Fake network gear

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Efforts to fend off fakes

Manufacturers are working on ways to make their products harder to clone through use of packaging labels, logos and three-dimensional holograms. Vendors such as 3Com are working on RFID tagging systems, and cryptographic machine authentication is a viable option to help devices call home.

For the past few years, Cisco and 3Com have been building anticounterfeit culture into every level of their product-to-market channels, educating suppliers and distributors about what they need to do to protect their own channels, while building international investigative teams to help law enforcement agencies shut counterfeiters down.

Cisco's 30 investigators stationed worldwide are dedicated to 200 active counterfeit cases at any given time. From the Mandarin characters on the back of his business card, it's clear that Wright spends a lot of time in China. And a whiteboard behind Wright's desk has a hand-drawn diagram titled "Stopping the counterfeit flow," which contains multiple loops back to Chinese distribution and law enforcement intervention points.

According to Wright and Tidd, China is the source for most counterfeit gear. Tidd toured multiple floors of counterfeit consumer electronics and network gear last year at a public shopping mall in Shenzhen, China.

"3Com has done raids in China, cooperating with local law enforcement who've shut down factories and seized counterfeit goods. Once they've done the seizure, we go in and try to figure out how many boxed products went out before they were shut down," Tidd says. "Unfortunately, as fast as you shut the factories down, other factories go back up."

According to the AGMA study, the United States is the second major point of origin for counterfeit goods - California, in particular, say Rauhauser and Dana Andrews, owner of Digitial Surplus in Boston. They point to the port of Los Angeles as a big dumping ground for Chinese counterfeit parts and to Silicon Valley as a place of production.

Since 1994, Andrews has made a pastime of helping federal agents catch criminals he says are polluting the reseller channel and costing him his business. In February, he helped the FBI catch a fraudulent buyer who had set up a phony escrow company and tried to scam Andrews out of half a million dollars worth of Cisco gear.

While several law enforcement agencies contacted for this story won't talk about specific cases, a June raid on Sun Valley Technical Repair in Morgan Hill, Calif., could turn out to be a big case of counterfeit in Silicon Valley.

Reports in the San Francisco Chronicle made it appear at first like an immigration raid, as 12 illegal immigrants (11 from Mexico and one from Colombia) were taken away. But that wouldn't explain the presence of so many agencies, including the FBI, the U.S. Immigration and Customs Enforcement, the U.S. Postal Service and the Rapid Enforcement Allied Computer Team, which investigates large-scale, high-tech piracy and counterfeit cases.

Law enforcement efforts are helping to shut these factories down, say Tidd and Wright, who is active with Business Action to Stop Counterfeit and Piracy, which is sponsored by the International Chamber of Commerce.

H.R. 32, the Stop Counterfeiting in Manufactured Goods Act, signed by President Bush in March, should also make a strong deterrent, experts say. The act sets prison terms of as many as 20 years and fines of as much as $15 million for counterfeiting in what the International Anticounterfeiting Coalition praises as a direct response to "dangerous international counterfeiting problem that is threatening the U.S. economy, costing U.S. jobs and harming citizens."

Industry leaders need to do more to keep counterfeit out of the distribution channel, resellers and users say, before it affects public safety.

"The networking industry should reach out to other industries that have problems with counterfeit parts," van de Gohm adds. "The industry should apply the best practices already learned in the auto, pharmaceutical, airplane and other industries where counterfeit parts could result in loss of life."

Radcliff is a freelance writer. She can be reached at deb@radcliff.com.