Emanuel Ninger, a meticulous counterfeiter of American currency, painted each bill by hand. Wary of drawing attention to the dollars he created and circulated, he only did small denominations. But even a circumspect and small-time counterfeiter like Ninger was eventually found out.

In Ninger’s case it didn’t take a sophisticated technology or even a magnifying glass to bare the illegitimacy of the $50 bill he laid on a bar to pay for a bottle of wine on March 28, 1896. He managed to place the bill in a puddle, and when the bartender picked it up, the ink smeared on his fingers. Or so goes the story in Jon Blackwell’s “Notorious New Jersey.”

Counterfeiters have learned a thing or two over the past century — fake currency can withstand a lot more than a bit of water — and they have moved into many new arenas like credit cards and prescription drugs. In their wake have come a slew of companies with technologies designed to protect products and keep copycats off our shelves and out of our wallets.

In February one of these businesses, JDSU (formerly JDS Uniphase) of Milipitas, California, acquired another, American Bank Note Holographics (ABNH) of Robbinsville, to grab the top position in overt – as opposed to covert – technologies that protect against counterfeiting. This acquisition brought together the two most powerful security technologies that can be seen with the naked eye — JDSU’s color-shifting inks and ABNH’s holographics.

Before the acquisition, JDS Uniphase had been a leader in the protection of currencies and other government documents, like passports and visas, while ABNH had been the leader in the securing of transaction cards. Pat Higgins, director of business development for the advanced optical technologies segment of JDSU in Santa Rosa, California, explains the strategic thinking behind the acquisition. “When we looked at the type of solution provider we were going to be,” he says, “we decided we would be number one in the industry around overt technology solutions.”

The security industry also includes covert technologies that the user cannot see, forensic technologies that can be found only by sophisticated measuring techniques, and “track and trace” products like RFID tags that can be read at all stages of a product’s distribution chain.

Mark J. Bonney, vice president and general manager of JDSU Authentication Solutions in Robbinsville, explains why the merger with JDSU was such a good fit from the perspective of the former ABNH. With ABNH’s holograms protecting 60 percent of the world’s transaction-card market and JDSU’s color-shifting pigments and inks securing 80 percent of the value of currency circulating in the world, says Bonney, “we own your wallet. In virtually every transaction made, someone is going to touch our product. The combination of our capabilities gives us a very strong position in a market at its tipping point.”

Higgins sets the acquisition in the context of dramatic changes in the world economy that have affected product security. On the one hand, the Internet has dramatically increased access of consumers to what they think are legitimate goods, but in fact are counterfeit. At the same time, counterfeiting has been creeping out of third world countries in Asia, Africa, and South America into supply chains in first world countries — an undesirable consequence of globalization.

The International Chamber of Commerce estimated that in 2006 the cost of counterfeiting to the global economy was $600 billion and suggested it might go as high as $1.2 trillion by 2009. In the pharmaceutical sector recognition of the extent of counterfeiting and its negative consequences for patients has been growing, and estimates of the cost of counterfeiting in this market alone vary, but some industry estimates have placed it at just above $30 billion a year.

Whereas the first wave of counterfeiting was in high-price items like currency, transaction cards, pharmaceuticals, and high-end electronics, counterfeiters have also been moving in on low-cost, everyday items that sell in high volumes — looking for economies of scale, as any “businessperson” would.

In June, 2007, for example, counterfeit tubes of Colgate toothpaste containing improper chemicals were found in dollar-type discount stores. Colgate was concerned that its brand was at risk and that consumers would purchase Crest instead to avoid any potential problem. As a result, brand owners in the household consumer goods and the paper industries have gotten interested in protecting their products with authentication technology.

As JDSU was considering its future strategy, it was in a field of about 400 different companies offering technology products for the security industry, according to a recent study by Reconnaisance International, a British company. Most of these, says Higgins, were new startups trying to develop novel technical concepts into products.

