3D Printing: How businesses should cope with infringers

As 3D printing technology becomes increasingly cheaper and more available, how will businesses cope with infringers who now have the capability to print toys, car parts and a wide variety of household goods?

 

There will be, er, neigh-sayers who will rear up and dismiss what they’re about to be told: There are men out there who are such devoted fans of the My Little Pony (MLP) toys and cartoons that they rival Trekkies and Potterheads for unabashed adult adulation of fictional characters.

Bronies, as these men are called (and, yes, it is all men), sometimes trot around their own Comic-Con type conventions in garishly coloured costumes of such wide-eyed ponies as Pinkie Pie, Derpy Hooves and Rainbow Dash. Hasbro Inc. created the toy line in 1981, quickly expanding it into a host of animated television series.

So fanatical is Brony pony worship that it has opened the stables to the possible ways corporations and lawyers will deal with the rapidly evolving world of 3D printing (3DP) and its likely disruption of the manufacturing world.

Fans of comic book and cartoon characters discovered some years ago they could – with 3D digital files shared on open-source 3DP websites such as Thingiverse, YouMagine or Bld3r – use 3D printers themselves to create free copies of their own plastic, clay or sandstone versions of super-heroes, sappily cute ponies and other toys and products.

With increasingly available and cheaper technology, it’s possible to easily scan an MLP, digitally capture its dimensions, then, if they wish, modify the digital file and print their own ponies, such as an interpretation of Princess Luna turning into the beast Nightmare Moon. That finished design spat out of a 3D printer in sandstone by MLP fan Joshua Schmitt sells for US$68.40 on the 3DP website, Shapeways.com.

Hasbro, like other toymakers, was getting nothing from many 3D printed copies of its products by hobbyists and Bronies until 2014 when it announced a partnership with Shapeways.com, a New-York based company founded in 2010. Hasbro would allow creators the opportunity to make licensed, customized versions of MLP products to sell online through a separate portal on Shapeways called SuperFanArt.

Through Shapeways, artists are free to take the basic Hasbro products and, as long as Hasbro approves their customized designs, they can 3D print them and market them. Hasbro, Shapeways and the fan-art creators now share in the profits — and no one gets sued. The collaboration has been such a hit Hasbro has recently licensed Monopoly, Scrabble, Dungeons & Dragons and other brands to Shapeways.

 

The printing boom

Three-dimensional printing, also known as additive manufacturing, has been around since 1981 when the process was first developed in Japan. Yet, for 20 years, it was a technology that remained in the specialized hands of industry where it was mainly used for rapid prototyping. Now it’s rapidly evolving in the way 2D printers did when they used to be a pricey office product to a device you can get for under $100 and which practically anyone with a computer has in their home.

“What has changed in recent years,” explains Jean-Philippe Mikus, a partner and trade-mark agent with Fasken Martineau DuMoulin LLP in Montréal, “is that some key patents [for manufacturing 3D printers themselves]       have expired, which has led to more people getting into the field.” 3D printers have rapidly improved, proliferated and come down in price and size. You can now buy a fifth-generation MakerBot Replicator Desktop 3D printer at Staples Canada for $4,099 or a Cube 3D printer for just $1,471.

There’s a growing number of print and online magazines catering to the 3DP crowd, including Make magazine (with headlines like “Homegrown Drones!” or “3D Print Your Car”) and 3dprint.com to name a few. Alongside those have popped up online 3D printing services such as Shapeways and Thingiverse.com, the latter the online design community of MakerBot, a top 3D printer manufacturer.

Research firm Gartner, Inc. predicts global shipments of 3D printers will double every year, from 217,315 units this year to 2.3 million by 2018, quickly going from niche to mass market. That poses problems for manufacturers and their intellectual property lawyers who are beginning to wrestle with questions about how Canadian copyright, patent, industrial design and trade-mark law can – and cannot – protect their corporate clients.

 

Heads in the sandstone

But, one might fairly ask, are manufacturers – as the music industry did before them – burying their collective heads about the financial risk posed if their products are copied en masse? “A lot of people are thinking about the issue,” says Antonio Turco, an IP lawyer with Blake, Cassels & Graydon LLP. “But we haven’t seen a lot of people coming to us and saying what, exactly, proactive steps should we be taking?”

