Microchips Under The Skin Offer
ID But Raise Serious 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 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.
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.
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.
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.''
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% 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.
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.''
``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.

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