Startup Backed by Kodak, Alibaba Fights Fakes With Invisible Inkby
EApeiron’s markers keep products traceable over supply chain
Counterfeit goods accounted for $461 billion globally in 2013
The film cameras that built Eastman Kodak Co. in 1888 are long gone, yet the company’s imprint may soon be embedded on products from shoes to cigarettes.
Kodak, supplying hundreds of patents, research and history, is behind a startup working to combat counterfeiting with a technology that places an invisible, digitally traceable marker on products to ensure they are authentic.
The new company, eApeiron, whose name comes from the Greek word for everlasting, launched last month and is targeting e-commerce. Globally, fake and pirated products accounted for almost a half-trillion dollars in 2013, according to a report this year by the Organization for Economic Cooperation and Development, with 84 percent of seized goods originating in China and Hong Kong. Besides losses and brand erosion for companies, counterfeiting can result in lost tax revenue for governments and it discourages innovation.
“Everyone knows this is a problem,” said Kodak Chief Executive Officer Jeff Clarke, who cited the complex supply chains at many companies. “If you’re in charge of brand protection or you’re a security officer of a major brand, this means you’ve got a new tool.”
Miami-based eApeiron, which is pronounced e-uh-PEER-on, will locate its research, engineering and manufacturing operations within Kodak’s business park in Rochester, New York. Some research will also occur in labs in Shanghai and Tel Aviv. Alibaba Group Holding Ltd., owner of China’s largest e-commerce company, is an investor and President Michael Evans will sit on eApeiron’s board along with Clarke, according to the company’s website.
Alibaba, which declined to comment for this story, has been working to clean up its image in the eyes of brands and regulators tasked with fighting counterfeits. The company wants to be seen as a partner that can help identify sources of fake goods and eliminate them, not as a free-wheeling marketplace where cheap knock-offs flourish.
Its participation in eApeiron is consistent with many of its other investments, where it takes a minority stake in a company and then phases-in greater investment over time when it appears to be a good fit, said RJ Hottovy, an analyst at Morningstar Inc.
“EApeiron’s tagging system for identifying and tracking products through its supply chain is likely what attracted Alibaba, given the complexity of its supply chain and the need for a unique product signature due to the number of carriers” involved in its Cainiao logistics and delivery joint venture, Hottovy said.
The startup has fewer than 50 employees right now, and plans to expand rapidly, according to CEO Charles Fernandez. He declined to give a valuation for the company, though said he expects it to triple revenue in the next two years. The potential to access vendors that use Alibaba’s platforms represents a large opportunity, he said.
Other companies are making invisible ink security products, including VerifyMe Inc., which signed a memo of understanding in May with HP Inc.’s Israel-based Indigo division, part of its HP Graphics business. One of VerifyMe’s anti-counterfeiting pigment technologies lets consumers see visible ink markings on a product while manufacturers can use devices to see invisible markings to support their supply and distribution-chain security.
YPB Group Ltd., based in Australia, makes scannable markers that are invisible to the eye because they blend in to the material of the product they are marking.
While luxury-goods companies and those with name-brand products are often targeted by counterfeiters, the OECD report pointed to other potentially dangerous faked goods such as drugs, toys and spare parts. Tracing these items through the supply chain could ensure they aren’t expired or forgeries, Clarke said. EApeiron has signed up “large” pharmaceutical and tobacco companies as customers, he said, though declined to name them.
Kodak, after succumbing to digital competition, filed for bankruptcy in early 2012, and emerged as a commercial-printing business in September 2013. While the shares have climbed 35 percent this year, they are down 13 percent since coming out of bankruptcy.
It’s not uncommon for Kodak to team with young companies on technology research. Its labs have more than 4,000 patents and 50 scientists working primarily in material science, helping companies create products for consumer and commercial markets in industries including graphic arts, publishing, packaging, electronic displays and entertainment.
Some of the company’s current research focuses on potential future products such as printing microscopic GPS tracers, radio-frequency identification tags and batteries, Clarke said.
“There are many things we’re working on in next generations that will go obviously beyond brand protection, but will have additional applications in this market.”