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Holographic Protection of Intellectual Property

International Hologram Manufacturers Association (IHMA) : 26 January, 2012  (Special Report)
Glenn Wood of the International Hologram Manufacturers Association provides details about the protection of intellectual property rights and the role that holography plays in this increasingly prominent role
Holographic Protection of Intellectual Property
Holography has been more active and helpful in the protection of intellectual property rights than any other technology in the modern era. However, to understand this claim, we must look more closely at the meaning of the terms ‘intellectual property rights’ and ‘holography’ before discussing the relationship between them.

Within the context of our discussion, the most obvious owners of intellectual property rights are so-called ‘brand owners’, who own the brand names which appear on many of the traded goods familiar to consumers around the world - the better known the name, the more valuable the brand and hence the IP associated with that brand.

Well known examples include Coca Cola, Microsoft and now the most valuable of all, Apple. But as the owners of these brands are acutely aware, the brand value lies in the number of goods sold which bear the brand name, and the more popular the brand, the greater the incentive for unscrupulous counterfeiters to copy it.

Many set up unauthorised manufacturing facilities to produce goods having the appearance of the genuine article before giving it the appearance of legitimacy by printing the brand name on it. In the case of Apple, the brand recognition comes not through a written name but the depiction of an apple with a bite taken out of it. This is known as a logo and is registered, along with the written name, by the owner of that IP.

What these companies have in common is that, in addition to owning the IP associated with a recognised brand name, they own the means of manufacturing the genuine products bearing that name. All of the companies mentioned above have legal departments whose main job is to hunt down and prosecute anyone who attempts to profit from the unauthorised use of the name or logo of the genuine owner of the brand.

Sometimes, the unauthorised product frequently referred to as a fake or counterfeit item, is so convincing in its appearance that the brand owner has resorted to a depiction of the genuine brand name (or logo) in a form which is instantly recognisable but which cannot be copied. This is where holography enters.

Unlike printing, holograms are produced using lasers to create images in fantastic rainbow colours which appear to have depth and movement and are very difficult to create compared with conventional printing, and even the most sophisticated scanners and digital techniques cannot accurately reproduce their visual appearance.

So this is the reason that Microsoft, for example, has embraced holographic technology as a way of authenticating its software products. Not only has it been used on the certificates of authenticity that accompany its software products, the CD ROMs themselves have been covered with holograms from edge-to-edge thus making the genuine product utterly distinctive.

The misinformed will point to crass media reporting and say that the counterfeiters ‘even counterfeited the hologram’. This couldn’t be more inaccurate as investigators charged with the task of identifying fake products will readily concede that the hologram is the first thing they check because it is so difficult to copy. It may be possible to produce a poor simulation but these can be quickly spotted, even by the untrained eye while, on the other hand, all the elements of the secondary packaging such as paper, cardboard, plastic and inks require forensic examination to determine if they are genuine or not.

Microsoft has been using holographic technology to identify its genuine branded goods for many years now and shows no sign of abandoning its loyalty to holographic technology as a way of protecting its brand and intellectual property.

Let us now consider other types of iconic brand names: FIFA World Cup, the Olympic Games and Major League Baseball. In contrast to the previously mentioned brand names, these three are equally well known and yet the owners of these IPRs have no factories producing goods bearing their brand names. Their business is primarily the staging of spectacular events and the definition of the rules associated with those events. The cost of doing business is defrayed by the sale of licensed goods - thus FIFA Marketing is a privately held company which holds the IP rights to its name but that is all it has and the means of producing all the merchandise and paraphernalia bearing its name and logo are owned by others.

This situation is typical of sports-based organisations. Apart from the sale of tickets to their events - a small fraction of their income - the main revenue generators are the sale of merchandise bearing the brand name of the controlling organisation. In many respects, this situation is even more difficult to control because such merchandise is usually made in countries where production costs are very low using materials which are not technologically sophisticated. Unauthorised versions of the genuine goods are often indistinguishable from the ‘genuine’ goods because they make use of the same materials and manufacturing techniques.

For a decade or two, most, if not all of these sporting bodies have found it useful to control production of their licensed merchandise by means of holograms. Take a look at the merchandise for a sporting event that hasn’t even taken place yet, the London, 2012 Olympic Games. In common with all of its predecessors since the Atlanta Olympics in 1996, genuine retail merchandise for this event has either a holographic label attached to it or a swing tag with a holographic element. In both cases, the hologram is the most eye catching feature and is usually numbered for tracking purposes.

