Dearest start-ups, you’ve done all of the hard work, you’re at the biggest augmented reality (AR)/ virtual reality (VR) conference, you know your investors, the competition and you’re practically chewing at the bit at the chance to show off. But please, consider applying the brakes, at least momentarily, and give intellectual property a thought, before you jump head-first into showing the world your dreams, only to have them thwarted due to a lack of legal preparation.
Intellectual property experts always have that damning advice that is deemed to stop creativity, but give the lawyers a chance – they’ll be the ones saving your ass later.
Let’s take a look at patents first. They’re notoriously difficult to obtain in the UK, as well as the US, but when companies file a patent application, they have a chance to defend their so carefully developed technology, should a competitor try to recreate, or rip off your work (Apple v Samsung, anyone?), essentially infringing the patent.
That is exactly what has happened in the smartphone world, and unless you’ve been hiding under a rock, billions are at stake. Patent infringement cases have been rife in tech since year dot, but AR and VR tech has been largely left alone. That was until patent assertion entity (PAE) Lennon Image Technologies filed suit against jewellery-maker Boucheron Joaillerie, amongst others, in 2012, stopping their use of virtual reality technology, but mostly shutting down the innovators dreams.
PAEs are different to a practising entity: rather than innovating, themselves, they acquire patents, typically from budding innovators in need of a cash injection and assert those patents when they deem their rights infringed.
And that’s exactly what Lennon did – the PAE filed a patent infringement suit in the US District Court for the District of Delaware against Boucheron over the patent entitled ‘customer image capture and use thereof in a retailing system’. Simplified, the patent covered a virtual ‘try-on’ experience with Boucheron’s jewellery range. The tech’ was removed from the Boucheron website, but it was the innovators that felt the brunt of the case – their technology was deemed infringing, a real stinger for a start-up.
Brian Wassom, partner at Warner Norcross & Judd advises: “In the AR/VR space, the damage inflicted by Lennon’s patent enforcement campaign—as well as the ongoing patent wars within the smartphone market—have definitely gotten innovators worried.”
The case certainly serves as a warning for budding developers. Despite their talent, tech developers have much to consider because there is money in the AR and VR space, so, as Wassom points out, “PAE’s will be especially focused on start-ups in this space.”
“They know that emerging companies are vulnerable to the economic pressure that comes with the threat of patent litigation. Start-ups can help protect themselves by being proactive about patent protection up front, both by searching others’ patents as well as obtaining their own patent registrations. A little money spent on patent protection up front can save a lot of money and hassle—and perhaps the entire company—down the road.”
If that wasn’t enough to worry you, please pay attention to third-party rights. They are all-too-easy to overlook as start-ups prioritise their own copyright, and in the process forget to address the music rights within the software, or a brand which may appear in the background, for example.
Doron Goldstein, partner at Katten Muchin Rosenman advises that developers must become more aware of the probing questions from investors, who will inevitably ask about third party rights as part of their due diligence review of the company they’re investing in, as a matter of risk, before they even consider investment.
“Investors will normally raise the issue as part of their due diligence review (whether during the startup pitch or in followup diligence), as they are trying to get a handle on the operations, risk, and company sophistication.”
In short, do your homework and tick all of those boxes, before you even begin eyeing up the next conference to exhibit at.
Now that I’ve given you some intellectual property issues to chew over, data protection needs a mention.
Remember when everyone got up in arms about Google glass, allegedly breaching the Information Commissioner’s Office’s Act, when the prototype became available in the UK in 2014?
Google was criticised for using users personal data for its own gain, despite it vehement denials. So how do companies remain free from abuse and the threat of losing customers when they operate in the AR/VR space?
Ashley Winton, partner at Paul Hastings says: “Whether it is for personal gaming or driving assistance on the roads, AR has the capacity to collect vast amounts of image and other sensor data. As we know from the legal furore in Europe around Google’s Street View and wifi SSID collection, data protection regulators are highly sensitive to this form of systematic large scale data collection.”
He explains that the average Augmented Reality + Virtual Reality (AR+VR) start-up will not have Google’s legal firepower, so a critical part of their legal strategy should be “Privacy by Design”, “an oft maligned expression which means that privacy and cyber protections should be brought into the design stage rather than just left to the lawyers.”
It’s certainly food for thought as the next conference looms and AR/VR opens the door to a wide range of novel cyber and legal risks.
Google Patent Search: https://patents.google.com/