news: Microchips Under the Skin Offer ID

Saturday December 22

Microchips Under the Skin Offer ID, Raise Questions

By Kevin Krolicki

LOS ANGELES (Reuters) - Picture a chip the size of a
grain of rice that can be injected into your body and
give detailed information about you to anyone with the
right scanning equipment.

A scene from a bad science fiction film? A radical
research project in some secret government laboratory?
The chip is neither fiction nor obscure science, but
instead it is a soon-to-be-marketed product ready to
make its way to customers in the year ahead.

The use of high-powered chips melded to the body has
been a recurrent theme of sci-fi from the 1984
cyberpunk novel ''Neuromancer'' to the 1999 blockbuster
film ``The Matrix,'' but the announcement of a
commercial-ready product by Applied Digital Solutions
this week will focus real-world attention on the
potential and risks of such technology, experts said.

Designed to store critical personal medical data, the
chip could mark the start of a more urgent debate about
potential privacy invasions at a time when privacy
advocates are on the defensive over anti-terror
initiatives after Sept. 11.

``It's certainly going to raise issues that we haven't
dealt with before,'' said Stephen Keating, executive
director of the Denver-based Privacy Foundation. Such
radio-activated chips are already used to track cattle,
house pets and salmon.

But this would mark the first attempt to apply the
technology to human beings, offering a potentially
controversial means for hospitals to ``scan'' patients
--------
in emergency rooms and for governments to pick out
------------------
convicted criminals.

[Suggests the implant will be required as a
precondition to recieving emergency health care.]

Applied Digital said Wednesday it would begin marketing
its implantable VeriChip in South America and Europe,
initially as a means to convey information about
medical devices to doctors who need a quick way to find
out how and where patients with pacemakers, artificial
joints and other surgically implanted devices have been
treated.

When activated by a radio scanner, the chip would emit
a radio signal of its own from under the skin that
would transmit stored data to a nearby
Internet-equipped computer or via the telephone, the
company said.

The chip itself could be implanted in a doctor's office
with a local anesthesia and the site of the injection
could be closed without stitches, it said.

But the company already has its sights on more
ambitious applications for the chips, which are
currently capable of carrying the equivalent of about 6
lines of text. Future versions could emit a tracking
beacon or serve as a form of personal identification,
an executive said.

``There are enough benefits that outweigh the concerns
-------- ---------------------
people have about privacy,'' said Applied Digital
-------------------------
Chairman and Chief Executive Richard Sullivan.

[Sounds like we won't have a choice.]

Other experts remain skeptical, citing immediate
practical problems, such as the need to set standards
-------------------------
that would make such chips more universally readable,
--------------------
and longer-term concerns over civil liberties.

[Universal standards will be needed if the system
is to work in every country.]

Even so, such implants are certain to become more
widespread, said technology forecaster Paul Saffo.

``Of course, we will do this,'' said Saffo of the
Silicon Valley-based Institute for the Future ``And it
won't be just for the functionality. It will also be
for fashion. You've got a generation that's already
-----------
piercing themselves. Of course, they're going to put
electronics under their skin.''

TOUCHED BY A DIGITAL ANGEL

Applied Digital, which has a $95-million market value
and has been scarcely followed on Wall Street, plans to
file an application with the Food and Drug
Administration in January to market the chip in the
United States, a process that could take another year
to 18 months, Sullivan said.

The Federal Communications Commission has already
licensed the chip's use of radio frequencies because of
an existing version used to track runaway pets, said
Sullivan.

The Palm Beach, Fla.-based company is just coming
through a two-year-long restructuring, reorganizing a
far-flung telecommunications business around a patent
it acquired in December 1999 for a transmitter that
could be implanted in the body and powered by muscle
movements.

The first related commercial application was a
remote-monitoring device called Digital Angel,
introduced at the end of November, which combines a
wristwatch-like sensor linked to a wireless transmitter
and a global positioning system.

The device can transmit information on body
temperature, pulse and location and has been sold as a
way to track Alzheimer's patients and children who
might wander from home.

The company has also won a three-year trial contract
----------------------------------------------------
with California to supply a version of the product that
-------------------------------------------------------
would track paroled prisoners in Los Angeles and alert
-----------------------------
authorities when they had violated the terms of their
parole by leaving a set area.
------------------

Sales of the new implanted chip could total $2.5
million to $5 million in 2002, Sullivan estimated, a
small fraction of a potential market the company has
projected could be worth $70 billion or more.

Wall Street is excited about the chip. Applied Digital,
which saw its stock rise 18 percent to 45 cents on the
Nasdaq on its initial product announcement on
Wednesday, is in talks with major pacemaker
manufacturers about a joint-marketing plan that would
see the VeriChip implanted at the same time as the
---------------------------------
heart-regulating devices, he said.
------------------------

[Perhaps the implant will be required of all pacemaker
wearers?]

Some see new opportunities for high-tech security after
----------------------------------------------
the hijacking attacks on New York and the Pentagon
killed nearly 3,300 on Sept. 11. The attacks brought
--------
new support for the use of such technology by
=============================================
government and more interest in its future commercial
==========
applications, Sullivan said.

``People are becoming less concerned about what
information is out there,'' he said.

Erwin Chemerinsky, a civil rights expert and law
professor at the University of Southern California,
conceded that the public mood has shifted, but said:
``It all depends on how this is used ... when the
====----
government is invading the body there are always
------------------------------------------------
special privacy concerns.''
------------------------

[Are there examples of the government invading the body
in this way before? Erwin talks like this is a common
thing... some civil rights expert...]

``This is rightly going to prompt debate, as you can
imagine, but the good news is that we'll have years to
figure it out,'' said futurist Saffo.