Applied DNA Sciences on: Electronics

Counterfeit microchips were found--just in time!--in a F-15 flight computer at Robins Air Force Base in Georgia video >>

Better late than never: the Senate Armed Services Committee has uncovered the fact that in 2008, counterfeit microchips were found--just in time!--in a F-15 flight computer at Robins Air Force Base in Georgia.

In a CBS expose on the issue, Major General Robert McMahon pointed out the complexity, and vulnerability of the F-15: "You look at all of those gaps in the structure there," McMahon said as he showed a CBS reporter the interior of an F-15 nose assembly.

"There'd be a black box in there and each black box has a myriad of circuit cards and each card has a variety of chips," he added. The modules control radar, flight and weapons systems in the jet. Applied DNA Sciences President and CEO James Hayward testified before the Senate Committee this year, and pointed out that, while counterfeiters are getting smarter, and the old identifying protocols are not as reliable, DNA marking and authentication are a solid solution.

 

CBS posted this video:

 
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VisionTech: More detail on the millions of fake chips sold into supply chain.

More detail, some of it very scary, continues to emerge from the VisionTech case in Florida, where for years counterfeiters sold fake chips, perhaps numbering in the millions into the supply chain, including to the military.  One employee is to be fined $600,000, while the owner died last spring.

A 78-page memorandum has now been made public by the DOJ, and we intend to study it, and report.
 
Meanwhile, we urge our readers to read through yesterday's (Oct 24) piece in the EE Times, which makes several urgently important points, and also reveals the dollar numbers of chips that were sold to semiconductor companies (see below).  The companies are a king's list of the industry.  This article also is followed by a lively, sometimes contentious, series of comments by supply chain techs and others. 
 
In our view, the key point is that, despite hard work and surveillance, a relatively paltry number of counterfeits were able to be authenticated and seized by Customs Border Patrol agents from VisionTech over the course of four years: 35 seizures out of 3,263 shipments.  The others were not identified by CPB, nor by the trademark owners, or semiconductor companies, so millions of probable counterfeits, blithely made their way into the supply chain.  
 
The inescapable conclusion: a standard authentication system and protocol urgently needs to be established, something several government agencies and industry associations are indeed working on.  Implementation yesterday would be infinitely preferable to tomorrow.
 
We believe the Applied DNA Science holds the gold standard in such a system and protocol, and urge its adoption as soon as feasible.
 
The full citation from EEE Times:
 
"Of the estimated 3,263 shipments of semiconductors imported by VisionTech between December 2006 and September 2010, only 35 were confirmed as containing counterfeits and seized at the border by U.S. Customs agents. Those 35 shipments contained a total of nearly 60,000 counterfeit ICs, according to the government’s memorandum.
 
The 3,228 shipments that were not seized made their way into the U.S. electronics supply chain through sales VisionTech made to more than 1,100 buyers in virtually every industry sector. Many of VisionTech’s customers were other brokers, who resold the parts. While some of the counterfeits were caught during manufacturer testing, hundreds of thousands, if not millions, of counterfeit parts are potentially still floating around in the supply chain or, worse yet, inside equipment that’s being used today."
 
 
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Computer virus in U.S. Drones: "accident or deliberate." Video >>

 

"Officials don't know if this was an accident or deliberate."  So says the editor of Wired magazine who broke the story.  As we pointed out in Saturday's post, the jury is out on whether a software hole, or hardware vulnerability is at fault for this extremely serious issue.  Counterfeit electronics parts may or not be at fault, but one thing is for sure, as military anticounterfeiting experts say: the deluge of counterfeit parts creates great "noise" in the supply chain, making it all the more difficult to isolate the cause of issues like this.

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Virus infects U.S. drone warplanes flying combat missions; search for security hole

A computer virus has infected U.S. drone warcraft now flying dozens of missions in Afganistan and other combat zones.  The virus, which has hit Predator and Reaper drones, has not been easy to eradicate.  It "keeps coming back," a Pentagon technician told Wired magazine.

"No one’s panicking. Yet." he added.
 
The virus logs every keystroke of the drones' pilots, directing the robotic craft from ground control bases.
 
The military stressed that the virus, identified two weeks ago, has not prevented pilots at Creech Air Force Base in Nevada from flying their missions overseas  But it is not the first time security issues have plagued the bot warplanes, which have become a staple of anti-terrorist war technology.   In the summer of 2009, U.S. forces discovered “days and days and hours and hours” of the drone footage on the laptops of Iraqi insurgents. A $26 piece of software allowed the militants to capture the video.
 
The problem that time seemed to be a lack of encryption of video data transmitted by the drones.
 
 
We shall see how the story unfolds and will report information to you as it develops.  Certainly, security specialists will be on the watch to see whether the vulnerability was an opportunistic exploit of security software systems, or whether, perhaps more ominously, hardware defects or sabotage helped introduce the virus.  
 
