How Digital Printing and QR Codes Make Product Authentication and Traceability More Accessible to SMEs

Dr. Justin Picard
Chief Technical Officer, Scantrust SA

Ebony Nicole Simon
Marketing Content Manager, Scantrust SA

Successful Small and Medium Enterprises (SMEs) that sell e-commerce products are almost guaranteed that, sooner or later, they will have to deal with the problem of counterfeits or copycats (Bercovici, 2021). And, in Europe, a survey showed that one in four SMEs claims to have suffered from IP infringements (Wahl, 2021). 

While the packaging of counterfeits is typically replicated with high accuracy, the product itself is in most cases malfunctioning, made with inferior components, or, at the very least, does not adhere to proper manufacturing practices. 

The main challenge for counterfeiters is not producing fakes but distributing these into legitimate channels while maximizing their profit margin without getting caught.  

As sales increasingly move online, the boundaries between so-called “legitimate” versus illicit sales channels are blurring to the point where they no longer are sufficient criteria in determining whether a product is authentic. A fundamental way to make the distribution of counterfeits harder is to provide convenient ways to assess the authenticity of products at every point of the supply chain. Ideally, this would allow a consumer, a distributor, a retailer, or a brand inspector to determine on the spot whether a product is genuine, without specific training or knowledge. 

In the case authenticity is not confirmed, at the very least, the transaction will not take place, but also every detection of counterfeit contributes to the disruption of illicit activities.

Adding security features allowing potentially anyone to verify authenticity may appear like a no-brainer. However, the sheer number of authentication technologies and solution providers out there can be overwhelming. This is why the European Union Intellectual Property Office (EUIPO) published an anti-counterfeiting technology guide earlier this year. The 122-page document can provide guidance to companies of any size. The primary motivation is to support SMEs that don’t have the resources to research and understand available anti-counterfeiting technologies application, implementation, and cost. 

Although the guide provides a solid overview, the motivated reader who goes through the outlined 50 or so technologies still has to decide on which technology, or combination of technologies, makes the most sense to address their counterfeiting problem.

Among all these technologies, the QR Code stands out for its potential to address the needs of SMEs due to its versatility, wide range of benefits, and relative ease of integration. 

QR Codes are already widely used on packaging in Asia, where they have become part of the social fabric over the last ten years. In the Western world, adoption has been slower, yet their use has been revealed to Westerners thanks to the touchless transactions they enable during the pandemic. So, what makes QR Codes special, in contrast to other anti-counterfeiting technologies? 

Let’s first note that, as stated by the EUIPO guide, “QR codes by themselves do not offer protection against copies. Indeed, a simple photocopy of a QR Code will defeat any QR Code reader.” However, the guide adds that, “…they can be combined with other authentication technologies such as holograms, copy detection patterns or unique identifiers to provide automated authentication via a smartphone scan.”

On the other hand, the presence of the QR Code makes authentication of the security element more effective and easier to perform than if there were no QR Code. The whole is greater than the sum of the parts. Furthermore, if a digital pattern, such as a copy detection pattern, is embedded into the QR Code, the protection against copy becomes intrinsic at the graphical level (Picard, 2020).

Many authentication security features are the same for a batch of products. With digital printing, QR Codes can be serialized and made unique to each product, which unlocks other means of detecting fraud. Indeed, every new scan generates an additional data point with geolocation— which provides the SME with real-time visibility on their distribution channels—helping to detect counterfeit hotspots and other illicit activities (gray market, expired products, etc.). Automated or semi-automated statistical detection of counterfeits can also be enabled, as an unusually high number of scans on any single serialized QR code would indicate that an item has been copied, distributed, and perhaps sold illegally.  

The potential benefits offered by QR Codes go way beyond addressing illicit activities. 

SMEs also need effective ways to connect with their customers digitally. By associating a unique identity to each product, serialized QR Codes allow storing the traceability history of each product and creating such customized interactions. Unit-level information is held in a product cloud and updated at every event throughout the product’s life cycle. The response to a scan is dynamically generated depending on the context, user rights, etc. This opens myriads of possibilities for customer engagement and providing more value to product users.  

“Connected packaging” is the increasingly used term to refer to packaging which can address, at once, challenges of product authenticity, supply chain visibility, and consumer engagement. The connecting element is typically a QR Code (with an additional security element to protect against copy). 

Still, other unit-level secure identifiers such as Near Field Communication (NFC) may also be used for high-value products where cost is not an issue. However, there can be complexity in the implementation of connected packaging—especially if the printing or packaging company does not have substantial expertise with digital printing. 

It is also essential that the cloud platform used to manage item-level information comes with a wide range of features needed to connect to the company’s Enterprise Resource Planning (ERP), to create customized landing pages easily, or to manage parent-child associations, to name a few. 

Fortunately, some exciting initiatives are underway (Reynolds, 2021), For example ePac , a company Scantrust has partnered with, has launched a connected packaging initiative and is providing digital printing-based packaging to SMEs that gives them the ability to compete with large brands. This initiative makes connected packaging accessible to SMEs at a reasonable cost, or even no cost at all, for a basic version (ePacConnect, 2021).

Who would have thought that one day, anti-counterfeiting would be offered as a freemium version?

See the March 2021 edition of the Brand Protection Professional on Packaging and Brand Protection.