Codentify

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Background

Codentify, now known as the Inexto Suite (Image 1),[1] is a product serialisation/pack marker system, marketed by the tobacco industry as a way to verify the authenticity of a packet of cigarettes and whether they are genuine product or counterfeit.[2] The Codentify system involves the printing of a unique, unpredictable, set of 12 letters or numbers readable by the naked eye on each individual cigarette pack.[3]

Image 1. A snippet from a 2016 Inexto presentation[1]

The tobacco industry has been advocating for Codentify to be used as the internationally recognised standard for the tracking and tracing of tobacco products.[4] The World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) and its’ Protocol to Eliminate Illicit Trade in Tobacco Products (ITP) put technological solutions, via a global track and trace system, at the heart of efforts to address the illicit tobacco trade and specifically stipulates that the tobacco industry should play no part in such a system.[5] In addition to multiple other Tobacco Industry Attempts to Undermine the FCTC Illicit Trade Protocol (ITP), Codentify has been presented by the tobacco industry as a suitable track and trace solution based on the ITP’s requirements (Image 2),[6][7][3] despite Codentify’s connections to the tobacco industry meaning that in actuality it is in breach of these requirements.[4]

Image 2: A snippet from a 2013 presentation on Codentify by Daniel Hubert – former Director of the Digital Coding and Tracking Association (DCTA) and British American Tobacco’s (BAT) former global programme manager of supply chain tracking & verification[6][8]

Joint Tobacco Industry Project

The technology was originally developed and patented by Philip Morris International (PMI).[9][3] Leaked tobacco industry documents have revealed that in 2010, Codentify became a joint tobacco industry project when, in a highly unusual move, PMI licenced Codentify for free to its main competitors, British American Tobacco; Japan Tobacco International; and Imperial Tobacco [3] (renamed Imperial Brands in December 2015). BAT, JTI, and Imperial Tobacco began working together to promote the technology, forming the pan-industry working group, the Digital Coding & Tracking Association (DCTA) in 2011.[10][11]

Since 2010, the four tobacco companies have been promoting the Codentify system to governments and other law enforcement agencies, including striking up a deal with INTERPOL, which accepted 15 million Euros from PMI in 2011.[12] In 2012, INTERPOL announced that it would be working with the tobacco industry’s DCTA to make Codentify accessible via its Global Register, which enables those with a device that is connected to the internet to verify a product’s legitimacy by screening it through the multiple product verification options featured within the register.[3][13]

Problems with Codentify

Tobacco industry insiders, academics, and the FCTC Secretariat have criticised Codentify, arguing that it is not compliant with the ITP and is an ineffective track and trace mechanism for the following reasons:

  • The adoption of the Codentify system would mean that the tobacco industry – which has a history of facilitating tobacco smuggling - would control the track and trace system which monitors tobacco smuggling. This has been likened to asking the fox to guard the hen house by Professor Anna Gilmore at the University of Bath[14][15] and Dr. Vera da Costa e Silva, the head of Secretariat at the World Health Organization’s Framework Convention on Tobacco Control.[16]

This has led to concern from public health researchers and NGOs that a substantial component of global anti-illicit efforts may end up under tobacco industry control:

“The industry… works aggressively to prevent future policies… hijacking the problem of tobacco smuggling for policy gain, attempting to put itself in control of an illegal trade in which there is overwhelming historical evidence of its complicity”.[17]

Codentify has also been described as a “black box” that is protected by a tobacco industry patent, whereby its contents are unknown but are managed and controlled by the tobacco industry.[18][19] There are further problems with the technology:

  • As the codes are visible on the packs they are easy to copy and or falsify.[3]
  • Codentify would not store the codes in a linked database to enable it to function as a track and trace system.[3][14][20]
  • Codentify is not a tracking and tracing system. Tracking and tracing is defined in the ITP as “the systematic monitoring and re-creation by competent authorities or any other person acting on their behalf of the route or movement taken by items through the supply chain”.[21]

As Joossens and Gilmore pointed out in a critique of Codentify:

”Tracking and tracing should enable authorities to determine at what point in the supply chain a product is diverted into illicit channels. Article 8.10 of the ITP specifically requires the tracking and tracing system to deliver information up to the point that all duties and relevant taxes have been discharged. A database which registers data on the product throughout its supply chain is therefore required. Codentify does not meet these standards because it does not store the codes or register events after the product is manufactured. Article 8.4 of the ITP, for instance, requires information on the name, invoice, order number and payment records of the first customer or the intended shipment route, the shipment date, shipment destination, point of departure; information that would be unavailable under Codentify. For the same reason, Codentify cannot determine whether a product subsequently enters an illegal distribution route”[3]
  • Codentify also seeks to abolish government-controlled tax stamps which could further take away the authority and control on tax administration from governments to the tobacco industry:
“Replacing tax stamps with Codentify would require delegating the power and technology for tax collection from government to an industry that could and has obviously benefitted from non-payment of tobacco excise.”[3]
  • Tax stamps feature physical high-security features in order to differentiate genuine codes from those that are duplicated or cloned. Under the Codentify system, if the same code appears on two products, there will be no way of identifying which one is genuine and which is not.[3][22]
  • An FCTC review of track and trace systems, including Codentify, argued that independent audits would be necessary in order to ensure that the verification system could not be easily breached.[23] With TTCs refusing to commit to such a measure, Codentify is a cause for concern.[3]

