Applied DNA Sciences Inc (APDN)

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http://www.militaryaerospace.com/articles/print/volume-24/issue-7/opinion/signature-dna-marking-on-the-agenda-for-electronics.html

SigNature DNA marking: on the agenda for electronics

July 11, 2013

BY James A. Hayward

The SigNature DNA marking and authentication platform-known by the shorthand "DNA marking"-is on the industry agenda right now. A quick Internet search for this phrase will turn up dozens of pages on the subject. Webinars have been held, task forces arranged. We thought readers might want to hear from the company who developed the platform.

To date, 42 businesses have either signed contractual agreements to begin using SigNature DNA authentication technology, or are in stages of negotiation. Many more are think- ing about it. We believe people in the industry, the vast majority of whom want a healthy business and a healthy supply chain for warfighters, should think carefully about the implications of this development.

First: these are formidable early stage numbers.

In the U.S. Defense Logistics Agency (DLA) requirement for suppliers to use SigNature DNA, we are looking at a groundbreaking program to help protect the military supply chain. As industry hands well know, the electronics business has seen many well-meaning attempts to attack the problem of misrepresented parts.

This one, however, is subsidized by DLA to its to trusted suppliers. DLA has steadily built a superstructure of specifications and linked it to new qualification requirements. Our company, along with DLA, has consistently been available to the industry, at no less than 49 conferences and countless public meetings over 18 months. The contract signings are another key indication of its successful forward movement.
The potential scope for this program is broad, and its value for the military and suppliers is great. It is crystal clear that DLA is determined to forge ahead with the program.

This determination should not be a surprise. The crisis of counterfeiting is real; it is a life-or-death issue for warfighters, and it has never been at the extreme levels that we find today. Only in the last five to eight years do we see the volumes of counterfeits skyrocket while the counterfeits stream has changed over time from simple, easy-to-fake parts to inclusion of complex microcircuits like the ones DLA is protecting with the SigNature DNA program.

SigNature DNA is ready, available, and has shown to be an effective method to mitigate the great risks to the military supply chain posed by this crisis.

There has been a consensus from the beginning that SigNature DNA marking and authentication can be effective for policing open-market procurement of electronics, where independent distributors and brokers dominate. That is where we began our outreach. Yet, the group we have announced includes independent and authorized distributors, as well as manufacturers and original equipment makers. This trend points to a broad market that includes independent distributors.

A key point that is not yet widely understood in the industry: SigNature DNA as used by manufacturers is in the form of an authentication mark, applied during production, which assures the originality of an item. As used by suppliers such as distributors, SigNature DNA is in the form of a provenance mark, assuring the immediate source of the part (not directly its authenticity).

Manufacturers and authorized distributors can and do benefit. The expanded base of the SigNature DNA program gives food for thought on this contentious issue: the assertion that SigNature DNA is not needed for authorized distributors and manufacturers since these businesses "sell directly to DLA" and do not make counterfeits.

The reality is not so clear-cut. On the one hand, it is undeniable that buying from an authorized channel is preferred (although it is not always possible). On the other hand, counterfeit parts can and do find their way into the stocks of manufacturers and authorized distributors through returns. A Department of Commerce study in 2010 found that 10 percent of counterfeit incidents in a survey were sourced from authorized distributors, and pointed to returned goods as the culprit.

An interesting observation was published in 2009 by Dale Lillard, president of Lansdale Semiconductor in Phoenix, who wrote in Wireless Design and Development that "the only way a manufacturer can confidently be sure that an end user of its product is not getting a counterfeit is to...never restock returned product for resale."

We agree. Returns in today's market can be treacherous and manufacturers are at risk of "getting a counterfeit" from them, as Lillard puts it. SigNature DNA gives manufacturers and their authorized distributors a powerful tool to mitigate this risk, providing confidence to their customers and to themselves.

"The only way a manufacturer can confidently be sure that an end user of its product is not getting a counterfeit is to sell the product directly to them without using a middle sales channel and to never restock returned product for resale."

As a side note, Lillard in the same article suggests that manufacturers cease restocking returns entirely.

"In light of the magnitude of the problem, I recommend that restocking be discontinued as it is difficult to detect counterfeits, and once the product leaves the control of the distributor or manufacturer, it can be replaced with counterfeits and the substitution not be detected. "

This may be an interesting long-term approach, but to cease restocking returns might have far more disruptive impact on production and could inflate costs much more than the adoption of SigNature DNA.

We welcome the opportunity to partner with manufacturers and the authorized channel, and all will benefit from the collaboration.

We have been asked about SigNature DNA costs and process impact. First: Cost of the initial marking to DLA trusted suppliers is zero, thanks to the DLA subsidy of the SigNature DNA marking program. No per-order battery of "re-marking" or "re-branding" tests is required, although that rumor has been imaginatively floated in print recently.

See Defense Logistics Agency FAQ, April 12, 2013, which explicitly addresses the question, and our own technical brief on regulations and standards governing SigNature DNA marking.

Our company has also addressed performance and mark stability concerns at a January meeting of the JEDEC JC-13 committee, with a presentation of comprehensive test results showing no impact on component performance and rock-solid stability of the mark in a battery of tests. These months-long tests were performed at independent test labs, the University Of Maryland Center for Advanced Life Cycle Engineering (CALCE), and at Battelle.

We urge suppliers and interested parties to contact us directly.

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James A. Hayward is president and CEO Applied DNA Sciences in Stony Brook, N.Y. DNA Sciences is online at www.adnas.com.