Verayo teams up with SkyeTek to create cheap anti-counterfeiting system

Verayo and SkyeTek have figured out a relatively cheap way to circumvent counterfeiting. In essence, Verayo makes a secure radio tag that can’t be copied, while SkyeTek makes cheap readers that can read tags and then signal “red” for a fake and “green” for the real thing.

The companies are planning on launching the system first to certify the authenticity of pharmaceuticals delivered in Africa, where the problem of fake drugs is rampant and the consequences of buying fakes can be devastating. They are working exclusively with GLOBALPCCA, a pharmaceutical anti-counterfeiting company that is seeking to clean up the drug supply chain in Africa.

The solution is a result of the clever use of inexpensive technologies. San Jose, Calif.-based Verayo makes “unclonable RFIDs” or radio frequency identification tags (pictured, lower left) which are akin to the security badges that employees use to open doors. SkyeTek makes a pen-sized RFID reader, pictured right.

One of the great problems of the chip industry is that no two chips are alike. Even when chip makers are fabricating the exact same chip product, like an Intel microprocessor, there are always minute and virtually unnoticeable differences from one chip to the next. The brilliant thing about chip startup Verayo is that it has figured out how to turn this flaw into an advantage. It uses the minute variations in chips to uniquely identify each chip. In turn, it uses this identification method to create ID tags that are secure and can’t be cloned. Anant Agrawal, chief executive of Verayo, calls this “silicon biometrics,” akin to fingerprint identification.

The technology was dreamed up by Srini Devadas, an electrical engineering and computer science professor at the Massachusetts Institute of Technology. Devadas started the company in 2005 and developed the technology for two years with funding from the U.S. government. If you send an electrical signal into a chip, you will get a unique response because every chip has different physical unclonable functions, or PUFs. The good thing about these PUFs is they are cheap; they are tiny circuits that add virtually no cost to a chip.

The technology fits well with basic tests for authenticating products. You can give a chip 50 different challenges that produce 50 different responses. You store the responses on a server. Then you put the chip into a radio identification tag (RFID) that can be attached to a retail product as if it were a bar code. When someone buys that product, a reader at the cash register will read the serial number on the tag. The reader then sends the serial number back to the centralized computer in a data center. That server will look up the serial number in its database and send one of the 50 challenges associated with that specific chip. The reader receives the challenge and it prompts a response from the chip in the tag. That response goes back to the server. If it’s a match, then the chip is verified as authentic. Here’s a video description of Verayo’s technology.

Verayo has succeeded in getting various customer trials and is now working on mass producing its chips. But the chips aren’t that useful if there are no readers to read them. That’s where Denver-based SkyeTek comes in. The company makes low-cost RFID readers and software that perform the authentication functions required in Verayo’s chips. SkyeTek’s RFID readers come in a pen-size form called a Pentesta, for consumers to carry in their pockets. Consumers can pull out the half-inch-thick, battery-powered readers and use them when they’re about to buy drugs at a store. A tray-sized reader, dubbed the Trayesta, lets pharmacies test a bunch of drugs before they sell them to consumers. When the PUF authentication verifies a product, the test devices display a green light. If it’s fake, it displays a red light. The pens currently cost around $50, and SkyeTek is working on driving costs lower.

Nigeria’s equivalent of the Food and Drug Administration, NAFDAC, has approved GLOBALPCCA’s solutions and has signed a contract for delivery of a low-cost RFID authentication system for Nigeria, said Steve Ams, chief executive of GLOBALPCCA.

Verayo was founded in 2005 and has 12 employees. Its rivals include NXP. Verayo has raised an estimated $6 – $7 million from Khosla Ventures, and it has revenue from the Pentagon.

SkyeTek is headed by CEO Daniel Frydenlund, was founded in 2000 and has six employees. The company was founded by Sean Loving, a former Motorola RFID engineer who envisioned RFID readers that were small. Rivals include ThingMagic. The company’s investors include Appian Ventures.

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