Tobacco Insider Raises Concerns

One tobacco industry insider who worked in a tobacco factory has also raised concerns over Codentify. In an interview the insider said:

“At the beginning I really believed that the Codentify system had a very good potential to fight illegal trade and bringing this industry into the 21st Century, but I think I made a mistake. After a couple of months I realised that working with Codentify I realised that this technology is less than great. Really I was very disappointed.”[20]

He also alleged that Codentify is flawed as, while codes link back to the factory where cigarettes packs are produced, the codes are not stored, and so Codentify is an insufficient system for tracking and tracing cigarettes:

“No tracking, no tracing. Nothing. It doesn’t work. Codentify doesn’t store codes”. [20]

Sale to Inexto

In June, 2016 the DCTA sold Codentify to a company called Inexto – an affiliate of the French Impala Group,[24] stating in a press release that:

“a specialised and independent technology company is now best placed to further develop this technology to ensure it remains state-of-the-art and fit for purpose.”[25]

The European patent register confirms that Inexto now own Codentify’s European patent (EP1719070).[9] When the sale was reported in the press, a PMI spokesperson was cited as claiming that the system “now complies with the EU's new Tobacco Products Directive and the WHO's Framework Convention on Tobacco Control (FCTC).”[26] PMI spokesperson Andrew Cave also claimed that Inexto is “fully independent from the tobacco industry."[26]

Inexto’s role as “merely a front company”[27] for the tobacco industry

Section 12 of Article 8 of the WHO FCTC ITP states that the tracking and tracing of tobacco products “shall not be performed by or delegated to the tobacco industry”.[28] Given Codentify’s link with the tobacco industry- the sale, and subsequent name change of the Codentify technology, may be viewed as an attempt to bypass this requirement by portraying Inexto as an independent provider. The All Party Parliamentary Group on Smoking and Health’s 2013 inquiry into the illicit trade in tobacco products made several recommendations at the national level including that the UK Government should consider whether Codentify “could compromise the integrity and independence of enforcement action by public agencies”[29] and the International Tax Stamp Association has described the sale of Codentify to Inexto as a “ploy to make Codentify acceptable to world regulatory authorities.”[22]

Despite the claims that Inexto is independent from the tobacco industry, Inexto’s top officials are former long-time PMI employees who are credited with having created Codentify, according to patent records. Inexto’s managing director is Philippe Chatelain, who was PMI’s Director of Product Tracking Intelligence & Security for 14 years, and one of the inventors of Codentify.[30][31] The other top officials are Erwan Fradet, Philip Morris’ Product Manager for Codentify for five and a half years,[32] and Patrick Chanez, who worked for PMI for over ten years in anti-illicit trade technology research and development.[33][34] The three hold patents, along with Philip Morris, to the track and trace technology[35] and Philip Morris still owns the trademark to Codentify after the supposed take-over by Inexto.[36][37][38] Inexto’s managing director, Philippe Chatelain, was quoted in a June 2017 Euobserver article as stating that, while Codentify is “maybe not compliant” with the independence and transparency requirements of the FCTC and the European Union’s (EU) Tobacco Products Directive (TPD), he is “100 percent sure” that Inexto complies with the TPD’s requirements because “a government will have control of the machine” and the system was redeveloped “from scratch” after being transferred to Inexto.[39]

