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http://www.gopbi.com/partners/pbpost/epaper/editions/today/business_c312779d0594
902e00ee.html

Applied Digital pushes microchip to plant in foreigners for tracking


By Deborah Circelli, Palm Beach Post Staff Writer
Thursday, December 20, 2001


PALM BEACH -- Today's security measures don't work very well, says Richard
Sullivan, pointing to the Sept. 11 terror attacks on New York and Washington.

He's says he's got a better idea: a microchip instead of a green card.
Foreigners who pass through customs or immigration could be injected with the
chip, allowing officials to monitor their activities better and keep terrorists
out.

"Man today is more than ever converging with technology," said Sullivan, who is
CEO of the Palm Beach-based tech company Applied Digital Solutions (Nasdaq:
ADSX, 45 cents). "I think the positives overwhelmingly overcome any small
negatives. The government is more prepared, for the overall benefit of our
citizens, to advocate some of these changes."

Sullivan's company has high hopes for the implantable technology, which it
unveiled Wednesday. Until now, the microchips -- called VeriChips -- have been
used for tracking and identifying animals.

Applied Digital has had a patent for such devices since 1999. The new technology
would make Applied Digital the first company in the nation to sell microchips
designed to be implanted in human beings.

But privacy groups reacted with outrage Wednesday to Sullivan's idea for
monitoring foreigners. America is not that desperate, one group said, citing a
violation of "bodily integrity."

"That is so unconstitutional," said Randall Marshall, legal director for the
Miami chapter of the American Civil Liberties Union. "I can't imagine this
surviving a constitutional challenge. It just simply goes way too far outside
the realm of what we believe in as a society."

Sullivan said the product will be marketed in January in South America while the
company seeks approval in the United States from the Food and Drug
Administration. Approval is expected in 18 months.

A New Jersey surgeon who serves on the board of Owings, Md.-based Medical
Advisory Systems, which is about to combine with a subsidiary of Applied
Digital, injected himself with two of the VeriChips five days after the terror
attacks.

Richard Seelig inserted the chips in his forearm and hip as part of the clinical
process Applied Digital will have to conduct to receive FDA approval, Sullivan
said. Seelig, 55, referred all questions Wednesday to Sullivan but told the Los
Angeles Times he felt compelled to have a secure form of identification after
Sept. 11.

"I was so compelled by what had happened," Seelig told the Times. "One of the
potential applications suddenly jumped out -- the ability to have a secure form
of identification -- and I felt I had to take the next step."

The chips are about the size of a grain of rice and contain an identification
number or other data, such as medical information, and a person's address and
phone number.

The chips have no internal power source. Their data can't be read without a
scanner close at hand. The next generation of body chips -- one that transmits
signals from a distance -- is several years away.

The chip is the same as the one Applied Digital's subsidiary uses in more than 1
million animals, but the VeriChip can be used in humans with a pacemaker,
artificial heart valves or orthopedic knee devices. If a patient needs help, a
hospital can use a scanner to obtain information.

In five years, Sullivan said he can see the chips being used in children, the
elderly, prisoners, and by employers at facilities such as airports and nuclear
plants. Society in general could use them instead of ATM or credit cards, he
said.

But Evan Hendricks, editor and publisher of Privacy Times, a Washington,
D.C.-based newsletter, said it's one thing for an individual to choose to
implant the device for medical purposes, but it's crossing the line when parents
start putting them in their children or employers require them for employment.

"This has been science fiction for most of our adult life, but now we see the
technology allows it," Hendricks said. "The problem is that it is happening in a
vacuum where there are not adequate privacy laws."

Los Angeles Times contributed to this story.

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