Congressional committees such as the powerful Senate Armed Services Committee have been investigating how deeply counterfeit microchips and sabotaged electronics may have infiltrated the military supply chain.  Senator Carl Levin has revealed that critical weapons systems have been so infiltrated.  It is natural that technicians are worried about security flaws in the hardware, as well as in the more immediate and common concern  about exploitations of software and firewalls.  
 
Wired reports that "...[more than] 150...Predator and Reaper drones, under U.S. Air Force control, watch over the fighting in Afghanistan and Iraq. American military drones struck 92 times in Libya between mid-April and late August. And late last month, an American drone killed top terrorist Anwar al-Awlaki — part of an escalating unmanned air assault in the Horn of Africa and southern Arabian peninsula."
 
 
Photo: Drone pilots control room at Creech, Nevada
 
 
 
 
 
 
 
 
 
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Estimated one-third of consumer goods in Russia are counterfeits; aviation also hit

A country awash in energy wealth, Russia boasts numbers of newly-minted billionaires, while the upscale shopping streets of Moscow and other large cities are lined with stores selling the latest, most fashionable products produced worldwide.  Or are they?

A Russian Interior Ministry investigation has estimated that up to a third of everything sold to consumers in Russia--most especially those glittering luxury goods-- are counterfeit.  The fakes don't end at the all too normal handbags and running shoes, but extend to clothes, perfume, cigarettes, household chemicals and food, according to the Moscow Times.  And this leaves aside the well-known plethora of digital piracy eminating from this region.
 
The phenomenon of the fake store, most recently seen in China's fake Apple stores, is widespread in Russia according the web site The Mark, a Russian business newspaper.  Several supermarkets report counterfeit stores selling under their trade name, such as the luxury supermarket Aliye Parusa.  At the other end of the scale, the discount house Pyatyorochka is widely faked.
 
Counterfeit Yves Rocher store
 
A fake Yves Rocher store operates in the Siberian republic of Tuva, even after the company complained to the local office of the Federal Consumer Protection Service, again according to the Mark
 
In fact, somewhat mysteriously, authorities such as the Consumer Protection Service claim that many fake stores are left operating because "it is difficult to prove that the counterfeiters broke the law," as spokesman Mikhail Anshakov put it.
 
Aside from faking the whole store, perfumes are a favorite target, including counterfeit items by Christian Dior, Dolce & Gabbana, Donna Karan and Nina Ricci.
 
In an indication of just how widespread the use of counterfeit parts are in the country, mechanics often refer to their use of 'leviye' — the Russian word for "left," which in slang means "fake."
 
Counterfeits and air disaster
 
Ominously, this includes the use of counterfeit parts in aviation. This perhaps leads us to another dark statistic: there were twenty-four major air crashes in Russia in the first seven months of the year alone.  After a September crash which killed the entire championship hockey team Lokomotiv, President Medvedev pointed to the quality of equipment, urging the use of more equipment "from abroad."
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Electronics

Hub Subtitle: 
Utilizing botanical DNA to forensically ID microelectronics is the ultimate weapon to foil counterfeiters.
 
The Defense Logistics Agency, the Department of Defense's combat logistics support agency, has launched a mandate that suppliers provide microcircuits that have been marked with botanically-generated DNA produced by Applied DNA Sciences or its authorized licensees.
 
Applied DNA’s marks offer a breakthrough solution to the “growing deluge of millions of counterfeit chips posing peril to the U.S. military and the general public”. Utilizing botanical DNA to forensically ID microelectronics is the ultimate weapon to foil counterfeiters. 
 
Defense Suppliers: Please follow the links on this page to learn more about the DLA mandate for microcircuits.
Feb 12, 2013 — Aviation Week; DLA Uses DNA to Mark Electronics Against Counterfeits

Jan 24, 2013 — DLA “Loglines”: Combating Counterfeits

Nov 1, 2012 — Military and Aerospace Electronics: Defense Logistics Agency requires DNA marking to combat counterfeit parts

Oct 10, 2012 — DNA MARKING AND IMPLEMENTATION CONCEPTS: Discussions from a defense and aerospace community perspective. | © Henry Livingston

Oct 8, 2012 — AOL Defense: DLA Demands Chip Makers Tag Products With Plant DNA; A War On Counterfeiters

DNA marking must begin on items falling within Federal Supply Class (FSC) 5962, Electronic Microcircuits, which have been determined to be at high risk for counterfeiting. A new clause at Defense Logistics Acquisition Directive (DLAD) 52.211-9074, Deoxyribonucleic Acid (DNA) Marking on High Risk Items, will be included in new solicitations and contracts for FSC 5962 items when the item description states that the item requires DNA marking.

