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Two-Dimensional Barcodes: How 2D Could Change Retail
by: Kristin McGaver Sikora of Foley & Lardner LLP - Manufacturing Industry
Advisor
Thursday, December 28, 2023

RELATED PRACTICES & JURISDICTIONS

* Corporate & Business Organizations
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When introduced nearly fifty years ago, the Universal Product Code (UPC)—the
most visually recognizable of One-Dimensional (1D) barcodes—was a major
innovation. 1D barcodes increased checkout speeds, improved accuracy of
transactions, and enabled stores to better monitor sales. Now, the
Two-Dimensional (2D) barcode offers the potential to transform retail
once-again.

In coordination with industry, GS1 US—the nonprofit standards organization that
oversees barcodes—launched an initiative dubbed “Sunrise 2027”[1] that aims for
retailers to be able to read 2D barcodes at points of sale by the end of 2027.
According to GS1 US, 2D barcodes can provide a range of benefits, including
improved inventory management, enhanced recall readiness, greater sustainability
and ethical sourcing, better product authentication, and greater brand
trust.[2] The transition to 2D, however, will also present new challenges and
legal risks that companies need to prepare for as they push forward into this
new era.

1D VERSUS 2D

1D barcodes are the familiar pattern of black and white bars organized
horizontally that you scan at the self-checkout line of your favorite local
retailer. These linear barcodes consist of around two dozen characters, and only
contain alphanumeric data. Since these barcodes grow longer with more data,
their length is typically limited to around 8-15 characters. The UPC
code—printed on virtually every consumer product in the world—only encodes a
maximum of 11 numeric digits and a trailing checksum, encoding just two facts:
manufacturer and product code.

2D barcodes contain a matrix code that stores information both horizontally and
vertically. As a result, 2D barcodes can hold much more data—up to 2,000
characters—while remaining smaller than a 1D barcode. 2D barcodes are also not
limited to alphanumeric data and can include references to images, sounds, and
other forms of information. For example, QR codes—a type of 2D barcode
accessible via smartphone scan that gained popularity during the COVID-19
pandemic—are now commonly used to replace certain paper items, including
restaurant menus and product instruction manuals.

THE POTENTIAL OF 2D

Industry and consumers can expect a range of benefits stemming from the growing
use of 2D barcodes. For example, 2D barcodes have already helped certain
retailers more closely monitor food products. Woolworths Supermarket—the largest
supermarket chain in Australia and New Zealand—piloted placing 2D barcodes on
fresh meat and poultry products back in 2019.[3] By 2022, barcodes were on 50%
of the products in Woolworths’ meat category in over 1,000 of its stores.[4] GS1
Australia estimates that Woolworths can enhance food safety and reduce food
waste by up to 40% for products that have fully transitioned to 2D
barcodes.[5] 2D barcodes help industry achieve these results by encoding a
product’s batch and serial number within the barcodes, helping to limit waste by
easily identifying expired or recalled products while allowing unaffected
products to remain on the shelf.

Companies can also rely on 2D barcodes to meet government regulations. For
example, the Drug Supply Chain Security Act (DSCSA) required the pharmaceutical
supply chain to achieve electronic tracing of products at the package level by
November 27, 2023.[6] The DSCSA specifies that packages must be marked with a 2D
barcode, or homogeneous cases to be marked with either a 2D barcode or linear
barcode.[7] Further, the FDA Final Rule on Requirements for Additional
Traceability Records for Certain Foods (Food Traceability Final Rule)
“establishes traceability recordkeeping requirements, beyond those in existing
regulations, for persons who manufacture, process, pack, or hold foods included
on the Food Traceability List.”[8] This includes maintaining records containing
“Key Data Elements” associated with specific “Critical Tracking
Events.”[9] While the compliance date for the Food Traceability Final Rule is
not until January 20, 2026,[10] companies must plan ahead to meet the rule’s
extensive requirements. 2D barcodes can help—and may in fact be necessary to
comply.

2D barcodes can help companies keep consumers informed and safe. Unlike static
1D barcodes, 2D barcodes allow the manufacturer to provide consumers with the
most current information by directing them to dynamic webpages. For example, the
clothing industry could consider utilizing 2D barcodes to embed the necessary
information from long, itchy clothing tags, while also providing consumers with
the most current information—including information on the recyclability of
products, which is subject to change. Companies could also employ 2D barcodes to
alert consumers of product safety issues and recalls. Eventually, 2D barcodes
could be the primary mechanism to deliver targeted notices to consumers about
product safety issues and recalls affecting specific products.

The increasing ability to collect consumer information through 2D barcodes
raises potential data privacy concerns, however. Every time a consumer scans a
QR code, metadata regarding the device used, location, IP address, date and
time, and other information they may input can be collected.[11] Companies that
collect any such consumer information should be aware of the consent
requirements for and risks associated with the collection and storage of
consumer information and have safeguards in place to give consumers proper
notice and prevent data breaches.

THE FUTURE IN 2D

While 2027 is still several years away, the transition to 2D is already well
underway. This shift will require companies to examine their systems and make
process changes. Such changes will come with great benefits but also new legal
requirements, risks, and challenges that companies must anticipate and prepare
for.

Special thanks to Marcella Michalek, a former summer associate at Foley, for her
contributions to this article.

--------------------------------------------------------------------------------

FOOTNOTES

[1] A New Dimension in Barcodes: Get Ready for Sunrise 2027, GS1 US,
https://www.gs1us.org/industries-and-insights/by-topic/sunrise-2027.

[2] Id.

[3] Woolworths Australia Seeing Multiple Benefits From Barcodes, GS1, 2,
https://www.gs1.org/sites/gs1/files/2022-06/case-study-woolworths-gs1australia.pdf.

[4] Id.

[5] Id.

[6] 2023 DSCSA Requirements, PDSA,
https://pdsaonline.org/dscsa-information/phase-ii-implementation.

[7] 2019 Update: Barcode Readability for DSCSA 2023 Interoperability, GS1 US,
https://www.fda.gov/media/168278/download#:~:text=The%20HDA%20Guidelines%20for%20Bar,encoding%20all%20four%20data%20elements.

[8] FSMA Final Rule on Requirements for Additional Traceability Records for
Certain Foods, FDA,
https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-final-rule-requirements-additional-traceability-records-certain-foods#:~:text=The%20FDA%20final%20rule%20on,Food%20Traceability%20List%20(FTL).

[9] Id.

[10] Id.

[11] Security Considerations for QR Codes, Canadian Centre for Cyber Security
(Jan. 2022),
https://www.cyber.gc.ca/en/guidance/security-considerations-qr-codes-itsap00141.

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