Chips Dip into Fashion


The luxury goods industry has been a target for counterfeiting for many years. From Louis Vuitton clutches to Hermes handbags, counterfeits can cost brands billions of dollars. Thankfully, Blockchain technology is transforming how the luxury industry fights counterfeiting. It offers a tamper-proof, secure way for brands to identify products. A unique cryptographic token may be placed on one or more RFID chips that can be surreptitiously located on or in the product.  This technology allows tracing of a product’s life cycle, from raw materials through manufacturing to the point of sale and beyond to resale.

Radio-Frequency identification (RFID) chips rely upon radio-frequency fields to automatically identify and track tags that have been affixed to objects, e.g., a designer handbag. RFID systems utilize miniature radio transponders, a radio receiver, and transmitter. When a radio-frequency interrogation pulse from the transponder is sensed by the RFID chip, it transmits digital data, e.g., a cryptographic token, back to the radio receiver. In this way, the identity and origins of a RFID tagged physical item can be determined from the information encrypted in the token. This technology is currently in use throughout commerce for a variety of purposes including food, retail, healthcare, and physical security.

Combining cryptographic tokens with RFID technology is a fast-growing trend in the luxury industry. By tagging luxury goods with RFID chips that include a unique digital signature, the manufacturer is able to quickly and accurately identify a particular item as authentic and determine its origins.  A cryptographic token is an encrypted electronic file that may be used to authenticate the identity of a website, individual, organization, user, or assets. They can be thought of as the “Blocks” in a Blockchain.

In May 2019, LVMH and ConsenSys launched AURA, a Blockchain-based platform that allows consumers to verify the authenticity of their luxury items via an online certificate. The AURA protocol cryptographically connects all parties involved in the supply chain (design, raw materials, manufacturing, distribution) to ensure full transparency and prevent counterfeiting. LVMH is using Aura for its Louis Vuitton and Parfums Christian Dior brands. The brand is working with a number of third-party suppliers, including those who provide raw materials for its products.

Richemont, which owns Vacheron Constantin, has also rolled out the certification technology for its Les Collectionneurs series of vintage watches. This will make sure that each timepiece is authentic and anonymously traceable, a requirement for the brand to maintain its high level of quality control. Another example of the use of cryptographic tokens for anti-counterfeiting is Arianee, which has created a digital “identity card” that identifies each luxury product and its owner. This opens a secure, permanent, and anonymous communication channel between brands, products, and owners through a mobile application that uses the Arianee Blockchain to create a digital certificate of ownership. This will be a great way for consumers to verify the authenticity while also making shopping on the resale market a lot safer. By enabling consumers to track the origins and provenance of their luxury items, Blockchain-based technologies like Arianee’s will enable brands to improve operational efficiency and customer satisfaction.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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