CAN CRYPTOGRAPHY STOP THE REMAN INDUSTRY

[Anonymous]

Can cryptography prevent printer-ink piracy?
Using Recycled Ink Cartridges Means I’ma Pirate Now?
In the computer printer business, everyone knows the big money comes from the sale of ink cartridges.Most
of these cartridges are made by printer manufacturers and sell for a
substantial premium. Some come from unauthorized sources, sell for
substantially less and attract the attention of antipiracy lawyers.

Cryptography
Research Inc. (CRI), a San Francisco company, is developing chip
technology aimed at helping printer manufacturers protect this primary
source of profit. The company’s chips use cryptography designed to make
it harder for printers to use off-brand and counterfeit
cartridges.”We’re not saying we can end piracy, but our system is
designed to recover from failure,” said Kit Rodgers, CRI’s vice
president of business development.Not all ink-cartridge remanufacturing
is illegal–much of it is, in fact, legitimate–but pirated
ink-cartridge technology cuts substantially into original
manufacturers’ profits.There are three main ways the $60 billion-a-year
worldwide printing industry loses money:
• Used cartridges get refilled and sold as “new”– instead of as remanufactured.
• Cartridges get illegally replicated through reverse engineering.
• Printers get hacked or physically altered to use any type of ink.
Although
solid figures on counterfeiting are impossible to determine, it’s
estimated to cost the industry at least $3 billion a year, according to
the Image Supplies Coalition, a lobbying group formed to fight piracy
and cloning in the ink and toner industry.Cryptography is a method of
encrypting data so that only a specific, private key can unlock, or
decrypt, the information. It’s used in everything from credit cards to
digital media. CRI plans to create a secure chip that will allow only
certain ink cartridges to communicate with certain printers.Although
this concept isn’t new, CRI said its chip will be designed for use in
standard fabrication processes, eliminating the need for a special–and
more expensive–manufacturing process. CRI also said that the chip will
be designed that so large portions of it will have no decipherable
structure, a feature that would thwart someone attempting to
reverse-engineer the chip by examining it under a microscope to
determine how it works.”You can see 95 percent of the (chip’s) grid and
you still don’t know how it works,” Rodgers said. There also are other,
secret elements CRI won’t reveal for security and competitive
reasons.Skillful hackers can eventually crack almost any code thrown at
them and then exploit it for commercial purposes. Once antipiracy
encryption is hacked on a product such as high-definition DVDs, for
example, it’s cracked forever and the discs can be copied and played
using the hack. CRI takes a different tack with its protection scheme:
its chip generates a separate, random code for each ink cartridge, thus
requiring a would-be hacker to break every successive cartridge’s code
to make use of the cartridge.”We want to make sure you can’t repeat the
same attack,” said Benjamin Jun, CRI’s vice president of technology.
“If (hackers) have to rebreak it over and over, it’s not as good a
business model.”The chip, called CryptoFirewall, is not in use in this
industry yet, but it’s been widely deployed in the pay-TV sector, where
25 million set-top boxes have a similar technology from CRI embedded,
the company said. CRI will also soon debut a similar copy-protection
feature for Blu-ray video discs. The printer technology will be
available in early 2008, according to CRI.Counterfeiting and piracy are
all but impossible to eradicate, but CRI hopes to at least minimize the
financial damage they cause. Today, there are 123 million desktop
inkjet printers and 25.6 million laserjet printers in use in the U.S.,
according to InfoTrends.In terms of making and selling hardware,
printers themselves are one of the least profitable sectors. Often the
manufacturers are willing to sell their printers at a loss with the
goal of making money on sales of ink. Hewlett-Packard, the biggest PC
maker in the world, actually makes the most profit from its printer
business: 46 percent of its total earnings in the most recent fiscal
quarter were generated by its Imaging and Printing Group. And ink is a
key. As mentioned, remanufacturing cartridges isn’t necessarily a
problem. There are plenty of companies that refill cartridges and
resell them, offering many consumers and businesses cheaper
alternatives to the cartridges sold by printer manufacturers.”There’s
absolutely nothing wrong with that; it’s an accepted part of a
competitive industry,” according to Tuan Tran, vice president of
marketing and sales for HP’s supplies business. “That is a legal
competition in our minds.”About 11 percent of the money spent on inkjet
cartridges and 25 percent of the money paid for monochrome laserjet
cartridges goes to companies that resell cartridges they did not
manufacture, according to John Shane, director of marketing at
InfoTrends.”The vast majority of that is perfectly legal. Most people
believe (the U.S. market for illegal cartridges is) a lot smaller than
the illegal market, say, in China,” Shane said.When faced with
competition from counterfeiters, HP’s Tran said, companies like HP are
forced to turn to their “primary weapon” in fighting patent violations,
the legal system.”There are other folks who want to avoid the (proper)
process altogether and design a cartridge to work with an HP printer,”
he said.In a high-profile 2003 case, Lexmark International, the company
that makes printers for Dell, took printer-supplies specialist Static
Control Components to court for selling a chip that allowed Lexmark
printers to accept any kind of ink cartridge. Lexmark ultimately lost
the case, but it hasn’t stopped others from trying fiercely to protect
their business.

Just last month, HP’s German subsidiary accused
a Swiss print supplier, Pelikan Hardcopy, of using its patented ink
formula and last week filed a separate suit claiming the company is
selling remanufactured cartridges labeled as new. In 2005, HP sued
another cartridge refiller, Cartridge World, for using an ink formula
that it said infringed on its patents.There are other, less litigious
ways to keep counterfeiters at bay. HP uses a holographic security
label on its ink cartridges to identify them as legitimate HP
products.InfoTrends’ Shane also noted that the printing quality of
printer manufacturers’ cartridges holds up longer over time when the
cartridges are used with the corresponding printers, whose technical
specifications can present problems for remanufacturers and
counterfeiters.But a technology like CRI’s at least has the potential
to cut down on future legal fees and weed out counterfeiters early on
in the manufacturing process. The idea is intruiguing to printer
makers, although companies like HP say they will wait and see until
CRI’s chip is actually available.”If there was a technology that
enabled us to protect our intellectual property, absolutely, any
company would be interested in it,” Tran said. 

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July 9, 2007 at 11:04 AM