About this time the pharmaceutical industry began to face liability issues around counterfeited drugs and initially adopted a piecemeal approach to protect its products. Pfizer, the leader in bringing security to pharmaceuticals, would grab this technology from one company, and that from another, says Higgins, and then figure out how to combine the technologies and install them on its products.

The pharmaceuticals eventually got tired of this pick-and-choose approach or couldn’t afford it, and in 2002 one of them approached JDSU to develop a comprehensive solution that worked across product lines and across the product lifecycle. This pushed JDSU to adopt a new approach to its security business.

“We embarked on a strategy to become one of the major players of what are called authentication solutions companies,” says Higgins. A company would be able to turn to JDSU and have its problem solved, regardless of the technology involved. “We are not completely there,” he says, “but this acquisition (of ABNH) was a major step of moving in that direction.”

JDSU decided to focus entirely on overt technology solutions, determined to become number one in the industry. Prior to acquiring ABNH, JDS Uniphase had a strong position and was known as the number one technology. But to have the largest market share, it needed holograms.

JDS Uniphase began looking at potential acquisitions last summer. After assessing the strengths and weaknesses of the bigger companies, the company started talking to the key players. “When we got to Robbinsville, we expected less than we found,” says Higgins. “We were surprised at what they had well hidden there.” He then chides himself for his surprise — because the nature of the security business is to be hidden.

Higgins had known the founder and president of ABNH, Sal d’Amato, for years and got very excited as he talked to him about the capabilities that ABNH was developing. “They have a strong position in transaction cards, a market-leading position, which is what drew me to them in the first place,” he says. “We found that the combination of what we did in Santa Rosa with what they had in terms of market position would make a combined position almost insurmountable by the competition.”

The glue that finished the deal was compatibility. “When we went in and talked to people in Robbinsville,” says Higgins, “we could have been looking at our own folks; style, quality, security, and manufacturing processes were done at the same level of quality that we of Flex, the products group of JDSU, expect of our own business.” He remembers saying to himself that the integration was not going to be tough and that has proven to be the case. “It is one of easiest integrations I’ve ever been involved with,” he says.

The ABN Corporation traced its history back to Paul Revere’s time when several printers came together to print the first United States currency, and it incorporated in the mid-nineteenth century. In the late 1970s, d’Amato created the ABN’s holographics division.

ABN struggled through a merger, a leveraged buyout, and a series of other problems through the early 1990s, says Bonney. In 1998 ABNH was created through a spinoff and initial public offering from the parent ABN Corporation, which retained no ownership.

Although ABNH started life with a couple of hundred employees, the company pretty quickly streamlined to about 135 and remained that size for several years. The company had three operating facilities, in Pennsylvania, New York, and Massachusetts, which it consolidated in 2005 and 2006 into one high-tech, high-security facility in Robbinsville to mass produce holograms.

The company maintains its Huntingdon Valley, Pennsylvania, facility as a disaster recovery site. Today Robbinsville has 115 employees in 120,000 square feet, a size it has been and likely will be for awhile. “It’s a highly efficient production facility,” says Bonney. “We can produce a lot more product without physical expansion; we can increase output with overtime.” The employee base for all sites in JDSU’s advanced optical technologies segment around the world is about 700.

“ABN revolutionized the production of holograms,” says Bonney. It focused at first on the credit card market, which later expanded to all transaction cards, including department store and gift cards. “Mastercard was the first to identify the need to put some security element on a transaction card,” he recalls, “and wanted an element that the public would recognize.”

Although a hologram also has covert features, which require a magnifying glass or a microscope to distinguish, its visible features were critical for credit cards, since the holograms would be used by clerks to authenticate the credit card.

Today when so many transactions take place over the telephone or Internet, the hologram is less important for security purposes but instead has become part of each credit card’s brand.

