Holographic Technology
Anti-Counterfeit Security: Present and Future

Stephen P. McGrew, President
New Light Industries, Ltd.
9715 W. Sunset Highway, Spokane, WA 99224 USA
Tel: 509-456-8321 fax: 509-456-8351 email:stevem@nli-ltd.com

Presented at Holo-pack*Holo-print Asia (Singapore), July 1996.


Holograms have served as anti-counterfeit security devices since the late 1970's. This paper explores the factors influencing the effectiveness of holograms in security applications, considers probable technological advances in the field of holography, and projects the impact these advances may have on anti-counterfeit security in the future. This paper will not deal with specific techniques of hologram counterfeiting or anti-counterfeit techniques used today. Rather, it focuses on the kinds of new advances necessary in order to keep holography at the forefront of anti-counterfeit technologies.

I. Introduction

The subject of this paper is holographic anti-counterfeit security technology. it is helpful to begin by pointing out that anti-counterfeit security is not a product or a technology; it is a dynamic, evolving system. Anti-counterfeit security is an attempt to prevent valuable products or documents from being copied or falsified. We use the term "copyright owner" generically to mean anyone who has an interest in preventing counterfeiting, such as a government, a name brand manufacturer, or an intellectual property owner. The copyright owner, the product being counterfeited, the end users of the products, the distribution channels' the methods or technologies used to deter counterfeiting, and, finally, the counterfeiter, are all part of the anti- counterfeiting security system.

Any analysis of anti-counterfeit security should begin with the assumption that nothing mankind can make is absolutely uncounterfeitable. Given enough time and money, people can counterfeit anything that people can make. All of the factors and issues in anti-counterfeit security boil down to counterfeit deterrence, which in turn boils down to two economic principles:

I) if the counterfeiter cannot make a profit by counterfeiting a product, counterfeiting will not be a problem; and
2) if a counterfeit deterrent costs more than the losses due to counterfeiting, copyright holders will not pay for the deterrent.

These two principles reduce to one fundamental principle that drives the competition between counterfeiters and copyright holders:

3) Products that attract counterfeiters are expensive to create and cheap to produce but have high value. The counterfeiter usually avoids the cost of creation and sometimes can produce a cheaper product. The ratio of value to cost must be high for the copyright holder and low for the counterfeiter' or else the copyright holder will lose to the counterfeiter.

Anti-counterfeit security is an evolving system.

  • Intellectual property owners continually introduce
    new technologies and procedures
    to prevent known methods of counterfeiting.
  • Counterfeiters continually learn to copy those
    technologies and circumvent those procedures.

Anti-counterfeit technologies are (or should be) designed to ensure that counterfeiting is too expensive to be profitable-- because of risk of getting caught and/or the cost of overcoming the anti- counterfeiting technologies. The counterfeiter often has an advantage, though, because he does not have all the costs that the copyright holder has in creating and producing the product. An anti- counterfeit technology needs to reverse the counterfeiter's advantage: it must make the counterfeit product more expensive to produce than the valid product.

Time is a crucial parameter in the anti-counterfeit/counterfeit cycle. In the long run, a counterfeiter will always be able to duplicate any security device such as a tag, label, seal or special packaging material' and in the long run the counterfeiter will be able to produce it just as inexpensively as the copyright holder. To the counterfeiter, time and cost are directly connected. It is normally vastly more expensive and risky to counterfeit a new security device in a few days than in a few months. Then, if the copyright holder changes the security device every few weeks, the counterfeiter is unlikely to be able to make a profit; the copyright holder wins the race.

The counterfeit/anti-counterfeit cycle
is driven by economics.

  • Products for which counterfeiting is a problem are those with a high value-to-cost ratio.
  • Typically, the creator of the product has made a large investment to create the product, but the counterfeiter can copy the product by reverse engineering? with a much smaller investment.
  • If the counterfeiter can make a high-quality counterfeit at low cost, he has a big advantage over the copyright owner: his profit margin can be MUCH higher.
  • The end user of the product often WANTS counterfeit products because they are less expensive.
  • The counterfeiter can afford to spend more money overcoming an anti-counterfeit security system, than the copyright owner can afford to spend for anti-counterfeit security!

Past and Present Holographic Anti-Counterfeit Technology:

Holography offers certain advantages as a security device. First, producing an original hologram is expensive and time consuming, but mass-produced replicas from the original are relatively inexpensive. Second, the equipment and skills necessary for mass producing holograms has been fairly difficult to obtain in the past. Third' holograms look distinctively different from printed labels. Fourth, the tools counterfeiters have traditionally used for counterfeiting (the camera and the printing press) do not work on holograms.

At the same time, holography has disadvantages. Because most holograms are embossed, mechanical copies are relatively easy to make. A skilled holographer can make optical copies of holograms that are very difficult to distinguish from the originals.

What the copyright owner wants:


  • Security tags or labels that are inexpensive and mass producible
  • Security tags or labels that are impossible to counterfeit
  • A security system that does not affect his business procedures much

And, once a good master copy has been made, high quality replicas are very easy to make.

Despite some disadvantages, holography is currently an effective counterfeit deterrent. However, if holography companies want to continue to enjoy a high share of the anti-counterfeit security market, they must look to the future. They must realize that today's hologram technology has become relatively easy and inexpensive to obtain, and hologram counterfeiting will surely become both feasible and profitable in the relatively near future. Holographic anti-counterfeiting technology needs to make new advances, comparable to the initial advance in 1980 when Light Impressions introduced embossed holograms to the world.