Turco says some manufacturers have been using 3DP themselves for years for rapid prototyping and other applications, and don’t see the technology as particularly groundbreaking. That ignores the perils of the technology moving into the basements of hobbyists and consumers … not to mention the seedy enclaves of professional overseas counterfeiters.

Other companies, even if 3DP does proliferate exponentially, don’t believe the technology will affect their product lines. “Some are right,” says Turco. “And some are being, I don’t want to say naïve about it, but they aren’t coming to grips with what is going to happen.”

What is happening in 3DP astonishes — from weird to wonderful. There was, last year, the viral story of Turbo, an Indianapolis Chihuahua born without front legs. When a San Diego rocket parts designer heard about Turbo, he used a MakerBot 3D printer to make him a cart, with skateboard-style wheels, that straps to his chest. The contraption lets Turbo propel himself around on his back legs.

In March, China produced its first 3D printed car, an electric vehicle called the Shuya, whose frame and body are 3D printed composites. In April, New Zealand’s Rocket Lab unveiled its Rutherford jet propulsion system, the first 3D-printed rocket engine. About the same time, GE built the first commercial jet 3DP engine part approved for use by the US Federal Aviation Administration. The list goes on, from car parts to body parts.

 

The legal dimensions

All of this has sparked plenty of questions for the legal community to mull over, though some lawyers believe the potential impact of 3DP on manufacturing and IP is over-hyped. “I think there’s certainly a risk we are conflating the problem,” says Turco, citing the fact that, so far, the home 3DPer is limited to basic materials such as plastics, ceramic and sandstone; good for making toys, pen holders, door stops and other household items. But the quality is rough, the printed items often more fragile than professionally manufactured goods.

Mark Biernacki, a patent and trade-mark agent and partner with Smart & Biggar/Fetherstonhaugh in Toronto, is on side: Apart from 3DP’s material limitations at the hobbyist and consumer level, 3D printing can be expensive. A typical one-kilogram spool of plastic 3D printing filament costs $54.99 and might make you three or four small objects. “This won’t be as disruptive as copying was in the music industry,” says Biernacki. “3D printing is expensive. It’s convenient for custom products, one-off products, rapid prototyping. But you would never, for instance, use a 3D printer to print a razor blade when you can buy them in a store at a fraction of the price.”

On the other side is Dr. Teresa Scassa, a University of Ottawa law professor. “I don’t think it’s being overplayed at all. My sense is that this is going to be a very big deal in terms of intellectual property rights for the kinds of products that really escaped the agonies of the digital revolution.”

Scassa, who is a Canada Research Chair in Information Law, says many businesses are unaware how fast 3DP is advancing. There are still obstacles to mass production in someone’s basement and 3DP “will affect different industries in different ways. While we are not at the point where 3DP has become a significant problem, I think we are on the precipice.”

When the music and film industries lost control of their products at the beginning of the millennium thanks to peer-to-peer (P2P) digital copying sites such as Napster, it cost them hundreds of millions of dollars. That could happen to many kinds of manufacturers as it becomes easier to make digital scans of objects whose files can be shared via P2P with anyone who might want to 3D print them.

Until Napster and similar P2P services came along, the film and music industries only had to worry about piracy from offshore organizations that set up illegal CD and DVD copying facilities. That was bad enough. But at least there was some chance of tracking down and going after the perpetrators. “Then suddenly,” recounts Scassa, “they were faced with the fact that consumers had the technology to make near perfect zero-cost copies of their work at home without detection and share it widely with anyone they wanted. This changed the game and led to a lot of pressure for governments to change copyright legislation in some fairly dramatic ways.” That, in turn, led to much debate about what the proper balance should be between copyright and patent-holder rights, and users’ rights.

When it comes to intellectual property, manufacturers and creators basically have four legal tools to protect their rights: Copyright, patent, industrial design and trade-mark law. What remains to be seen is how – and how well – those will cope with the rise of 3DP.

