Cryptography – Electric signal modification – Having production of printed copy
Reexamination Certificate
1997-10-16
2003-07-29
Barron, Jr., Gilberto (Department: 2132)
Cryptography
Electric signal modification
Having production of printed copy
C713S170000, C713S176000, C713S179000, C380S055000
Reexamination Certificate
active
06600823
ABSTRACT:
BACKGROUND, FEATURES
Workers in the art of handling checks and the like are well aware that fraud is a growing concern; check fraud due to counterfeiting in 1996 will approximate $4.3 B (Nilson Report, with losses 10% Banks—90% Merchants). Experts know that counterfeit identification is easily procured.
To prevent fraud it is critical to distinguish an authentic document from a counterfeit or altered document. Current technologies rely on difficult-to-print human detectable features which are added to a document to prevent illegal reproduction. Fraud detection is accomplished by human observation and is based upon the examiner's knowledge, experience and time allotted for examination of a document.
Another approach to increasing security of a value document is to add a unique property to each document. Data about that property is encoded on the document itself and is secured using a public key based digital signature. In such a scheme, machine verification of authenticity is possible.
This invention uses a unique property of magnetic ink printing on a check: magnetic remanence variation, that provides for self-authentication when used with a recordable magnetic stripe on the check for storing a digital signature and other document data.
A “value document” will be understood as representing negotiability (e.g. currency which is highly negotiable). A value document may have limited negotiability; for example, a birth certificate is not negotiable but has value. Regardless of the limits of negotiability, fraudulent value documents increasingly threaten the integrity of our conventional business practices. In many instances where paper value documents are used there is a move to convert those transactions to completely electronic transactions (e.g. electronic funds transfer, though it needs improved security and resistance to fraud, can reduce the cost of commercial transactions by eliminating the handling of paper, cash and checks—but electronic transactions may prove to be more prone to fraud than paper documents).
Traditionally, the authenticity of a document is determined by physical examination for color, background printing, paper texture, printing resolution, and ink characteristics. On an initial level, there may be numerous security features present in a value document but few if any, can be detected and evaluated by the untrained individual. Because security features are normally not standardized except in currency, training tellers and cashiers to do extensive security evaluation is not practical, even though these are often the only people who get the chance to closely examine the document in a payment system which is “back-end automated”.
Here one may assume that “value documents” comprise commercial and personal checks, although the concepts presented here can easily be applied to travelers cheques, credit cards, event tickets, passports, driver's licenses, motor vehicle titles, and even currency.
According to the July 1995 Nilson Report, the volume of paper checks written in the United States in 1994 was $61 billion U.S. dollars: 57%, or $34.8 billion were personal checks, 40%, or $24.4 billion, were commercial checks and 3%, or $1.8 billion, were cheeks written by the government. In that same Nilson Report, fraud losses from all checks totaled $12.6 Billion, with losses to merchants of $11.26 Billion, while financial institutions lost another $1.34 Billion. Types of check fraud included:
Accounts closed and kiting—32%
Counterfeiting—27%
Forgery—24%
Bankruptcy—12%
Refer to maker—5%
In working on measurement of unique magnetic signal properties of Magnetic Ink Character Recognition (MICR) characters of checks, I noted that magnetic remanence variation quite often presented a large distortion in MICR waveforms. I noted that the magnetic remanence variation was reproducible when read by a read system with a given bandwidth proportional to document speed. A system concept came to mind that correlated the magnetic remanence variation of the left-most Routing Transit symbol to a value stored in a data base. The data base could be queried, using the MICR line itself as the index, and the previously noted remanence variation could be compared with the subsequent measured variation. This “FIRST method”, although technically feasible when the MICR readers had the same physical spatial and electronic proportional bandwidth, was not preferred, as a potential product, because of the necessary large “all-items” data base requirements. There were some limited applications such as credit cards where this can be feasible, but the credit card market is moving to “smart cards” as a way to reduce fraud. And a market survey indicated that credit card issuers were reluctant to invest in new technology to further improve “magnetic stripe technology”.
When I contemplated, methods for authenticating value documents, I realized that the methods should not have the limitation of requiring an “all-items data base” to perform authentication. I began to realize that one could use a recordable data file for storing an “encrypted” message, or a “digital signature”, using “public key technology.”
Encryption
One may assume that an “encrypted digital signature” is a kind of “electronic fingerprint” that only a legitimate sender can add to electronic mail (e.g. e-mail).
Workers are aware of encryption “keys”, or mathematical functions by which unencrypted characters are transformed into code, e.g. a message sender and receiver may agree on a secret code (key) to encrypt and decrypt a message—a system as simple as substituting the letter B for the letter A, C for B, D for C an so on. The recipient reverses the procedure to decrypt and read the so—encoded message.
This gives rise to “public key cryptography” where each user has two “keys”: the public key which is disseminated widely and used by others to encrypt their messages to you, but which is decoded only with a matching “private key”, kept secret (e.g. guarded by a password an a user's computer) and used to decode the public key message into clear text. Using “one-way functions”, this public/private key system is quite secure—these functions being easy to perform in one direction but very, very difficult to perform in the opposite direction without the secret private-key information. Thus once you've successfully installed the software and created a pair of keys, turning an e-mail message into pages of nonsense is as easy as clicking on an icon depicting a padlock on an envelope. Clicking a second icon adds an encrypted digital signature, proving that you wrote the message. You can then safely send the message over the Internet.
Except for one problem. Your recipient must also have Pretty Good Privacy (PGP) compatible encryption software—and that person must have already supplied you with his or her public key. Without the recipient's public key, there's no way to encode the message to him or her. Likewise, the other party will need your public key before he or she can encrypt a reply. Swapping keys is a simple matter, but ensuring that your correspondent has the necessary software isn't.
That's why encrypted e-mail is expected to get a big boost from the latest generation of Web browsers, which have built public-key cryptography into their e-mail utilities.
But, in an improved method, the sender also sets up a “digital certificate”. By handing someone his digital certificate, he's giving them his public key. (e.g. this added integration in a Netscape browser means that when you receive an e-mail with someone else's certificate attached, it automatically gets added to a database on your PC, ready for use when you want to send that person an encoded message).
The certificate concept is meant to emphasize proof-of-identity. Certificates can be endorsed by a third party, a so-called trusted entity that guarantees certain information. Netscape users in search of a certificate will find themselves directed to a Web site like that of VeriSign, where users can obtain digital ID cards with varying levels
Barron Jr. Gilberto
Kabakoff Stephen
Rasmussen David G.
Starr Mark T.
Unisys Corporation
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