 totals.
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Dealers to Join Fight Against Fake Drugs – NAFDAC
The NAFDAC has urged patent medicine dealers to join its campaign against fake and counterfeit drugs. The Director General of the agency, Dr Paul Orhii, made the call in Abakaliki on Friday in a message to a workshop designed to expose tricks of fake drug peddlers. He said the training was aimed at enlightening proprietary medicine dealers on the menace of fake drugs on public health. Orhii called for concerted efforts from all concerned in the battle against fake and regulated products. “The fight against fake and regulated products is not for NAFDAC alone. It is a fight for all so that everyone should contribute,’’ he said. Outlining the ways the stakeholders could contribute in the fight against fake and regulated products, Orhii said buying medicines from authenticated sources and obtaining letter-headed receipts of purchases could help. He said they should also ensure that they bought and sold only genuine medicines duly registered by NAFDAC. He said all adverse drug reactions should be similarly reported to NAFDAC. In his address, the Commander of the NDLEA in Ebonyi, Dr Ngozi Madubuike, described the workshop as apt in the effort to safeguard the health of Nigerians. “Fake and substandard regulated products as we all know portends very serious health hazards to those who happen to be victims. “There is no doubt that thousands of Nigerians have lost their lives due to fake and substandard regulated products. “Nigeria does not have enough pharmacists to cater for her teeming population, especially in the rural areas, hence the need to use patent medicine dealers to wage the war against fake drugs,” he said.
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Counterfeits holding back UGG boot sales in China
Financial results show that increased competition from counterfeits is holding back efforts to grow sales of UGG boots inChina. The company behind UGG boots, Deckers Outdoor, now has 20 stores in China but its most established operations are suffering from the rise of fakes. Sales at its four established stores were down more than 10 per cent, in part because of increased competition from counterfeits. “We’ve had a lot of competition in the past year…in the form of counterfeits. That does represent a significant amount of competition,” Angel Martinez, CEO of Deckers Outdoor, said. Stemming the rise of counterfeit UGG boots is now central to growth plans, particularly outside the US.Martinez said this anti-counterfeiting focus has made the company “pretty good at addressing those issues and going after those folks.” Deckers Outdoor is using this experience to develop more cost-effective anti-counterfeiting methods, helping it control costs while tackling fakes.
Lear MoreScale of counterfeiting problem is revealed in new figures
The number of high risk suppliers to the US government, including companies that sold suspect counterfeit product to military and commercial electronics channels, increased dramatically by 63% from 2002 to 2011, according to market analyst IHS. “This large and growing trend highlights the need for members of all tiers of the supply chain to implement tighter supplier-monitoring and procurement procedures in order to meet increasingly stringent regulations,” said IHS. A total of 9,539 suppliers in 2011 were reported either for known involvement in high-risk, fraudulent and suspect counterfeit-part transactions, or for conduct identified by the government as grounds to debar, suspend or otherwise exclude from contract participation. In all, 78,217 potential high-risk firms and suppliers to US government agencies, defense contractors and subcontractors were reported during the period from 2002 to 2011. IHS has said that reports of counterfeit parts in the electronics supply chain quadrupled from 2009 to 2011.
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Feds Confiscate 1,200 Counterfeit MLB, Giants Paraphernalia
Federal agents announced Monday that their agency has confiscated about 1,200 hats, T-shirts and other Giants paraphernalia that they say are Major League Baseball counterfeit knockoffs. Had the goods been genuine, officials said they would have sold for more than $25,000. The U.S. Immigration and Customs Enforcement’s Homeland Security Investigations took these items during the first two World Series Games when the Giants played the Tigers at AT&T Park in San Francisco. Last year, intellectual property rights enforcement by HSI and U.S. Customs and Border Protection led to more than 24,000 seizures – a 24-percent increase compared to the previous year. The seized goods had a total value of more than $1.1 billion, based upon the manufacturer’s suggested retail price had the products been legitimate.
Lear MoreAFDAC’s new anti-counterfeiting strategies
The menace of counterfeit and substandard drugs, is no doubt one that has been on the front burner of national discourse as far as the safety of the health of Nigerians is concerned. This led to the setting up of the National Agency for Food and Drug Administration and Control (NAFDAC) by the Federal Government in 1993, with a clear mandate of safeguarding the health of the nation, through the provision of effective regulation of food, drug and chemical sector of the economy. While NAFDAC’s mandate covers the food and chemical industry, it is the drug market that draws the most attention, no doubt because of the pivotal role the sector plays in the health of the nation and because of the lucrativeness of the sector which makes it attractive to unscrupulous counterfeiters out to profit at the expense of the safety of Nigerians.Over the years, successive Directors-General of the Agency have come up with different strategies to curb the menace of fake drugs and each in his or her own way have helped to significantly address the problem working together with officers of the agency. According to studies conducted by NAFDAC from 2001 to 2012, there is a positive trend in the progressive decline in the incidence of counterfeit medicines in Nigeria. In 2001, counterfeits that stood at 40 per ent due largely to the indefatigable effort of the NAFDAC’s team, under the then Director-General, Prof. Dora Akunyuli, was reduced to 16.7 per cent in 2005. Shortly before she left the Agency, however, there were threats of resurgence of the incidence as counterfeiters too have not rested and have also continued to come up with novel ways of evading detection by NAFDAC and other law enforcement agencies. A study carried out in 2008 shortly before the arrival of the current Director-General of the agency, Dr. Paul Orhii, on the Quality of Anti- Malarials in Sub-Saharan Africa (QAMSA) puts the incidence of the faking of anti-malarial drugs at 64 per cent. This made the new DG to declare a zero tolerance war on counterfeits shortly after assuming office.It is in realisation of this fact that the current administration of Dr. Orhii came up with a strategy that is not just only effective but one that is also guaranteed to place the agency many steps ahead of the counterfeiters in such a way that every of their moves is anticipated, checked and thwarted by the agency. One such strategy is the introduction of cutting-edge technology that has provided a more profound method of detecting counterfeits on the spot. Technology like the TRUSCAN machine for example have been deployed by the agency at the ports and entry points of the nation to carry out on-the-spot check of drugs before they are cleared into the country. The Agency’s officers have gone to the 36 states of the federation and the FCT with the TRUSCAN machine, paying unscheduled visits to medicine outlets to fish out counterfeit drugs and destroy them. NAFDAC as the first medicine regulatory agency in the world ever to deploy the technology and its effectiveness in curbing the menace of fake drugs, has not only drawn the attention of international medicine regulatory agencies, but has also made the agency’s DG, Dr. Orhii the toast in the industry.
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