Holograms have also proven useful in other markets, like pharmaceuticals. For pharmaceutical packages, ABNH has developed a tamper-apparent holographic label applied where a flap is folded into the box. The package is completely sealed on the other end.

If boxes with holograms have been opened before they come into the customer’s hand, even the slightest tampering will distort the holographic image. The hologram, says Bonney, ensures that buyer is getting the correct product.

These holographic closures for medicines were developed initially for markets where counterfeiting is high, for example, Eli Lilly’s Latin America markets and Johnson & Johnson’s Ansen Selig division in Mexico.

Although no single technology can protect a product from every form of fraud, tampering, or diversion, holograms help companies communicate authenticity and allow those on the receiving end to verify a product without having to send it elsewhere for an analysis.

Prior to the sale of American Bank Note Holographics to JDS Uniphase in February 2008, Bonney was ABNH’s executive vice president and chief financial officer. Having been on the company’s board of directors since 2003, he became an executive in June 2005. “I saw it as a great opportunity to join a company that had great technology, market strength, and people,” says Bonney.

Between 2003 and June, 2005, Bonney co-founded and led Endeavour Advisors, a strategic and financial consulting firm focused on turning around mid-sized private and public companies. Previously he had spent 27 years at Axsys Technologies, Zygo Corporation, and Black and Decker. He is also the founder and chairman of the Angel Investor Forum, a non-profit organization of private accredited investors who invest in companies at the seed and early stages of their development. Bonney graduated from Central Connecticut State University with a bachelor’s in business administration and from the University of Hartford with an MBA.

Higgins grew up in Yosemite National Park, where his father was a state building inspector. Despite the great natural beauty, he says it was not so great for a teenage boy, there being only two young women available for dating. Both his 1975 undergraduate degree in mechanical engineering and his doctorate in materials science are from University of California, Davis. Part of his dissertation related to work he was doing at the Lawrence Livermore Lab, developing materials for the stabilization of the inner walls of a nuclear reactor. In 1979 and 1980 he taught at the university.

Higgins’ involvement in the currency business has been from the materials side. “At the end of the day, almost all high technology comes down to materials processes,” he says.

Higgins left the Thin Film Product Group at JDS Uniphase in mid-2001 to play golf with his son, and then returned to be JDSU’s as business development manager for advanced optical technologies.

Higgins characterizes JDSU’s competition by market. In the currency market JDSU has the patent for optically variable, color-changing pigments and has no competition there. Some high-value denominations may have as many as 40 security features, only some of which are publicly disclosed.

In brand security, where JDSU competes since it acquired ABNH, competitors include holographic companies like Thomas de la Rue, Leonard Kurz, and OpSec in the United Kingdom, and Hologram Industries in France; divisions of larger companies like 3M, DuPont, and ITW; and independent companies like Authentix and InkSure Technologies in the United States.

Of course there are also security applications that JDSU is not involved in, for example, the authentication features on most United States drivers’ licenses. “Other companies may be very strong in holograms on currency,” says Bonney, “whereas we are strong in transaction cards.” Still others are strong in brand licensing – official NFL products, for examples, all carry holograms.

“People have carved the market into specific territories,” says Bonney. “Because we have a broader capability now, it gives us the capability to compete more effectively in more market segments.”

But for now, just open your wallet for a quick introduction to JDSU’s security products. In one section you’ll find credit cards decorated with brand-distinguishing holograms, and in another cash . “If you look at a $20, $50, or $100 bill, in the lower-right-hand corner, you will see a number,” explains Bonney. “When you move the bill in your hand, you see the color change from green to gold or gold to green.”

That’s advanced security protection that is visible to all who look for it, and that will not run even after an accidental trip through the washing machine — let alone a brief stay on a wet bar.

JDSU Authentication Solutions Group (JDSU), 2 Applegate Drive, Robbinsville 08691; 609-632-0800; fax, 609-632-0850. Mark Bonney, vice president, general manager. Home page: www.jdsu.com.

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