New NFC Solution Prevents Counterfeit Liquor in Taiwan

UserStar has developed an NFC tag that transmits a unique 'encrypted verification code' only once, via an NFC-enabled phone running a special app, and is then encoded with a new encrypted verification code, thereby preventing tag cloning.
Published: September 1, 2014

To protect its highest-value liquors, Taiwanese wine and liquor company Fortune Brewery International Co. is launching an anti-counterfeit program that depends on a passive 13.56 MHz RFID tag (compliant with the ISO 15693 standard) that changes its own unique identifier with each read. The solution, provided by UserStar Information System Co., enables retailers and consumers to employ a Near Field Communication (NFC)-enabled smartphone and the UserStar’s PhoneKey app to confirm that a product is not counterfeit.

The UserStar solution is an alternative to existing NFC anti-counterfeiting technology that offers limited security, since the tags themselves can be counterfeited, says Tseng Yin-Hung, UserStar’s general manager. With standard NFC technology, he says, “the data can be encrypted when written on a passive tag, but the data encryption does not prevent a passive tag from being cloned.” Passive EPC ultrahigh-frequency (UHF) RFID tags, Tseng says, could be cloned using systems such as an RFID development tool known Proxmark3 that can read and reproduce RFID signals in a cloned tag that would be identical to a legitimate tag.

When an NFC-enabled smartphone is used to read a UserStar NFC RFID tag attached to a bottle, the PhoneKey app will indicate whether that tag (and, thus, the bottle’s contents) is genuine or counterfeit.

To prevent this, UserStar developed something it calls “active variable verification,” a cloud-based software suite that prompts the PhoneKey app (running on an NFC reader device) to encode a tag with a new encrypted verification code that changes every time the tag is interrogated. If someone were to read that tag ID and use it to create a cloned tag, that ID would be invalid the next time the cloned tag was read. Thus, the cloud-based software would determine that the tag was counterfeit and the PhoneKey app would display an alert on the user’s NFC-enabled phone.

Fortune Brewery’s Liu Shu-Duan

With “expired identification technology,” the company explains, the verification code remains valid for only a few seconds after the tag is read.

Sales of Fortune Brewery’s high-value liquor have been growing in Taiwan, as well as in mainland China. This growth comes at the same time that counterfeiting is becoming an increasing problem in China, says Liu Shu-Duan, Fortune Brewery’s chairwoman and president. According to Liu, the company researched anti-counterfeiting solution providers during the past year, which included bar-code labels, laser printing, specially designed bottle caps and standard RFID tags, but she adds that “those solutions are easy to be copied and cracked, and do not solve the real counterfeit problem at all.”

Eventually, Liu says, the China Productivity Center, a Taiwanese economic agency, recommended the UserStar system. The company is initially tagging approximately 2,000 bottles of its Yunshang Fulushou Kaoliang liquor, which it plans to begin shipping to customers in November. “We will integrate the tag on the bottle-neck packaging manually,” Liu states, and we will advise our consumers that they can download the PhoneKey app to verify the authenticity.” The company will also provide a QR code poster that consumers can scan in order to download the app at an in-store Fortune Brewery kiosk. The app can also be downloaded from Google Play, China Mobile Market, or AppChina.

UserStar is now supplying its tags to Fortune Brewery, which affixes them to the foil covering the top of each bottle. Tamper resistance in the tag ensures that if someone attempts to open the bottle, its tag will no longer operate properly, indicating to those who acquire the bottle that it may contain counterfeit product.

Fortune Brewery plans not only to use the tags to prevent the counterfeiting of its products, but also to utilize the data from the software on UserStar’s hosted server—based on NFC tag reads—to create sales reports. The reports will indicate such information as dates and locations of product sales, as well as how long it took for specific bottles to reach stores, based on when their tags were interrogated.

UserStar’s Tseng Yin-Hung

“We foresee a mobile phone payment platform will lead to more extensive NFC mobile phones in the Chinese market,” Liu says, “and in the meantime, our liquor will be the first wave of epoch-making products to enter the mobile phone security age. We believe this will greatly enhance our brand value.”

UserStar provides software solutions to government projects, health-care providers and others. In 2010, the company began looking into NFC technology and found that the existing RFID chips did not provide the kind of security that would be required in an anti-counterfeiting solution. Therefore, the firm began developing its own RFID tag IC and a software platform to manage data from that chip.

The company initially worked with MadowWang, a fruit and vegetable company based in the Taiwanese city of Tainan, to pilot the use of an NFC tag applied to containers in which harvested fruit was stored. The tag could then be read via an NFC-enabled phone.

UserStar is now marketing its anti-counterfeiting technology for use by brands and manufacturers in Taiwan and mainland China.