Proving Provenance

Protecting intellectual properties in ASEAN countries using blockchain, IoT and NFC technology

Counterfeit goods can be replicas or first copies, making it impossible for the layperson to differentiate. These counterfeit products can be as expensive as the originals.

According to a recent survey by the Vietnam Directorate of Market Surveillance, 80 percent of consumers buy counterfeit goods because of the cheap price, even if they know the product is counterfeit. Similarly, retailers know the products are fake but do not report it to the authorities over concerns of potential impact on their prestige plus coordination between anticounterfeiting authorities in Vietnam is still not effective.

Also, in the health sector, about 1% of all drugs in circulation worldwide are fake, rising to 70% in some ASEAN member states. And of course, directly and indirectly, leading to deaths and health complications day in, day out. Goods and construction industries have also had to battle counterfeit products and materials. Local authorities are still struggling to ensure the standards of even basic goods such as fruit and vegetables.

Every year over 140 companies in 11 ASEAN countries are reported to issue fake organic certificates. The International Control Union Certifications Organization, which operates in more than 70 countries, reported two such companies in Vietnam that issued false organic certificates. There have also been reported incidences that many coffee shops use entirely synthetic replacements.

According to a survey done by the Vietnam Standards and Consumers Association, a third of local coffee products were either of extremely low quality or even completely fake. The results of the report were announced on July 20, 2019, at a conference discussing the issue in Ho Chi Minh City.

Dinh Van Manh, from the Department of Anti-Environmental Crime Police, said the fake coffee was largely a mixture of corn, soybean and flavor powder. “The market isn’t only flooded with dirty coffee that is produced in unhygienic conditions, but also fake coffee made from different powders and sometimes chemicals,” he said.

Nguyen Duy Thinh, from the Hanoi University of Science and Technology, voiced concern about the potentially carcinogenic ingredients being used in these cheap coffees. According to Thinh, coffee cheaper than VND160,000 per kilo is extraordinarily likely to be fake and could include moldy corn, soybean and cheap coffee beans that have not been stored properly. “Vietnamese people like a strong bitter taste in their black coffee so those ingredients will be overroasted. This is carcinogenic,” he said.

One of these factories, Thong Phat, had produced around 1.5 tons of fake coffee per day from soybeans, corn and a mix of partially unidentified chemicals that reporters named “life-threatening.” The inspectors did not find a single coffee bean.

While one-time consumption of fake coffee should not permanently damage your health, daily intake of chemicals like industrial colorings, sodium lauryl sulfate, carboxymethyl cellulose, chloramphenicol and sodium cyclamate can poison your liver, bone marrow and kidneys, cause cancer and even genetic defects in unborn children, such as Down’s Syndrome.

“Experts said that additives used to turn soybeans into coffee-like beans, which include coffee flavorings, foammaking substance Sodium Lauryl Sulfate mainly used to make shampoo or dish-soap, industrial color powders and Carboxymethyl Cellulose (CMC), can contain impurities and heavy metals like mercury and lead, which may lead to cancer if used for a long time.

Doctor Tran Van Ky warned that the abuse of the antibiotic Chloramphenicol can poison human livers, bone marrow, and kidneys, while chemical sugar Sodium Cyclamate, which is 50 times sweeter than normal sugar, can cause cancers or Down syndrome.”

What is the Source of the Problem?

Andrew Hupert, an American expert in cross-cultural studies who has written articles and books on the subject, stated that “there are 3 generalized cultural trends that make intellectual property theft so endemic in Asia.” Chipping in on the origins of counterfeit products, Andrew says, “Why take a risk and spend time and money building a better mousetrap when XYZ Inc. already sells millions of its latest model?”

Expanding on the problem of IP theft that exists in Asia, Andrew says, “Asian leaders and professionals justify IP theft as just part of the rough and tumble game of international economics.”

He goes on to explain their legal system as, “Asian governments have traditionally taken a lukewarm approach to write or enforce laws punishing local factory owners for impinging on foreign patents or copyrights.”

1) Respect for precedent. Confucian societies tend to put a premium on past successes. Innovation has, until recently, been seen as a lazy alternative to assiduous modeling of accepted templates. Creativity has traditionally been a last resort. Even today, Asian students excel at math and sciences where there is a single correct answer, while critical thinking and problem solving remain unattainable challenges. The same logic holds for consumer products. Why take a risk and spend time and money building a better mousetrap when XYZ Inc. already sells millions of its latest model?

2) IP theft plays into the common Asian theme that the West has plundered Asian resources for hundreds of years— and nations like the US and the UK achieved their wealth stealing IP from one another. Asian leaders and professionals justify IP theft as just part of the rough and tumble game of international economics. Western complaints about IP theft are seen as yet another hypocritical attempt to constrain and contain Asia’s rightful place at the global table.

