Intellectual Property Protection: The Evolving World of 3D Printing and Intellectual Property
- Mar 28, 2017
Additive manufacturing, commonly known as 3D printing, involves using computer-aided design software or a three-dimensional scanner to reproduce objects – anything from artificial organs to Barbie dolls. The 3D printing market is expected to exceed $30 billion by 2022. With that comes opportunities and challenges – particularly in the area of intellectual property (IP) protection.
IP owners have a new licensing opportunity into this market and will have to protect their properties from 3D printing pirates. For example, what if someone disseminates a program to print a 3D-made Barbie doll? As the prices for 3D printers come down, many consumers could conceivably make their own Barbie dolls. However, Mattel certainly would take issue with such activities cutting into their $1 billion in annual Barbie sales. As you can see, there are potentially massive ramifications for unauthorized 3D printing of licensed products. In fact, information technology research and advisory company Gartner, Inc. predicts 3D printing will result in the global loss of at least $100 billion annually in intellectual property revenue by 2018.
Additionally, imagine unscrupulous people using 3D printers to manufacture critical airplane parts or medical devices and the safety issues that could arise. The risk of using these inferior products will increase dramatically with the accessibility and enhanced ability of 3D printers.
“Basement manufacturers” often obtain source code and blueprint designs legally through open source networks. These are forums where end users can and do review and modify the source code or blueprints for their own needs. However, items printed from unauthorized code or without the IP owner’s permission may constitute an infringement on the underlying IP. If this occurs, how do IP owners stop it?
There are also online marketplaces for commercial transactions involving 3D-manufactured products. One such marketplace is Thingiverse, a design community for discovering, making and sharing 3D printable items. Designs are encouraged to be licensed under a Creative Common License that provides a simple, standardized way to use and share creations. Wide acceptance and adherence to such licenses have yet to be determined.
Licensees do have the traditional protections of patent and copyright laws. A patent gives the sole right to exclude others from making, using or selling an invention; whereas a copyright gives an originator the exclusive legal right to print, publish, perform, film or record content.
As 3D technology evolves, laws and protections need to be updated to adapt to these new technologies. Similar to the music industry, licensors and licensees need to work together to develop laws, standards and processes to create an efficient and effective process to license into this market. Laws may even extend to those who enable infringement, such as the sellers of 3D printers, blueprint providers, printer operators and retailers of 3D printed goods.
Similar to how Napster disrupted the music industry in the 1990s, 3D printing is starting to disrupt licensing and manufacturing. Napster was a platform that facilitated the unauthorized sharing of digital music over the Internet. Because Napster’s primary function was to enable copyright infringement, it was sued, shut down and later reformed as a legitimate licensed download and streaming service.
Another protection for licensees is the Digital Millennium Copyright Act, which criminalizes production and dissemination of technology, devices or services intended to circumvent measures to control access to copyrighted works. However, the act’s “safe harbor” provisions that grant immunity to digital service providers if they follow certain rules to mitigate piracy have hampered enforcement.
License holders must actively monitor the marketplace and their brands in order to identify piracy as soon as possible. Action must be taken against the facilitators as consumer infringement is much tougher to stop and prosecute than corporate infringement. Just think of the time and costs of initiating lawsuits and sending cease-and-desist letters to thousands of people printing 3D objects at home. It would be virtually impossible. The Recording Industry Association of America pursued this tactic and received significant negative press from suing people such as grandmothers and teenagers.
Beyond the risks associated with 3D printing, there are opportunities for IP owners to license their intellectual property to software programmers and 3D printers. Licensing would generate revenue for licensors, licensing agents and licensees and would enable consumers to purchase or print 3D products legitimately, which would curtail piracy. Licensors could also better monitor and control the quality of printed products. This business model is already being employed by Hasbro, the 3D printer Shapeways, and the retail website SuperFanArt for the 3D printing and sale of Transformers and My Little Pony figures.
New industries and new technologies typically pose new problems. Contracts and law evolve as the industries or technologies mature. Attorneys, accounting practitioners and business advisors will have new opportunities to provide services in this area. These professionals will need to familiarize themselves with the unique nuances associated with this technology, the law and the marketplace in order to provide quality client service.
IP owners should be prepared for a bumpy ride while this technology matures. The marketplace needs to be made aware that it must respect IP rights and only utilize legitimate software to print products subject to IP protection or to purchase such printed products. Laws should be evaluated and updated for this technology, and licensors need to embrace the technology early on to avoid the mistakes made by the music industry.
EisnerAmper Trends & Developments - March/April 2017
- Estate Planning: News from the Heckerling Institute on Estate Planning...
- Highlights from Recent Developments 2016
- Retirement Accounts in First and Second Marriages: The Fun Begins
- The Executor's Job Gets Tougher: Basis Consistency and Selected Other Income Tax Issues Facing Executors
- Recent International Developments
- Portability: Lots of Questions, Few Easy Answers
- Managing Inherited Art and Encouraging Clients to Plan Ahead
- Intellectual Property Protection: The Evolving World of 3D Printing and Intellectual Property
- Will Autonomous Cars Sideswipe the Insurance Industry?
- Immigration and Investment: The Changing World of the EB-5 Program
- Tax Savings for Start-Ups and Small Businesses - Part 1: R&D Credit Can Now Offset Payroll Tax
- Tax Savings for Start-Ups and Small Businesses - Part 2: R&D Credit Can Now Offset AMT
If you have any questions, we'd like to hear from you.
Explore More Insights
Receive the latest business insights, analysis, and perspectives from EisnerAmper professionals.