TobaccoTactics Resources

TCRG Research

Notes

  1. 1.0 1.1 Inexto Serialization, Authentication and Tracking Solution. Presentation – December 2016, December 2016, accessed August 2017
  2. Philip Morris International, PMI Product Marking, accessed August 2017
  3. 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 L. Joossens, A. Gilmore, The transnational tobacco companies’ strategy to promote Codentify, their inadequate tracking and tracing standard, 2014, Tobacco Control, 23(e1), e3-e6, doi:10.1136/tobaccocontrol-2012-050796
  4. 4.0 4.1 World Health Organization, The Protocol to Eliminate Illicit Trade in Tobacco Products: Questions and Answers, accessed August 2017
  5. World Health Organization, Decision FCTC/COP 5(1) Protocol to Eliminate Illicit Trade in Tobacco Products, Conference of the Parties to the WHO Framework Convention on Tobacco Control, Fifth Session, Seoul, 12–17 November 2012], 12 November 2012, accessed August 2017
  6. 6.0 6.1 Hubert, D., Implementing Technologies to Fight the Illicit Trade, May 2013, accessed August 2017
  7. All Party Parliamentary Group on Smoking and Health Inquiry into the illicit trade in tobacco products, March 2013, accessed August 2017
  8. Hubert, D., LinkedIn Profile, accessed August 2017
  9. 9.0 9.1 European Patent Register, EP1719070 – METHODS AND SYSTEMS FOR MARKING, TRACKING AND AUTHENTICATION OF PRODUCTS, 9 December 2016, accessed 19 Dec 2016
  10. MarketWatch, Association launched to fight illicit trade in excisable goods, 22 May 2014, accessed August 2017
  11. Digital Coding & Tracking Association, About us, accessed August 2017
  12. Business Wire, Philip Morris International Provides 15 Million Euro Contribution to INTERPOL to Fight Trafficking in Illicit Goods,21 June 2012, accessed August 2017
  13. INTERPOL, INTERPOL Global Register unveiled at Google Ideas INFO summit,17 July 2012, accessed July 2017
  14. 14.0 14.1 M. Geller, INSIGHT- Big Tobacco squares up as EU rules aim to track every cigarette, 18 June 2014, accessed August 2017
  15. FIRSTPOST., Putting fox in charge of hen-house: EU asks tobacco firms to track sale of cigarettes, 18 June 2014, accessed August 2017
  16. V.L. da Costa e Silva, Putting fox in charge of hen-house: EU asks tobacco firms to track sale of cigarettes, 23 February 2016, accessed August 2017
  17. A.B. Gilmore, G. Fooks, S.A. Bialous, R.R. Jackson, Exposing and addressing tobacco industry conduct in low-income and middle-income countries., 2015, “Lancet”, 385(9972), 1029-43, doi: 10.1016/S0140-6736(15)60312-9
  18. World Health Organization, Dr Vera Luiza da Costa e Silva, head of the Convention Secretariat, sends her remarks to the High Level Conference: Combating tobacco industry tactics: state of play and a way forward, European Parliament, Brussels, 2 March 2016, 2 March 2016, accessed August 2017
  19. Action on Smoking And Health, Framework Convention Alliance, South East-Asian Tobacco Control Alliance, World Lung Foundation, Does the tobacco industry have a tracking and tracing system that governments can use?, 2015, accessed August 2017
  20. 20.0 20.1 20.2 Youtube, Codentify - Interview with a Tobacco Industry Insider, 28 May 2015
  21. Conference of the Parties to the WHO Framework Convention on Tobacco Control, Fifth Session, Seoul, 12-17 November 2012, Decision FCTC/COP5(1), Protocol to Eliminate Illicit Trade in Tobacco Products, 12 November 2012, accessed August 2017
  22. 22.0 22.1 International Tax Stamp Association, Why Codentify Can Never Work as a Secure Track and Trace Solution Under the WHO FCTC Protocol and EU Tobacco Products Directive, 3 May 2017, accessed August 2017
  23. WHO Framework Convention on Tobacco Control, Analysis of the available for unique markings in view of the global track-and-trace regime proposed in the negotiation text for a protocol to eliminate illicit trade in tobacco products, 22 February 2010, accessed August 2017
  24. Moneyhouse, Inexto SA, 2016, accessed December 2016
  25. Digital Coding & Tracking Association, DCTA technology ownership transferred to Inexto, an affiliate of Impala Group, 1 June 2016, accessed August 2017
  26. 26.0 26.1 P. Teffer, Big Tobacco suspected of dodging EU anti-smuggling rules, 21 June 2016, accessed August 2017
  27. Day, M. House of Commons Hansard: Christmas Adjournment, 20 December 2016, Volume 618, 20 December 2016, accessed September 2016
  28. Illicit Trade Protocol, 2013, accessed August 2017
  29. All Party Parliamentary Group on Smoking and Health, Inquiry into the illicit trade in tobacco products, 2013, accessed August 2017
  30. Impala, Arjo Systems, Arjo Solutions, Inexto, 2013, accessed 19 December 2016
  31. O. Larsson, Sale of Codentify to Inexto Means Business as Usual for Big Tobacco, 21 June 2016, accessed December 2016
  32. LinkedIn, Erwan Fradet, accessed December 2016
  33. LinkedIn, Patrick Chanez, accessed August 2017
  34. ITreseller, Inexto SA., 2016, accessed December 2016
  35. Espacenet, Philip Morris and Patrick Chanzel search, accessed December 2016
  36. Intellectual Property Office, Case details for trade mark WE00000917422, accessed December 2016
  37. European Union Patent Office, Search on Codentify, accessed December 2016
  38. TMview, search on Codentify, accessed December 2016
  39. Teffer, P. [Cigarette tracking rules risk being derailed by lobbyists https://euobserver.com/health/138135]7 June 2017, accessed September 2017