Future Holographic Anti-Counterfeit Technology:

An effective anti-counterfeit security device will take longer to reverse-engineer than is required to create it in the first place. it will be accompanied by an automated and reliable validation process that allows for updating of security tag or label designs in a time that is short compared to reverse-engineering time.

Some excellent techniques have been developed in the data encryption field, by which a message can be distributed in an encrypted form, along with a public key that allows the message to be read. Although the message is easy to read, the method for encrypting the message in the first place is dependent on a separate key that is kept secret. So, it is very difficult to produce a fake message containing new information.

In the book, "Optical Document Security", K. J. Schell stated that "We would compare our strategy with that of computer security, where the security of encrypting algorithms is based on keys, and not on the secrecy of the algorithms". The same encryption techniques can be used in an "inverted" way to provide a label with a secure "signature" that is very difficult to counterfeit but very easy to verify.

Current holographic anti-counterfeit security methods usually use mass-produced, identical embossed holograms. An advanced holographic security label or ID card will not be mass produced. Instead, each hologram will be unique, bearing a unique encrypted "signature" whose validity can be checked electronically. This advance will require several significant advances in holographic technology.

In order to be affordable, the new hologram labels will need to be recorded on an inexpensive, high photographic sensitivity, rapid-development medium. Photo polymers are currently too expensive, but they are almost sensitive enough and they develop very rapidly. Silver halide films are too expensive, they are environmentally unstable, and require toxic chemicals for developing. We believe that either lower-cost, higher sensitivity photo polymers or some other advanced recording material will be developed in the near future.

The new hologram labels will need to be recorded using a high-speed optical system capable of creating three-dimensional, multicolored holographic images from computer generated imagery, in a small fraction of a second. There are "one step" holographic stereogram recording techniques that will make this possible. Although there will be some security in the materials and in the recording systems used to make these labels, the biggest security factor will be an encrypted signature built into the holographic image. Since each hologram is created "on the fly", each hologram will have its own unique, traceable signature. Although there will be some security in the materials and in the recording systems used to make these labels, the biggest security factor will be an encrypted signature built into the holographic image. Since each hologram is created "on the fly", each hologram will have its own unique, traceable signature.

This combination of technologies will become available within the next 5 years. It will cost more than embossed holograms, but will produce tags, labels and ID cards that are relatively inexpensive and extremely difficult to counterfeit. Learning how to make the recording material or having the recording system will not be enough; the counterfeiter will still have to crack the encryption key. And, the copyright owner can change the key for each production run. Modern data communication systems used to verify credit cards by telephone can easily be used to track labels and ensure not only that counterfeits will be detected but also that many types of fraud such as re-used of labels can be detected.

Proposed Specifications
for a
Future Ideal High-Security ID Card System

Each card should have:

  • a holographic 3D portrait of the individual? further containing a one-way encrypted machine readable hologram of the variable card information
  • a magnetic stripe containing variable information in a one-way encrypted form

The card would be supported by the type of computer network used with credit cards: local magnetic stripe/hologram readers and central servers.


  • Copying is useless. since the holographic portrait must match the cardholder's face
  • A holographic version of the card's variable information prevents alteration of the printed variable information
  • On-site validation provides high security even if data link is out
  • One-way encryption of variable information into the hologram and the magnetic stripe detects alteration of the information on the magnetic stripe.
  • Electronic communications enable cross checks to track card usage.


  • Requires advances in holographic imaging systems; these have been demonstrated experimentally
  • requires advances in holographic recording materials; these have been demonstrated experimentally.
  • Probable will be commercially available in 3 to 4 years.

Proposed Specifications
Future Product Authentication Security System

Each Tag or Label should have:

  • A very high spatial frequency hologram incapable of being manufactured on today's narrow-web embossing equipment
  • Visible features distinct from ordinary holograms
  • Serial holographic number
  • Covert features

Hand-held reader should:

  • read the serial number
  • detect the covert features
  • record or transmit the serial number and covert features


  • cannot be mass-replicated on common hologram embossing equipment
  • serial number allows distribution channel tracking as well as detection of replicas
  • covert features complicate the counterfeiter's task
  • hand held reader enables connection to data collection/analysis system


  • Requires development of improved embossing system (currently under development)

For lower-security applications, the security value of embossed holograms can be improved without greatly adding to the cost by improving the properties of adhesives and substrate and laminate materials. There are several techniques that can be employed to make mechanical or optical copying much more difficult. For example, extremely high frequency holograms can be made which are only embossable on special equipment. If these improvements are incorporated, embossed holograms will continue to be useful low-cost anti-counterfeit security devices for decades into the Future.


Holograms have been useful anti-counterfeit devices since the late 1970's Hologram embossing, developed in 1980, made holograms inexpensive enough that they have now been used on everything from passports to breakfast cereal, and from currency to cosmetics, to deter counterfeiters. The spread of hologram technology will soon reduce the value of ordinary embossed holograms as anti-counterfeit devices. On the other hand, advances we foresee in recording materials, hologram recording systems and embossing substrate materials should greatly increase the security value of holograms within three or four years.

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