The production of the goods licensed for manufacture using the IP owners’ logo is royalty based. This means that the licensee pays an upfront fee for the right to manufacture products under the name of the licensor followed by a royalty payment for each item sold. So the licensor appoints a third party manufacturer of the holographic security labels who will act as the check on how many items are sold. The labels are independently produced, serialised and shipped to the licensees and a record is kept of which numbers were sent where. This system avoids under reporting of the quantity of goods produced while, at the same time, distinguishing between legitimate goods and counterfeits. Thus, the investment of the licensor in the IPR of the licensee is also protected.

It is worth pointing out the scale of the business protected by holography. The major sports league of the USA, the NFL, enjoys annual revenues in excess of USD 3 billion each year from the sale of merchandise and every genuine item, whether it be a cap, a sweat shirt or a key fob, shows its legitimacy with a hologram. Add to that all the pharmaceutical and healthcare products, other sporting goods, software and entertainment products such as DVDs and the numbers are staggering, all protected with a hologram.

And what of the intellectual property rights of holograms? IHMA Hologram Copyright Guidelines point out that: ‘The Berne Convention is an international agreement, subscribed to by over 90 countries, which sets out minimum requirements on copyright law. Each member country’s copyright laws are required to at least meet the standards set out by the Berne Convention.

There is no specific law governing the copyright of holograms, which are treated as copyrightable insofar as they are the result of one or more original creative works. Nor has there been any test in law of the copyright ownership of a hologram.’

However, this situation changed in May 2011 when, in Taiwan, a bill passed the first legislative hurdle to expand the types of representation protected by trademark law by including holograms, 3D shapes and movements. The idea is that anything that serves to “identify” something, whether in the form of words, patterns, graphics, colors, holograms or sounds, could soon be submitted for trademark protection in Taiwan.

Wang Mei-hua, director-general of the Ministry of Economic Affairs’ Intellectual Property Office (IPO), said that if the revised law is passed, animation and holograms that appear on mobile phones could also receive trademark protection. She said the Nokia Corp image that appears when its cell phones are turned on has already been registered as a trademark in several countries and the firm could also apply for protection in Taiwan if the draft bill is passed.

The Trademark Act amendment approved by the Legislative Economic Committee will add animations (movement), laser logo (hologram) and three-dimensional shapes to the current legal recognition of a trademark as “a word, figure, symbol, color, sound, three-dimensional shape or a combination thereof.”

The International Hologram Manufacturers Association also welcomed earlier this year another move designed to strengthen this time pan-European anti counterfeiting laws. The EU Falsified Medicines Directive will ensure that a definition of ‘falsified medicinal product’ is provided to clearly distinguish falsified medicinal products from other illegal products, as well as from infringements of intellectual property rights.

The World Health Organisation estimates that up to 25% of the medicines consumed in some developing countries are counterfeit or substandard and that annual earnings from the global sales of fake and substandard medicines are over $32 billion, so the move will distinguish clearly those products with unintentional quality defects resulting from manufacturing or distribution errors from ones that have been deliberately falsified.

As concern grows for counterfeit products stealing brand identity and diverted product undermining legitimate distribution channels, so the need for security labels and seals also grows. The label is the most convenient and cost effective way of delivering holographic security technology - overt, covert, and forensic and track and trace, all in a single hit.

Compared to foiling techniques, label applicators are relatively inexpensive and operators require far less training than their foiling counterparts. Therefore, the barriers to entry with customers are far lower for label suppliers. Moreover, tamper evidence can be incorporated into holographic labels making them ideal for closure seals for cartons. Thus another important functionality can be added in addition authentication and tracking.

There are many security technologies but holographic – or optically variable security features, as the IHMA prefers to call them - remains one of the most tried and tested technologies endorsed and used by some of the world's most prestigious brand owners.

You will see that many branded medicines have a hologram on the pack or in the blister pack including in Malaysia, where the Meditag serialised hologram label found on all registered medicines - traditional and western - has helped the Ministry of Health inspectors to detect unauthorised and counterfeit product. Here, and elsewhere, the evolving anti-counterfeiting role of holograms lies in their ability to combine authentication with detection and sometimes pack enhancement, as Rodotex GmbH has shown with its packaging for Vitamin C+Kollagen in Indonesia.

The evolving anti-counterfeiting role of holograms lies in their ability to combine authentication with detection - and this is why the more enlightened pharmaceuticals companies and enforcement agencies continue to make them an integral part of modern anti-counterfeiting strategies.
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