Viewpoint
James Tumbridge, and Robert Peake, respectively partner and associate at law firm Pillsbury Winthrop Shaw Pittman LLP, explain a little-appreciated aspect of the development of additive manufacturing technologies
The accessibility of 3D printing promises to empower both businesses and individuals to create products anywhere. For businesses, the potential to decentralise production and reduce shipping costs is immense. However, it also poses challenges to inventors and designers as the means to make infringing articles on a grand dispersed scale is enormous.
The scale of opportunity for 3D printing in a wide range of fields is only now being discovered: In construction, a Chinese builder recently ‘printed’ ten homes in as many hours, and in Amsterdam, work is underway on the first 3D printed functional pedestrian footbridge. In the field of medicine (‘bioprinting’), surgeons have implanted a 3D printed cranium, as well as vertebrae, and have created a variety of prosthetics including hands, legs, and a nose. The military have used 3D printed parts for RAF Tornado fighter jets, while astronauts have 3D printed replacement parts on demand whilst in orbit. NASA has even successfully tested 3D printed injectors in rocket engines reaching 3,300 °C. Consumer scale applications abound as well, with manufacturers like Adidas and Nike exploring 3D printed footwear, and numerous businesses offering ‘customisable’ 3D printing for certain products. Now with the accessibility of 3D printers growing, so-called ‘maker spaces’ have appeared, not only in repurposed ‘traditional’ copy shops, but also in public libraries. With such innovation, both risks and rewards are changing.
The availability and increasing affordability of 3D printing could lead to an explosion of unauthorised goods being produced and sold. Anyone with access to the appropriate Computer Assisted Design (CAD) files will be positioned to reproduce protected designs without permission of the owner. CAD files may be created by enterprising third parties and made available online to others, either freely or for money. Creating a CAD file can be as easy as scanning a protected design using a smartphone and a freely available app to convert the images into an input file for a 3D printer. With the decentralised manufacturing of illicit goods, identifying and pursuing infringers will be difficult, and costly.
Accordingly, a fresh look at the licensing of patents or design rights is warranted. Traditionally, licenses grant an indemnity to the licensee promising the licensee exclusivity to produce and sell a product, and the licensor must prevent third parties from interfering with such exclusivity. However, imagine granting such an indemnity and then discovering that there are large numbers of small scale infringements via 3D printers; identifying and stopping such infringers could be a considerable headache and be very costly. Moreover, at the smallest scale it may not be an infringement legally, making it impossible to stop, but the indemnity in your licence agreement may still require you to give compensation. So with the increasing access to 3D printing technology, licensors should consider the scope of the indemnity offered to licensees.
3D printing will increasingly allow individuals to reproduce products in their own homes, and as noted above, in many cases this will be done for their own personal use. Reproducing a patented or design protected product, for purely private non-commercial use, will not constitute an infringement of a patent or design. This may not be of significant concern where there are isolated occurrences, but what if many thousands of customers were 3D printing their own personal copy of a patent or design? This would represent a significant loss of revenue.
Manufacturers and rights holders need to be thinking about what the future holds. 3D printing technologically is advancing quickly, and now is the time to work with their relevant trade bodies to consider how to align their business models to the 3D printing opportunities and risks. Identification now of gaps in legal protections, before technology or its use progresses to the point of posing a serious commercial risk, is the best course. There is a clear lesson from the music industry, considering their initial experience with online file sharing. The first response was traditional legal action to stop infringement, but that proved costly and the industry was unable to stop the change in the market. Ultimately, the embracing of paid for downloads and changing the approach to business proved the solution. Will 3D printing require a similar approach from manufacturers? Perhaps we shall see collecting arrangements from websites providing the downloadable 3D printing design files, or with those providing 3D printing services.
New thinking on licences may be the answer. Lower priced non-exclusive licences via the online providers of the designs downloaded to allow printing, may be an option. Though any suggestion of imposing a levy on 3D printers at the point of sale is certain to be met with objections that technological innovation will be stifled, it may still require consideration. Whatever the answer, now is the time to consider new models to protect revenue and maximise future growth in an era of 3D printing.
It is becoming common for consumers to have ready access to 3D printers, whether at home, at a local library, or a 3D printing service. This presents opportunities for new revenue streams by leveraging existing tools; for example the design files that manufacturers already hold and which are used for their existing (and past) product lines. One possibility is to offer customers the option to have their purchases printed at home or at a local service provider, instead of having items shipped. Service providers already exist which support the encrypted transmission of CAD files from the manufacturer to the end user’s 3D printer, where the number of copies of a design have been pre-paid by the customer. Printing items locally benefits both parties by eliminating delivery time, and warehousing and shipping costs.
