Ten years ago, sports trading-card company Donruss started selling "jersey cards," player cards that included a tiny swatch of a hero's uniform. Beginning with a card for Indianapolis Colts quarterback Peyton Manning, the Arlington, Tex. company has made millions of these collectibles. Also busy making jersey cards: counterfeiters.
"In some cases, we couldn't even tell what was real and what was fake," said Scott Prusha, spokesperson for Donruss. "There was clearly a problem." Fans aren't going to pay an extra $15 to $1,000 for a trading card if they aren't confident the thing is real.
To squelch the pirates, Donruss this year embedded an invisible marker into its cards, a trace amount of a chemical made by Eastman Kodak (nyse: EK - news - people ). Anyone questioning the authenticity of a trading card can send it to Donruss to be scanned by a device that detects the chemical's presence. The nature of the chemical is a secret. All the Kodak people would say is that it's made of small inorganic particles.
Kodak began selling its Traceless anticounterfeiting system last year, reaching out to producers of wine, pharmaceuticals, cosmetics and apparel. Counterfeits make up 7% of the world's goods, estimates the International Anticounterfeiting Coalition. Stopping them would rescue much lost profit for manufacturers of high-markup items.
Having technology to quickly identify fakes would make it easier for brand owners to get help from intermediaries. As it is, the brands get into expensive legal fights over what is a fake and who is aware of it. In July online auctioneer Ebay was ordered by a French judge to pay Louis Vuitton's parent, LVMH, $61 million in compensation for brokering illegal goods. Ebay is appealing; a week later it won a similar case, filed in the U.S., involving Tiffany (nyse: TIF - news - people ) products.
BrandProtect is a fast-growing Canadian firm that uses a technology called LinkWalker to trawl the Web for counterfeiters, looking for sites that make unauthorized use of product pictures and logos that have an invisible digital watermark incorporated into them. BrandProtect's clients include David's Bridal, KitchenAid and Whirlpool (nyse: WHR - news - people ). Sites selling what appear to be counterfeit items are asked to take down the products and, if they refuse, could get cease and desist letters.
In two months David's Bridal found 40 possible offenses, said Carol Steinberg, vice president of DavidsBridal.com, the online arm of the largest bridal retailer in the U.S. "People use pictures of our dresses and claim they can sell the same dresses on their site," Steinberg said. "Those dresses they sell aren't ours, because we sell our brand only on our site." To use BrandProtect, David's Bridal pays around $2,000 a month.
ASD, a $10 million (revenue) private company in Boulder, Colo., is focused on the pharmaceutical industry, where fakes are rampant and dangerous. Pfizer (nyse: PFE - news - people ) estimates that it lost $2 billion of sales last year to vendors of fake Viagra.
This summer ASD launched a drug scanner, known as RxSpec 700z, to test drug ingredients. The drug, in or out of its package, is placed under an infrared light detector that feeds information into a digital database that has chemical signatures of all the legitimate drugs sold in the world. In two seconds pharmaceutical companies or law enforcers can spot imitations. "It's a $65,000 solution to a multibillion-dollar problem," said Michael Lands, ASD's director of strategic planning and marketing.
ASD has already sold units to Novartis (nyse: NVS - news - people ) and is in discussions with the U.S. Food & Drug Administration. Several international aid programs are looking at RxSpec to deal with the flood of counterfeit drugs entering developing countries, where as much as 30% of the drugs are sham medicines, according to the World Health Organization. The bad drugs often lack active ingredients or contain hazardous ones that can cause serious allergic reactions.
Cutting back on paper-money counterfeits is the aim of British security company and defense contractor QinetiQ. The publicly traded London firm has developed a magnetized ink for currency, known as magnetic tactile. The name is not catchy, but the product itself is. A dollar bill or euro would be filled with magnetized strips of ink, causing it to stick to and pull against itself when folded. The action of the magnets against one another creates a subtle ribbed texture to the money. Bills wouldn't stick to the refrigerator, but they'd have a different texture than an average note. "Anyone would be able to detect a counterfeit just on contact," says Christopher R. Lawrence, QinetiQ's lead technology developer.
The cost of adding the ink to paper currency would be less than half a cent per note. QinetiQ, which was an arm of the United Kingdom Ministry of Defence until 2003, has no U.S. customers for the magnetized money but says it expects American engravers to begin using it in passports, checks or product labeling in a few years. European plastics firms are already using it. "We're ready for business, but the average country takes three to five years to add new features to a currency," Lawrence said. "It takes only three months for a counterfeiter to figure out how to replicate them."
