Fraunhofer magazine 2.20 - 59 The fight against product piracy is a tedious one. The “Product Piracy 2020” study shows that small and medium-sized companies, in particular, are reluctant to take action against infringers. Germany’s Mechanical Engineering Industry Association (VDMA) has conducted this study every two years since 2003 and now, since 2018, it does so in collaboration with the Fraunhofer Institute for Applied and Integrated Security AISEC. The institute provides, for instance, systematic risk analyses and develops individual protection strategies. the affected companies suffer – the loss of image caused by low-quality imitations is considerable as well. It’s best not to let it come to that in the first place. “The earlier companies get us involved, the more we can do. It is advisable to contact us as early as the design phase for new equipment,” says Bartol Filipovic, head of product protection and industrial security at Fraunhofer AISEC. Ideally, protection can then also be combined with additional benefits for the customer. “A chip in mechanical components such as sensing arms could, for instance, recognize a part as an original while at the same time helping to align it correctly,” Filipovic explains. Only one third of mechanical and plant engineering companies with fewer than 250 employees take action against this illicit reproduction, despite them, too, seeing an increase in product piracy. In 2016, 55 percent of these companies fell victim to counterfeiters; now that figure has grown to 64 percent. “As sales grow, so too does the incentive for product pirates to get in on this success,” says Ferdinand Jarisch, who headed the study for Fraunhofer AISEC. Of the participating large companies with more than 500 employees, 90 percent are affected. Here, however, the infringers can expect to encounter greater resistance: half of all major companies do not stop at a warning letter or a letter from their attorney, but take the matter to court. Among SMEs, only one in ten go that far. The costs and duration of civil proceedings deter them, as do the uncertain prospects of success in foreign jurisdictions. “Companies should consult with specialists who are familiar with the legal framework and who have experts on location. For China, for instance, that’s Chinabrand GmbH,” says Steffen Zimmer- mann, head of industrial security at VDMA. The study shows that China remains the country where the largest percentage of counterfeit products worldwide are sold, with 61 percent. Germany comes in a distant second with 19 percent, followed by Russia in third place with 12 percent. China also leads in the manufacture of counterfeit goods, at 82 percent, as the previous study for 2018 showed. Don’t give up – take action! Even though victimized companies refrain from pursuing legal recourse, they shouldn’t let the idea thieves get away with it. “It’s like with a child that doesn’t get disciplined. If I do nothing, it just keeps getting worse. Counterfeiters always follow the path of least resistance,” says Zimmermann. In his experience, even a warning letter that threatens conse- quences often helps. “Counterfeiters operate more easily under cover of anonymity than when they know they’ve been caught and are being watched.” In most cases, it is competitors who produce the counterfeit goods (72 percent), but customers, suppliers and spare parts vendors also copy products. The resulting loss of sales is not the only damage In only 36 percent of all cases are entire machines copied; in 64 percent, counterfeiters focus on individual components. “It gets expensive when a machine stands idle for a long time. Using normal channels, spare parts usually require four to six weeks for delivery, making it very tempting to resort to imitations from online shops,” says VDMA’s Zimmermann. That’s why it’s better to equip machines with self-protection mechanisms right from the start, enabling them to recognize imitations as imitations. If the machine is damaged by low-quality spare parts, the original manufacturer is stuck with the problem, rather than the repair service that installed the part. The manufacturer must provide proof that the replacement part is not an original. Equipping machines with self-protection Encrypting the machine’s operating software, otherwise known as firmware, also serves to protect the machine. “Value creation will increasingly be achieved through machine software. Digital protective measures are the future,” says Zimmermann. That is precisely what Filipovic and his colleagues at Fraunhofer AISEC specialize in. The most secure option is to combine software protection with hardware. “The firmware can, for example, process authentication queries from secu- rity features in the hardware. For this, we use cryptography mechanisms, which we are very familiar with and know how to implement on a variety of hardware platforms. We offer developers tools they can use to secure their firmware. Not all methods are equally suitable in all areas, but we are well versed in encryption, manipulation-resistant programming and masking critical functions,” says Filipovic. When planning the security strategy, Filipovic and his team identify access routes for attackers. “We work with the cus- tomer to prioritize issues and think about where it hurts the most. Then we close those security gaps. There is no such thing as 100 percent protection – that would be too complex and expensive. But we can make it extremely difficult for counterfeiters to have their way.” “Counterfeiters always follow the path of least resistance.” Steffen Zimmermann, head of industrial security at VDMA back to page 1