Another source of revenue may be to re-introduce products which are out of production; the market may be small but value could be there when you take out your production cost. This is evident from the online markets that have already developed which focus on supplying 3D printed parts which are no longer available directly from the manufacturer. Not only does this represent a loss of revenue for the manufacturer, but also a loss of control over the quality of parts being used with their products.
The opportunity is here. Now is the time to re-think licensing, to embrace making available of old product lines, and seize the opportunity of distributed manufacturing. Now is the time to take a lead and be the innovators in a new 3D printing economy.
“The first response was traditional legal action to stop infringement, but that proved costly and the industry was unable to stop the change in the market.”
Now there’s two surprises; first that litigation is costly (and guess who benefits from that -the two or more ‘sets’ of jumped-up clerks masquarading as professionals who profit from conducting it)
and second that ” ….was unable to stop the change in the market.” Well, thank goodness for that. Trying to stop the advance of technology is like trying to stop the tide coming in. In almost every area of technology, the shams are being eclipsed: and they can either go quietly or be pushed out. They have never made any real contribution, so why should we who do give them even the time of day, let alone any comfort or support.
Mike B
Fellow bloggers might enjoy a short piece from a book, written by a young(then) Engineer well known to me.
“The installation we were discussing was in Kursk, and had been started about a year before. As with all the Soviet’s contracts, it had taken many months of hard negotiation and bargaining to finalise the deal. But the order had been a large one, well over $2 million, a substantial contract in the Sixties, and the Turbo machines were the first part of a whole textile processing factory. Turbo had been paid for most of the contract ‘in advance’. Whatever one might say about the political misconduct of the Soviets, at least to our eyes, it had to be recognised that in matters of business, they were scrupulously straightforward and honest. They were hard negotiators, but once the contracts were signed, the money was as good as in the bank, except for that final 5 or 10%.
LS had been adamant. “I’m not being caught this time, not like that Chinese nonsense.”
Several years before, a major installation of a similar factory to produce and then convert acrylic fibre to yarns had been proposed for China. All had gone well initially, until the US State Department had intervened. “No machinery likely to be of use to the military forces of ‘those Commie bastards’ was to be supplied to China.”
“What rubbish,” LS had fumed, but the US Government was adamant. No exports to China from the US. “How can a stretch-breaking unit be considered strategic: you can’t use it to fire missiles, those fools at State need their heads examining.” LS had riled and cursed.
The main contractor, Courtaulds of England, was faced with a problem. They were committed to supply the factory to make and process the acrylic fibre. This included Turbo machines, at that time the only suitable machines in the world. Courtaulds Engineering division, who made all that firms’ ‘in-house’ equipment, took one of the TURBOs they had bought from ‘us’ and stripped it to pieces. They measured and copied every part and then made identical machines to fulfil the contract. This meant that Turbo gained nothing from the deal. LS was outraged. “Do you know, the fools even copied all the mistakes in John and Kirk’s design?” LS cursed the stupidity imposed on commerce by US Government policies. He also jibbed at the loss of earnings.
“Tom, Courtaulds didn’t even pay us a royalty for copying our designs!”
“Why didn’t we sue them?”
“We had much better things to do with our money than pay lawyers to waste it!”
Cannot disagree or add anything that I wrote 4 years ago!
I attended by invitation (I had worked upon the machinery and processes to create Kevlar whilst working in the USA in late 60s) a patent infringement Hearing involving a major US Chemical Co with HQ in Wilmington Del, USA and another which had its HQ in Holland. It was a spat involving the entire area of what are termed enhaced aramids. It was clear to me (and the two other experts from each ‘side’ one from Manchester University and one from Leeds, both of whom I knew that there were three persons who actually understood the issue: though I counted about a dozen wigs, an equal number of patent agents and solicitors and literally scores of thick document folders. The episode went on for several weeks: before both ‘sides’ agree to stop! $3.5,000,000 was the score at close of play. …The weakness in the ‘system’ to sensibly be a vehicle for the settlement of any dispute, let alone a decent decision was confirmed whet the Judge, piped-up and asked “What is yarn?!” If he knows that little about ‘my’ industry, what in heavens name is he (it was) doing there adjudicating! I have recounted this tale to the very summit of the legal groupings. She (it is!) was very amused.