Counterfeit microelectronics are spreading through e-commerce and undermine the resilience of critical infrastructure, including the power grid

the University of Maryland Carey School of Law “Debugging the Trademark Laws: The Lanham Act and Counterfeit

Microelectronics,” 31 TEX. INTELL. PROP. L.J. 211 (2023). Hein Online. Accessed via University of Michigan //DH

OCM = Original Component Manufacturer

However, electronic parts-both in and out of production-can also be purchased from independent distributors and brokers (i.e., unauthorized distributors), 31 who are often credited as being a primary source of counterfeit electronics in the supply chain. 32 Brokers and independent distributors obtain their products from sources other than original manufacturers, and parts being sold on the open market can go through many different distributors before they reach a final destination. 33 The result is a lack of provenance and traceability. Many of these unauthorized sales are conducted online through broker websites or e-commerce platforms that allow unscrupulous sellers to distribute counterfeit electronic parts to unwary or desperate buyers who are unable to obtain parts from authorized distributors due to supply chain disruptions or obsolescence. The counterfeiters typically operate under aliases (e.g., shop numbers or acronyms), or they may remain entirely anonymous.34

Semiconductor chips are frequently referred to as the "oil" of the 21st Century.35 They are one of the most traded commodities today, and the supply of semiconductors is said to be critical both "for commerce, and war and peace." 36 Semiconductor chips and electronic parts have made possible groundbreaking advances in computing, healthcare and medical equipment, communications systems, the power grid, transportation, and defense and aerospace systems. 37 Yet for the last twenty years, the stability of our digital world has been threatened by counterfeit electronic components 38 that pose serious risks to human health and safety, national security, and the resilience of critical infrastructure. 39

B. How are Counterfeit Microelectronics Produced, and What Risks do They Pose?

Counterfeit luxury goods such as handbags, footwear, sunglasses, and clothing are often dismissed as relatively benign items that harm no one, and consumer complicity (i.e., the desire for counterfeit products) is a major factor contributing to their prevalence. 40 Conversely, counterfeit microelectronics are not manufactured to industry standards and carry severe risks to end users.

The first patent applications claiming integrated circuits were filed by Robert Noyce of Fairchild Semiconductor4 1 and Jack Kilby of Texas Instruments 42 in 1959. While the first commercially available integrated circuits began appearing on the market in the early 1960s, 43 counterfeit microelectronics were not reported until almost forty years later.44 ERAI, Inc., a global services organization that monitors and reports issues affecting the electronics supply chain, 45 received its first complaint regarding counterfeit electronic parts in November 2001 against a China-based distributor known as 3A Century. 46 Although initial complaints cited obvious nonconformities and lack of sophistication, ERAI observed that "[w]ithin a few months, Chinese distributors began refurbishing and remarking parts to have consistent date and lot codes in order to pass used parts off as new." 47 By the spring of 2003, reports of counterfeit parts were also being filed with the Government- Industry Data Exchange Program (GIDEP),48 including complaints of improper markings and high failure rates. 49 From 2005 through 2008, 99% of GIDEP reports involved counterfeit electronic components.50 Today, the problem persists; in 2022, ERAI received reports of 768 different counterfeit and nonconforming parts, a marked increase over the previous year.5

Simply put, counterfeit microelectronics are parts that are made to appear to be something that they are not.52 Industry members and academics are not always in agreement about the precise definition of "counterfeit" microelectronics. 53 However, an industry standard published by SAE5 4 sets out seven recognized types of counterfeit parts, including (1) recycled parts," (2) remarked parts,56 (3) overproduced parts,5 7 (4) out-of-specification or defective parts that have been identified as nonconforming by the manufacturer,58 (5) cloned parts,59 (6) parts accompanied by forged documentation or substitution of an unauthorized part for the part identified in the shipping documents, 60 and (7) tampered parts that have been intentionally modified for sabotage or malfunction.61

Traditionally, a major source of counterfeit parts was e-waste.62 Used parts were harvested from discarded products and resold as new, often after being relabeled and remarked with different date codes and performance characteristics. A 2013 whitepaper provided a startling account of the typical "manufacturing process" for counterfeit components:

1. Using "mountains" of scrap electronics as an input, workers remove printed circuit boards (PCBs) from old electronic systems.

2. PCBs are heated over an open flame to melt the solder used to secure components to the boards. The boards are then banged against a hard surface so that the components will fall out into buckets. The components are then sorted, typically based on the package sizes and styles, and the electrical functions of the components.

3. The original markings on the components are removed using methods of increasing sophistication ranging from sanding to chemical etching to "black-topping" to "microblasting."

4. New markings, including trademarked OCM logos, are added to the components. These new markings generally are intended to make the parts more marketable and/or more expensive. For example, parts with old product codes may be marked with new product codes; packages that contain the element lead (Pb) may be marked to indicate they are leadfree (Pb-free); parts that have low performance may be marked to indicate they have high performance; and inexpensive commercial-grade parts may be marked to indicate they are more expensive automotive-grade or military-grade parts.

5. The external pins, pads, or solder balls on the packages are reworked to make them appear new. This sometimes entails using harsh chemicals to clean these external package connections.63

This is in stark contrast to the ultra-clean, environmentally-controlled, high-tech wafer fabs where the manufacturing of new semiconductor devices takes place. 64

In addition to harvesting components from e-waste, the Senate Armed Services Committee reported that entire factories are set up to produce blank chips, and counterfeit markings are later added in a "made-to-order fashion."6 5 Other counterfeiters may assemble empty packages with no die in them, or they remark used or new low-grade components to make them appear to be more expensive, high-grade components. 66 Some counterfeit parts may not function at all, while others may fail prematurely, leading to potentially catastrophic results. "Even if counterfeits made from previously used parts and salvaged from e-waste may initially perform, there is no way to predict how well they will perform, how long they will last, and the full impact of failure ."67