Intellectual Property Rights And The Virtual World

Intellectual Property Rights And The Virtual World

Risks And Opportunities In A New Frontier

Although VR technology has its roots in video games, the technology has snuck its way into the military, education, medicine, and other professional fields. Today, you can rely on VR to attend sporting events, host virtual conferences, or even tour tourist attractions – all from the comfort of your own home.1

VR technology has also caught the eye of the big tech giants, with the likes of Google, Facebook, Microsoft and Samsung all making a big push to make immersive technologies more accessible.2 Goldman Sachs predicts that VR technologies will generate as much as $182 billion by 2025.3

Real World IP Rights In A Virtual World

But as with all emerging technologies, the law has struggled to cope. Given that VR aims to create lifelike experiences, the simplest way to do this is to create virtual analogues of real-world experiences — music, artwork, characters, logos, films. While the law in this area is fairly nascent, it won’t be long before the virtual world starts butting heads with real-world IP issues.

Copyright

The most immediate area of contention is in the realm of copyright. Copyright gives rights owners control over not just substantially similar reproductions in the same medium, but also over derivatives in other formats, even those that did not exist at the same time as the original work. Works created in the virtual world may, therefore, be found to be infringing real-world copyright if they are found to be substantially similar. For example, the developers of Assassin’s Creed: Unity were prevented from creating an exact replica of the Notre Dame in-game due to French copyright law.4

Developers and users may choose to rely on the defence of “fair dealing”.5 However, predicting when such a use is “fair” can be difficult because of a lack of bright line rules. A finding of fair dealing is often dependent on the facts of a case and therefore requires a case-by-case analysis.

In the US, VR developers may look to the “safe harbour” provisions of the Digital Millennium Copyright Act (“DMCA”), which shields online service providers from copyright infringement liability when certain conditions are met.6 This, however, is subject to the usual notice-and-takedown procedures under the DMCA.

Trade Marks

Real-world trade mark rights may also present a stumbling block for developers of virtual worlds. Trade marks consist of signs, designs, or expressions which indicate the origin of a product or service. Owners of trade marks have the right to prevent others from using identical or similar trade marks on identical or similar goods or services.

To that extent, users and developers have been known to create merchandising bearing real-world logos and selling them for real or virtual currency. In 2009, Taser sued the operators of the popular computer game “Second Life”. In this case, online stores on Second Life were selling virtual replicas of Taser’s stun guns, under the “Taser” brand name. Taser also claimed that the activity tarnished their brand name as the stun guns were sold in virtual stores alongside pornographic content.7 While the dispute was eventually settled out of court, this case illustrates just one of many potential pitfalls for developers.

Balancing Fan Engagement With Enforcement

That said, rights owners should not see VR purely through the lens of infringement and enforcement. The truth is that VR affords new and unprecedented opportunities for rights owners to create brand and fan engagement, and to engage in the “experience economy”.8

From Pokemon to The Avengers, fans don’t want to just watch or read about their favourite characters — they want to be them. They want to catch Pikachu, don an Iron-Man suit, and live out their fantasies. With VR technologies, this is closer to reality than it has ever been.

What’s more, astute content creators will recognise that the value of merchandising can often exceed the underlying IP themselves. Case in point: the Star Wars films brought in $8.2 billion in ticket sales. Merchandising, however, eclipsed the movies themselves at $32 billion.9 VR has therefore only made the merchandising market more valuable, by providing fans with new modes of experience, emphasizing interactivity and role-playing.

Using VR to create customer experiences also allows companies to better track, collect and use data. For example, Kellog’s has teamed up with Accenture and Qualcomm to test the use of VR to optimise its in-store produce placement. The pilot project used eye-tracking technology in a VR headset to learn how customers reacted to product placements in stores, thus helping the brand to develop strategies to boost its product sales.10

Conclusion

Virtual environments can raise complex IP issues for rights holders and VR content creators alike. In order to manage these challenges:

  • Rights owners and content creators should review and address licence agreements to ensure that use on VR platforms is addressed and that ownership issues surround VR versions of content is addressed.
  • Creators of VR content should consider whether they need the consent of rights holders before launching their VR experience.
  • Businesses should take a pro-active approach to monitor the use of brands in VR. Where possible, these should be seen as opportunities to create new models of fan engagement.

As can be seen, there are both pitfalls and opportunities for IP rights holders in VR. To understand the risks and tap on these opportunities, please feel free to contact your friendly IP Strategist at IPOS International.

 

As the expertise and enterprise engagement arm of IPOS, IPOS International helps enterprises and industries use IP and intangible assets for business growth. To learn how you can leverage on your IP, email us at [email protected] or call +65 6330 8660.

 

1 Nick Statt, Virtual Reality is Taking Over the Video Game Industry, CNET (Feb. 28, 2015), https://www.cnet.com/news/virtual-reality-is-taking-over-the-video-game-industry/; Mark Lemley & Eugene Volokh, Law, Virtual Reality, and Augmented Reality, 166 U. PENN. L. REV. 1051, 1055 (April 2018)., at 1058; Tam Harbert, The Legal Hazards of Virtual Reality and Augmented Reality Apps, IEEE SPECTRUM (Feb. 20, 2018), https://spectrum.ieee.org/at-work/innovation/the-legal-hazards-of-virtual-reality-and-augmented-realityapps

2 Supra.

3 Virtual & Augmented Reality: Understanding the Race for the Next Computing Platform, GOLDMAN SACHS, 3 (Jan. 13, 2016), https://www.goldmansachs.com/insights/pages/technology-driving-innovation-folder/virtual-andaugmented-reality/report.pdf., at 4.

4 Brenna Hillier, Copyright Kept Assassin’s Creed: Unity Notre Dame from being a Perfec Replica, VG24/7 (Nov. 10, 2014), https://www.vg247.com/2014/11/10/assassins-creed-unity-notre-dame-pc-ps4-xbox-one/

5 Section 35, Copyright Act (Cap. 63). Available here: https://sso.agc.gov.sg/Act/CA1987

6 Section 512, Digital Millennium Copyright Act (1998). Available here: https://www.copyright.gov/legislation/dmca.pdf

7 Taser Int’l, Inc. v. Linden Research, Inc., 2:09-cf-00811-ROS (D. Az 2009).

8 B. Joseph Pine II and James H. Gilmore, Welcome to the Experience Economy, Harvard Business Review (July 1998), https://hbr.org/1998/07/welcome-to-the-experience-economy.

9 ‘Look at the size of that thing!’: How Star Wars makes its billions, Telegraph (4 May 2016), https://www.telegraph.co.uk/films/2016/05/04/look-at-the-size-of-that-thing-how-star-wars-makes-its-billions/.

10 Clare McDonald, Kellogg’s tests VR for developing merchandising strategy, ComputerWeekly.com (19 Feb 2019), https://www.computerweekly.com/news/252457909/Kelloggs-tests-VR-for-developing-merchandising-strategy

Posted on: 6 November 2019
Mark Cheng
Mark Cheng
IP Strategist