Blockchain as a tool to fight against counterfeiting, in particular for wine products
- MAIN FEATURES: the Blockchain and the Blockathon
Today, counterfeit products represent 2.5% of the world trade, according to the Counterfeit and Piracy Watch List (7.12.2018) released by the European Commission. The counterfeiting phenomenon shifted from being widespread mainly in the physical market to a quite unmanageable scope, making it necessary for protection tools and laws to adjust rapidly.
Blockathon is an initiative launched by EUIPO in June 2018. This contest represents a clear signal of the European Office’s trust in these new technologies’ potential to provide new and effective solutions to fight against IP rights violations. In this first edition, 11 teams of innovators were competing for 48-hours to create a new blockchain based software capable of marking a turning point in the fight against counterfeiting. At the end of the competition, the Italian team Cryptomice, led by Thomas Rossi, was awarded the prize for the best solution with their prototype “virtual twin”.
The blockchain system is in fact one of the most innovative solution applied in this field, but what is it exactly? The blockchain allows to create a “chain of blocks” each one containing more than one transaction. With this technology it is possible to implement anonymous coded operations, to then store all details and relevant information in an online public registry. In a nutshell, blockchain eliminates the intermediary completely thereby obtaining unchangeable data about coded and anonymous operations.
Back to the Blockathon contest, EUIPO’s scope was to develop a traceability technique for B2B purposes in order to improve the efficiency of products’ supply chain. In particular, these are specific solution for those cases in which brand owners rely completely on distribution chains for their sales activities, thus losing control on their value chain. For example, when products are offered for sale on marketplaces like Amazon or Alibaba, brand owners who did not implement any anticounterfeiting technology for products traceability often have troubles in confirming their authenticity.
During the contest, the Italian company Cryptomice created a software capable of verifying products’ authenticity very quickly. Their idea was to generate a “virtual twin” product, linked to the physical product but impossible to duplicate and/or counterfeit because based on the blockchain technology. In fact, the main value added of blockchain technology is to be equipped with a layer of unchangeable data, impossible to modify due to cryptography. The concept is easy: in order to sell a physical product it is necessary to prove that one owns – and, consequently, that one can give – its virtual twin as well. Blockchain technology allows to know certainly and unmistakably if an object is original or counterfeit. On the contrary, for example with a fake QR code, it is possible to duplicate a product perfectly resembling the original.
Specifically, when the physical product is sold, the virtual one created with the blockchain technology – thus unchangeable – has to be transferred to the new owner. In this way, the so-called “owners chains” grow. With this technology, it is rather simple to trace back the original creator of the “virtual twin”, that is to say the brand owner, and therefore check the originality of the product. If a subject belonging to the owners chain – in other words the product’s supply chain – realizes that the real product doesn’t match with the virtual one, it is possible to trace the whole list of the product’s previous owners. In this occasion, the system allows to send a counterfeiting notification in relation to the product, thus signaling with a red color the “owners line” at risk.
In this way, by collecting these kind of notifications over time, it is possible to detect those subjects of the supply chain who are not respecting the right procedures and that are circulating fake goods, namely those products whose virtual twin is not matching with the real product. This procedure has the big potential to help brand owners to quickly identify the distribution channels at high risk of counterfeiting. As a consequence, by cutting out of the supply chain those intermediaries, the risk that fake goods arrive to the final consumer should be considerably reduced.
- DIRECT APPLICABILITY: Wine products and Vinitaly
On the occasion of Vinitaly, starting from April 7th, Mipaaf and Agea launched the Italian experimental project Filiera 4.0 del Vino, created to protect Made In Italy products. Several Italian wine companies gave great trust to blockchain as a tool to limit counterfeiting in the wine sector, thanks to advanced systems of digital traceability. This initiative, technically developed by AlmaViva, employs blockchain technology to create a layer of unchangeable data, publicly available, about wine products, thus certifying with certainty the origin and authenticity of wine bottles.
Specifically, starting from data provided by SIAN (National Agricultural Information System), the blockchain platform called Ethereum allows to confirm the quality of wine productions. In practice, a sort of product’s ID card is created, reporting all details regarding the origin of raw materials, the production process, the checks successfully passed and certifications obtained etc.
Moreover, in this direct application of blockchain, before the product gets to the final consumer, any subject belonging to the owners’ chain of a single wine bottle has to report all data regarding his/her operations, thus making the whole distribution process transparent, publicly available and clearly registered through blockchain technology.
In order to trace every movement in the best possible way, a special NFC TAG, verifiable and readable through the APP eNology is applied to the physical product, i.e. to the wine bottles batches. With this technology, it is possible thanks to a Smartphone or a tablet to ascertain the origin of the product by tracing back the entire owners’ chain contributing to the passing of the product from the producer to the consumer. With this brilliant initiative, not only the communication with the final consumer becomes more effective, but also the difficulties often observed in verifying potential counterfeiting actions throughout the product’s production and/or distribution chain are dramatically reduced.
In conclusion, the advantages of blockchain as a system to digitally trace physical products, like wine bottles, are undoubtedly numerous and there are great premises for future improvements. All that being said, it is still fundamental that companies put their efforts to structure accurate protection strategies against counterfeiting, in order to reduce potential economic losses arising from the commercialization of fakes. In this regard, the legal and engineering advice of experts in the field of intellectual and industrial property is very often momentous to protect companies against the proliferation of fake products and, most of all, to help them maximize the value of their investments on products’ quality.