   

 
 
 
 
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Larry McIntosh, Director, Sales, Electronics

Bio: 
Larry McIntosh has twenty years of sales experience in the microprocessor, semiconductors and other electronic-driven industries, and possesses a wealth of B2B experience in selling technology-enabled services and products. Larry will substantially elevate APDN’s sales efforts, particularly as the Company begins to enter the fields of DNA marking of microchips and working to continue to expand APDN’s reach within the government and commercial sectors for these applications.

Mr. McIntosh received a Bachelor of Arts degree in Psychology, Economics, and Psychology from Fairfield University.

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SigNature® DNA

Hub Subtitle: 
Custom DNA sequences are created and embedded into a wide range of host carriers such as ink, varnish, thread, laminates and metal coatings.

 

Uncopyable. Forensic. Absolute. 

SigNature DNA markers provide the ultimate in forensic power and protection for a wide array of applications.  Highly secure, robust, durable and cost-effective, SigNature DNA markers can be used to fortify brand protection efforts; mark, track and convict criminals; and strengthen supply chain security.   

Versatile

Custom DNA sequences can be embedded into a wide range of host carriers including ink, varnish, thread, laminates and metal coatings.

 

Creating a SigNature DNA Marker

 

Botanical DNA is isolated

 

DNA is segmented

 

Segments are shuffled and reassembled to form an encrypted, unique, secure DNA marker

 

Applied DNA Sciences technical personnel authenticate markers and produce comprehensive witness statements, making the use of DNA evidence in legal action easy and effective.

Unique SigNature DNA Markers:

• Cannot be copied

• Covert and forensic

• Custom DNA markers can be created for specific vendors/suppliers or raw materials

• Compatible with a wide range of products; can be placed anywhere in or on the product

• Adaptable. Will not require major changes to the manufacturing process or supply chain

• Fully-supported expert witness reporting

 

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A second look inside the fake Apple store in Kunming: what it says about China

If you missed our blog video  taking you inside the counterfeit Apple store in China, it is...well, all we can say is, it's worth a look.  

Then consider the aftermath.

First, in subsequent weeks, there has been much commotion about Apple and counterfeiting, and especially its assumed slowness in responding to counterfeits of its products coming from China.  A new leak from the Wikileaks site showed that Apple "Apple hired in March, 2008 the team from Pfizer that had formed and led a multi-year crackdown on counterfeit production of its Viagra drug in Asia." according to PC World.  A horrified cyberspace has echoed the shock of such a "late" response.

While the history of Apple's relationship with its sales channels in China are no doubt complicated, this widespread idea misses the fact that the global explosion of counterfeiting is a recent phenomena--for all business, not just Apple.  Though becoming visible and threatening around the year 2000, counterfeiting as a global threat to jobs, businesses, and society only emerged  in the latter part of the decade. The much-threatened pharma companies really only began taking major anti-counterfeiting measures around the middle of the decade.  Here we are in 2011 however, with a qualitatively different story.  Now the phenomenon has become powerful enough to impact entire economies (and in the case of some more vulnerable countries, threaten to consume them; see our post Mexico economy plummets as counterfeiting soars).  In many ways, we are all just now grasping the seriousness of the problem.

And something else this incredible story tells us about the rise of China in the world economy.Consider this comment by the Financial Times:

"China’s role in the global supply chain has long been assembling things designed by others. Its share of the profits of this process has been correspondingly small. The proliferation of stores imitating the services as well as the goods provided by western firms look like the beginnings of a great leap up the value chain. There will be nothing fake about the squeeze on western profits that follows."
 
 
FT rightly notes the strong signs of a shift in the take-off strategy of China, as a developing nation in the modern global supply chain.
 
We would add that China has added a thoroughly modern twist to that strategy.  It has not been content with merely assembling, but has become the home of a vast counterfeiting of goods designed by others. According to the MIT Center for International Studies, about 8% of all products made in China are counterfeit.

This is a road also traveled in earlier decades by Japan, as many economists have pointed out.  In the case of Japan, the road moved through cheap, often infringing imitations to higher quality goods and ultimately and more fundamentally, a global economic position as an innovator, producer, and consumer in its own right.  At that point "Japan, Inc." challenged, and for a while, threatened to overtake the West.  

 
But in the era of the internet, globalization and a world counterfeiting black market, "cheap imitations" provide far more competitive muscle than was true for Japan in the 1950s.
 
Which brings us back to the fake Apple store with a bit less humour, and fewer easy swipes at Apple.  It is a sign, as FT puts it, that China will not long be satisfied with a role near the bottom of the economic food chain.  The challenge for the global economy is to do whatever possible to help China transform the competitive energy now channeled into faked, counterfeited goods and stolen IP, into legitimate business.   Then may the best value prop win.
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