L-1: The Technology Company in Your Pocket

May 12, 2008 • TechKnowledge No. 114

Market processes drive companies like Google, Facebook, telecom providers, and ISPs to balance privacy with other consumer interests. Whether their practices are satisfactory or not, equally powerful threats to privacy lurk in more obscure corners of the technology world. One such corner is the market for biometric technologies and identity cards. The dominant player in that market these days is L-1 Identity Solutions.

A leading biometric technology company, L-1 was formed from the combination of Viisage Technology and Identix in 2006. It has grown through a series of acquisitions, including Integrated Biometric Technology, SecuriMetrics, Iridian, SpecTal, ComnetiX, McClendon, and Advanced Concepts, Inc. L-1 is heavily leveraged into the government identity business, with nearly $100 million in federal contracts last year.

L-1 is the number two manufacturer of state driver’s licenses and identification cards in the United States. Among other things, its driver license Web page touts its role in “laying the foundation for the use of face recognition technology.” It is interesting to learn that this foundation is being laid.

More evidence of L-1’s thinking is on display in a brochure it hosts on its Web site entitled “Identity Solutions for the REAL ID Act.” REAL ID is the moribund U.S. national ID law. The cover features an attractive woman’s face with her driver license data superimposed over it. Joining her name, address, height, and eye color, are her place of birth, her political affiliation, and her race.

The REAL ID Act regulations issued by the Department of Homeland Security allow states to put race in the “machine readable zone” of licenses. Each time people were identified using these cards, their racial background could join other data in collections of information about their movements, purchases, and interactions. Political party is a new one — but stranger things have happened — and the inclusion of place of birth on a license would quickly destroy that obscure information’s role as a “security question” when people call their bankers. But what matters is that L-1 appears not to have these privacy and security issues in mind as it promotes its products to driver licensing officials.

L-1 now plans a merger with Digimarc ID Systems, the nation’s number one manufacturer of state identity cards and drivers’ licenses. The combined company will be a powerhouse in both advanced biometric technologies and driver licensing.

For its part, Digimarc has been very aggressive in promoting the REAL ID Act. The Digimarc website has an entire section dedicated to REAL ID, and the company spent $350,000 in the first half of 2007 on federal lobbying for the national ID law. It has also hosted conferences where state DMV bureaucrats trained up to promote REAL ID. Regrettably for Digimarc, Congress hasn’t funded REAL ID and not a single state complied with the May 11, 2008, deadline for implementation. Digimarc lost money in 2007.

Will the combined enterprise continue pushing REAL ID? It’s a legitimate concern. L-1’s board of directors features a number of people known for their law enforcement and national security experience much more than their technology or business acumen. The former Coast Guard commandant who originally stood up the Transportation Security Administration is on the board, for example. Admiral James M. Loy joined the Viisage board in 2006 and continued on after the merger that formed L-1.

Board member B. Boykin Rose adds insider knowledge of government‐​issued identification and licensing. He served as director of the South Carolina Department of Public Safety (which includes the Division of Motor Vehicles and the Driver Licensing Division) from 1993 to 2004. George Tenet became a director of Viisage (and subsequently L-1) after concluding his seven‐​year term as director of central intelligence for the United States. And the former head of the FBI, Louis Freeh, was a board member of L-1 until August 2007.

Digimarc will be the crown jewel in L-1’s government‐​identification‐​system empire. Given L-1’s substantial federal business and friendly federal government relationships, it is hard to envision the company not spending millions to promote the REAL ID Act through state and federal lobbying, funding of advocacy groups, and support for national‐​ID cheerleaders like the American Association of Motor Vehicle Administrators.

But this would all be good money thrown after bad. A dozen‐​and‐​a‐​half states have passed legislation either objecting to REAL ID or barring themselves outright from complying. As noted previously, not a single state implemented REAL ID by the May 11, 2008 deadline. Deeply complex issues — even issues highlighted by the DHS’s privacy advisory committee — weren’t satisfactorily addressed in the department’s final regulation. And even if REAL ID does eventually see compliance, it will take years. Nearly a decade will pass under the current plan before all licenses are REAL ID compliant.

Over this time, as the biometrics experts at L-1 surely know, identification and credentialing technology are likely to change immensely. People will identify themselves, pay for things, and prove credentials like age and security status with all kinds of different devices: cell phones, smart cards, dumb cards, key fobs, and many other form factors. These devices will use many different biometric systems, security designs, and communications protocols. The better ones will convey the precise information needed in each particular transaction rather than a full dossier of every person for each transaction as a REAL ID card would do. Security without surveillance is the goal.

If L-1 has foresight, it recognizes that REAL ID is a slow trip down a bumpy, dead‐​end road. Better it should invest its time in developing products for the decentralized, competitive identity and credentialing marketplace of the future.

In the meantime, people are right to be concerned that L-1 will be a prime mover behind any continuing REAL ID promotion. A corporate lobbying operation can do as much harm to liberty as any government agency or official.

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