3) Capitalism is a battle for the survival of the “in-group.” Chinese and Southeast Asian economies have lifted hundreds of millions of people out of poverty—and those gains must be defended and extended. Asian nationalism is often expressed as a struggle for survival against an aggressive, predatory Western enemy. Asian cultures are almost universally collectivist—with an in-group and an out-group. Outsiders are simply not afforded the same rights or protections as members of your own group. Courts and laws of other countries do not have any moral authority in local communities, and Asian governments have traditionally taken a lukewarm approach to write or enforce laws punishing local factory owners for impinging on foreign patents or copyrights.

China the “The Mc Donald’s of the Counterfeit World”

(Dalian is a city in Liaoning Province in China that just announced its “awardwinning” city logo. The logo may have won an award however it looks suspiciously to look to be the exact same design as the Disney logo).

Southern China is the world’s leading center for mass-produced works of art. One village of artists exports about five million paintings every year—most of them copies of famous masterpieces. The fastest workers can paint up to 30 paintings a day.

Wu Ruiqiu, the founder of “Shenzhen Art Lover” in Dafen, China, ships 300,000 paintings a year and is one of Dafen’s model companies. The businessman is dreaming of industrial mass production, complete with assembly lines. The creation of every painting would be divided into standardized production stages. Ruiqiu wants to “get into the business of oil paintings the way McDonald’s got into the business of fast food.”

Ronald Paredes, a Venezuelan artist living in China, gave us some interesting Western insights as to why forgery is prevalent in Chinese society. Ronald ponders on the fact that artists are the easiest targets of forgery because usually “we don’t have the means or the processes to protect our artwork, a signature is easy to forge the same as a certificate of authenticity.”

Forgery even has an adverse effect on consumers. He says, “As they are buying something, they think it is original and pay the premium, but end up getting a counterfeited painting.” Extending beyond counterfeiting being an ethical violation and creativity theft, Ronald explains that it can have far greater consequences. Reflecting on the impact this has had on China’s reputation, Ronald says that forgery has negatively affected “everything that bears the label of ‘Made in China’, which is automatically perceived as being of dubious origins, low quality and even perhaps life-endangering.”

Pondering on a solution to this problem, Ronald posed the idea that the only method to counter forgery is to digitize products. He is collaborating with launching GO-ID created by Guaranteed, a Vietnamese-Canadian joint venture start-up where “every product will be equipped with a small chip containing a tracking code created using blockchain technology … then IoT technology will allow NFC enabled cell phones to scan the code … this way consumers will be able to easily tell if the product is genuine or fake.”

Can blockchain, IoT, and NFC Technology Provide a Solution?

 

Chris Draper, Managing Director at the Trokt Platform in the US, has some interesting insights on the matter. When Chris was posed with the question of how he started to work on Trokt Platform’s state-of-theart technology to battle the problem of counterfeit products, he reminisced on the team’s journey towards defining the problem: “We realized that because everyone’s got fragments of data everywhere, that no one’s connecting the dots effectively, the real problem that we’re starting to see in this digital world is: What is digital originality? What is digital truth?”

Then, he expands upon the legal aspect of the issue of counterfeit products by elaborating: “So we get to the courts and we got two sides that say… well, ‘I got the right information my idea was first’, and the other one says, ‘I got the right information my idea was first’. Then we go on to spend USD5,000 to USD20,000 on forensic analysis only to come back uncertain. Everyone’s moved everything everywhere. No one knows where the original one is. Original doesn’t even really exist in the digital world anymore.” This led to the realization of the existence of the problem of “how can I walk into any court in the world in an intellectual property case or an IP government compliance case and say, ‘this document is real’, and instantly prove it for cents as opposed to thousands of dollars.”

Under Chris’s management, the Trokt Platform found a way to tackle the counterfeit goods problem using a Trokt Blockchain-based technology. Products based on this technology are secure, encrypted and have a unique identity so they can be traced easily to their origin.

Guaranteed Original is doing just that. The company is introducing the GO-ID tag-based in Hanoi that can be scanned with NFC technology that is currently available on any smartphone. Basically, the GO-ID will allow consumers to verify the authenticity of any product and help them to stay away from counterfeit products.

Once the code has been scanned and verified, then the consumers will be able to see all the authentic information about the product, whether it be from a factory or a farm. If it is a fake product, then the code will not be verified and the consumers will know that it is a fake product. The technology allows consumers to connect to the company’s IP address and social media sites and verify the exact location of the production using Google Business GPS Identifying geo-location tags so that fake online businesses will be eliminated.

Consumers will finally be able to buy products and interact with the seller and add positive and negative reviews with more confidence and feel safe when using them since the GO-ID tag will ensure that the product is Guaranteed Original.

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