Chicago — Futurists predict that some day, electronic devices will routinely communicate from inside the human body, possibly even uploading and downloading data to and from the brain. But that rosy scenario is cold comfort to the founders of Applied Digital Solutions Inc.

The Palm Beach, Fla., maker of RF chips for use inside the human body has struggled with questions about its business model, endured probes from privacy advocates, been described in the media as the purveyor of a "Big Brother" chip and even seen its product — which is inserted under the skin for security and identification applications — accused of satanic influences.

Applied Digital quietly announced two weeks ago that it has struck an agreement with a major medical supplier to distribute its VeriChip RFID devices. That might place the company on the verge of tapping into a rich revenue stream — or of supporting an idea that is doomed to oblivion. Either way, observers say, one thing is certain: Applied Digital is suffering the growing pains of a company that produces a high-profile, invasive, groundbreaking technology.

"It's almost a requirement for a new technology to be rejected on the first outing," said Dennis Roberson, vice provost for new initiatives at the Illinois Institute of Technology (Chicago) and a former chief technology officer at Motorola and NCR. "Invasive technologies like this one are especially tricky."

Moreover, Applied Digital's struggles could be a precursor to a long societal conflict in which the human body will serve as the battleground. "This may be a harbinger of what's to come," said John L. Petersen, founder of the Arlington Institute (Washington) and a futurist who has worked with the White House's National Security Council staff. "Based on history, it's guaranteed that we're going to continue to increase the augmentation of human abilities."

This very big debate revolves around a very small company. Applied Digital Solutions started as a maker of electronic tags for implantation in cats, dogs and cattle. The company announced in 2002 that it intended to market its VeriChip product for humans. This RFID device the size of a grain of rice (11 x 2 mm) has since received approval for human use from the U.S. Food and Drug Administration. It can be injected through a syringe.

After engineering a public relations coup by "chipping" the Attorney General of Mexico, Applied Digital earlier this month reached an agreement with Henry Schein Inc. (Melville, N.Y.) for distribution of the VeriChip to physicians. Henry Schein, a $3.4 billion-a-year company, works with more than 45 percent of the 230,000 medical practices in the United States.

Applied Digital insists its device could play an important role for patients handicapped by illness or injury. By placing an RF reader a few inches from a patient's subdermal VeriChip, medical personnel can access a unique ID number and then tap patient information stored in a separate database. Used in conjunction with pacemakers or artificial hips, the device could provide information that the patient might be unlikely to know. The company says, for example, that the VeriChip could contain data on the manufacturer of an implant as well as its serial number, recall information, who installed it and when, and the date of its last battery change. Or it could simply offer critical medical information, such as the fact that a patient might be diabetic.

"This technology empowers individuals," said Dr. Richard Seelig, vice president of medical applications for Applied Digital. "It communicates to their life-care providers when they can't."

Still, industry experts wonder if the company's VeriChip Division, which earned revenue of just $550,000 in 2003, can find a market.

"On the animal level, there's a market for this technology," said Mike Liard, an RFID analyst for Venture Development Corp. (Natick, Mass.). "But what's the value proposition for the doctors and the [human] patients? There haven't been any clear answers in that area."

Moreover, the small company has been a virtual magnet for social criticism. Privacy advocates have argued that its technology is a target for thieves eager to steal personal information. Data from the VeriChip, they say, is not encrypted and can be easily intercepted by anyone with an RFID reader.

What's more, the company's opponents have recently questioned the veracity of Applied Digital's public statements and the safety of its technology. Earlier this year, according to Consumers Against Supermarket Privacy Invasion and Numbering (Caspian), Applied Digital inaccurately claimed its Mexican distributor had "chipped" 160 people in the Mexican Attorney General's Office as a security measure. Subsequent calls to the AG's office, verified by EE Times, revealed that the actual number was 18.

Also, Caspian charged that the company hasn't been forthcoming about the VeriChip's incompatibility with magnetic-resonance imaging systems, adding that the powerful magnets inside MRI machines could literally suck the chip out of the body like a reverse bullet.

Applied Digital executives insisted that the company has been up front about MRI issues. "There is as much MRI incompatibility with the VeriChip as there is with any implanted medical device containing metal," said Seelig. "That being the case, why aren't they challenging orthopedic joint replacements, battery packs, heart valves, aneurysm clips and staples? All of those are incompatible with MRIs, too."

Groups such as Caspian nevertheless express dismay over the situation. "Far from replacing the MedicAlert bracelet, if you have a VeriChip inside your body, you will now have to wear a MedicAlert bracelet to call attention to the chip," said Katherine Albrecht, founder of Caspian.

Growing resistance to the technology has even spawned a belief among some religious fundamentalists that the VeriChip could be the "mark of the beast" forecast in the Book of Revelations. Hundreds of Web sites have sounded an alert about the technology, with one such site warning darkly that "evil disguised as benign assistance is knocking on the door."

Bionic future
To be sure, experts in the history of technology acknowledge that privacy and security questions need to be aired, but add that strong societal reactions have been commonplace throughout history whenever technology crosses a new barrier.

"When the first pacemakers were introduced, there was a huge uproar because they were touching the heart, and the heart was believed to hold very special importance," said Roberson of the Illinois Institute of Technology. "Here, they are taking it a step further, because the company is also providing access to sensitive medical information."

Roberson added that society has similarly fought the introduction of technologies ranging from automobiles to insulin pumps to credit cards. Such resistance usually disappears as people begin to grasp the benefits of a technology, he added.

Still, experts said that the furor surrounding the VeriChip may mark just the beginning of a long, intense battle over the role of technology inside the human body.

Moreover, a handful of forward-thinking engineers foresee a day when electronic systems will actually connect to neurons, thus permitting "data dumps" from the brain as well as augmentation of the brain's knowledge from outside sources.

"There's a trajectory that we're on, and we're just now hitting the beginning of that trajectory," said Petersen of the Arlington Institute. "What we are seeing is an inexorable convergence of trends in which humans are becoming more computer-like, and computers are becoming more human. Step by step, we are coming closer to being able to produce cyborgs."

Medtronic Inc., for example, has implemented thousands of implantable defibrillators and, more recently, pacemakers that employ RF-based technology. This CareLink technology enables patients or doctors to interrogate chips located inside the body that store, for instance, information about the functioning of the heart over a given period of time. Two weeks ago, the Minneapolis-based medical-electronics giant also quietly rolled out the world's first implantable medical device capable of using RF technology to alert patients to fluid buildup inside the thoracic cavity.

"We've been pulling data out of the human body for decades," said a Medtronic spokeswoman.