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Counterfeits, Fakes, Forgeries, and Copies

(11/12/2008)

Published in October 2008 Issue of U.S. TECH

By R. Dale Lillard, President and Lee Mathiesen, Operations Manager
Lansdale Semiconductor, Inc., Tempe, AZ             
 
            When we hear the word counterfeit we usually think of money.  However, although currency was one of the first and most counterfeited items, there are many other items being counterfeited today.  Everything — medicines, auto parts, computer peripherals, electronic components, designer handbags, high end watches, and anything of value — is now being counterfeited.

Most of these counterfeits are produced using inferior material and
workmanship. Some can be dangerous, like cell phone batteries that explode or medicines that can kill. In 2005, counterfeit consumer goods were estimated to be a 200 billion dollar market, approximately 5 to 7 percent of world trade. Most of the counterfeits come from emerging countries, with leading the pack with an estimated 90 percent of the total.

So what changed to make counterfeit consumer goods so profitable? What changed is the way we buy. Back in the good old days, counterfeit consumer goods were sold out of the trunk of a car or on a street corner by some guy in a trench coat. Today the Internet, although a boon for putting information at our fingertips, has also given the counterfeiters a great outlet for their goods. It is almost impossible to tell the genuine manufacturer of an item from a broker or counterfeiter.

For example, Lansdale Semiconductor is the only authorized manufacturer of many obsolete integrated circuits from manufacturers such as Intel, Philips/ Signetics, Motorola, and Freescale. However, if you do a net search on Google for the MC3356D, an old Motorola/Freescale part number, Lansdale doesn’t even show up until page 6 or 7 of the search. The way Google or any other search engine ranks a website is by how many times the search engine’s webcrawlers found the search phrase. So in the first 6 or 7 pages the sites listed are from brokers and resellers who want you to buy their product, products that are probably not legitimate.

                At Lansdale, we have received a number of calls on suspect counterfeit
products. Usually they are commercial product where the original manufacturer’s logo has been used but the date code of the product is a date after the manufacturer had stopped manufacturing it, an obvious counterfeit. We have also seen a couple of military products. One, a product procured by the Defense Supply Center Columbus, had certification Components and Distribution that said it was Lansdale manufactured product and the package labeling said it was Lansdale product, but Lansdale had never sold any of that specific part. When the packaging was opened, the product was not Lansdale product but was another manufacturer’s product — therefore a counterfeit. The last military part we saw was product marked with a Missile Command MISXXXX part number. The product did not work over the full temperature range of the MIS spec (it did work at 25°C), and the customer asked us to verify it. When the product was de-lidded, it was found to be an emulated part from Sarnoff for the correct source type. We notified the Defense Logistics Agency person who handles the GEM program with Sarnoff, but they stated that none of the Sarnoff product was ever sold to the MIS drawing, so again a counterfeit.

               In the electronics industry these fakes are showing up everywhere but probably the most frightening area is in the military IC market. The counterfeiters have learned that these products sell for higher prices than their commercial counterparts, and the real military grade products are often in short supply at legitimate sources or carry high minimums and long lead times. It has been stated by one user company that if you buy a military grade IC through the broker market today you have a 50/50 chance of getting a counterfeit. One suggested method to combat the procurement of counterfeit parts is to only buy from authorized distributors, but even this isn’t foolproof as the counterfeiters and unscrupulous buyers and sellers have found a new way to get the counterfeits into the supply chain. They procure products which are counterfeit, then buy legitimate product from an authorized distributor. They contact the authorized distributor stating that they procured the wrong part and return them for refund or credit or “exchange” for the right parts, except they return the counterfeit product which the authorized distributor puts back on the shelf in good faith. While this has happened, it’s doubtful that the distributors will continue to fall for it.

Are We Helping Counterfeiters?

Numerous articles are being written on how to keep from buying counterfeits. The Semiconductor Industry Association (SIA) has an Anti-Counterfeit Task Group. The Electronics Industry Association (EIA) G12 committee wrote an Engineering Bulletin on counterfeit risk mitigation. The Society of Automotive Engineers (SAE) is stepping into the fray trying to define what to do, and who to notify. The only problem is the more we write about it, the more we may be teaching the counterfeiters how to have their products go unnoticed.

Webster’s Dictionary defines counterfeit as: “Made in imitation of something else with the intent to deceive: FORGED.” The electronics industry cannot accept this simple 12-word definition; it has felt compelled to “improve” it with a lot of excessive verbiage. The DOE (Department of Energy), for example, defines counterfeit as: “A counterfeit item is one whose material, performance, or characteristics are knowingly
misrepresented by the vendor, supplier or distributor or manufacturer.”

Counterfeiting often involves cases where parts are offered that present a product substitution risk to the Government Equipment Manufacturer and to the Government User. Examples include:

·        Parts remarked to disguise parts differing from
those offered by the original part manufacturer.

·        Defective parts scrapped by the original part
manufacturer.

·        Previously used parts salvaged from scrapped
assemblies.

        Then there is the definition being used by the SIAACTF (Semiconductor Industries Association, Anti-Counterfeit Task Force): “Substitutes or unauthorized copies of a product. A product as defined by the manufacturer’s part number ID, date code, and manufacturer’s ID in which the materials used or the performance of the product has changed without notice by someone other than the original manufacturer of the product. A substandard component misrepresented by the supplier.”

        Or there is the definition of the Electronics Manufacturing Center for Excellence (EMPF) that defines counterfeit electronic components and boards as: “Substitutes or unauthorized copies of a product. A product in which the materials used or the performance of the product has changed without notice. A substandard component misrepresented by the supplier.”

       Or the definition by the Lawrence Livermore National Laboratories: “A counterfeit item is a suspect item that is a copy of or substitute made without legal right or authority whose material, performance, or characteristics are knowingly misrepresented by the seller, supplier, distributor, or manufacturer.

Too Many Definitions

        So as an industry of makers and users of high reliability electronic components, we have generated at least 4 different very wordy definitions of something that Webster’s defined in just 12 words. The only way to guarantee that you are not buying counterfeit product is to buy direct from the manufacturer. The next best is to buy from the manufacturer’s authorized distributor.  After that, Caveat Emptor (Let the buyer beware). Be ready to test, verify, and retest the product to make sure it is not counterfeit. There has been a lot of discussion about getting the original C of C’s or traceability documentation with the product. Think about this: If the counterfeiter is smart enough to make a part that has the correct marking, and actually looks like what you think you bought, how hard is it going to be for them to counterfeit the paperwork?

       And by extension, based on the definitions given here, the DLA (Defense Logistics Agency)-sponsored GEM (generalized emulation of microcircuits) program is producing counterfeit parts — for use by the military.


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