This article is from the CD-Recordable FAQ, by Andy McFadden (email@example.com) with numerous contributions by others.
The disc has an embedded secure micro (like a smart card) that is activated
when the laser light strikes a photodetector. The light is converted to
electrical impulses, the impulses drive the chip, and if all goes well
the results are presented to the drive via an embedded light-emitting diode.
Making an exact duplicate of the disc would be very difficult. It's unclear
whether this technology actually makes it harder to get a working copy
of the contents. The scheme seems to essentially be a combination of an
"uncopyable" disc and a hardware dongle, both of which have been around
for years (neither of which have brought an end to piracy).
The company's web site is http://www.doc-witness.com/.