 

Copyright

Jill Tonus heads Bereskin & Parr LLP’s New Media/Copyright practice group from Toronto. A copyright specialist, Tonus suggests the Canadian Copyright Act – modified in recent years to cope with the copying of digital files – offers reasonable legal protection on that front.

“From a copyright perspective,” she explains, “the law is pretty flexible and media neutral.” If someone takes someone else’s designs, digitally scans them, 3D prints them and sells them, copyright law would say without permission that’s still copyright infringement.

The Act was amended in 2012 via Bill C-11, the Copyright Modernization Act. It enhanced copyright-holder protection — for instance making it a crime to circumvent digital locks designed to protect files from replication.

At the same time, compared to the US, Scassa contends that Canada’s approach “has not been so draconian” for consumers, who have been cut some slack when it comes to copying and using various kinds of copyrighted digital files. It expands the fair dealings provision, allowing the public to incorporate copyrighted content into their own user-generated work, provided it’s not for commercial gain and won’t negatively impact a copyright-holder’s market. In other words, go ahead and tweak in your own YouTube video with Robin Thicke’s “Blurred Lines” playing in the background. No copyright issue there, so you won’t suffer the same fate as Robin Thicke or Pharrell Williams did in court. It also expands the use of copyrighted content to satire, education and parody. Previously that was restricted to research, private study, criticism and news reporting.

 

Backlash

Tonus notes the Act also lowers statutory damages for individuals who infringe copyright for non-commercial purposes from $20,000 down to $5,000.

Compare that with the infamous case of Jammie Thomas-Rasset, a Minnesota single mother of four, who, after three trials and a failed Supreme Court appeal, was ordered to pay six record labels a total of US$220,000 for using the now-defunct P2P site Kazaa to download and share 24 copyrighted songs.

Canada, says Tonus, benefitted from seeing the PR nightmare that followed the US music industry’s aggressive legal tactics with individuals. And the music and film industries “found a way to monetize digital downloads, not fear them.”

There’s a lesson there, says Edward Fan, a partner at Torys LLP in Toronto, for creators and manufacturers who might in the future see their products scanned of their Computer Aided Design (CAD) files shared on peer-to-peer 3DP websites. Or their toys, car parts, jewelry, housewares – whatever it might be – oozing out of someone’s basement 3D printer for personal use or to be hawked on eBay.

The music industry, says Fan, which helps clients negotiate IP and technology-related licensing agreements, has retreated from its belligerent pursuit of making big examples out of small-time infringers. It has also started removing digital locks on media files, rather than adding them. “Which seems to say that if you try to push a legal solution before a business has even had a chance to react with its normal suite of business tools, you may find the legal resolution is actually irrelevant or completely going in the wrong direction.”

 

Put on notice

On January 1, new “notice and notice” provisions under the Copyright Act came into effect. As it is for the entertainment industry, it could be a tool for manufacturers to stem 3Dpers from infringing their designs and products. The provision permits copyright holders to send notice to Internet Service Providers (ISPs) if they discover infringements taking place on hosted websites. Previously an ISP, such as Shaw, Telus or hundreds of smaller companies, could decide themselves whether to send customers involved in illegal downloading such letters. Now ISPs – in order to immunize themselves from liability – must forward notices to infringers and notify copyright holders when this has been done. They must also retain information identifying alleged infringers should a court order those details provided to the copyright holder.

Canadian courts, however, notes Tonus, have expressed concern about copyright trolls using the notice-and-notice provision to use information gathered and, through litigation threats, unduly use the law to shakedown individual infringers of money.

Last year in Voltage v. TekSavvy the Federal Court ordered TekSavvy Solutions Inc., an independent Canadian ISP, to hand over subscriber information to Voltage Pictures, a US film production company whose features include the Hurt Locker. But the court restricted what Voltage could say to alleged infringers in demand letters. It ordered such letters be vetted by case-management judges to ensure settlement demands are reasonable before they’re sent to subscriber emails. As well, such letters must include a bold-type message advising that no court “has yet made a determination that such subscriber has infringed or is liable in any way for payment of damages.”

The US, through the Digital Millennium Copyright Act (DMCA), has taken a tougher “notice and takedown” approach. Once an ISP gets notice of an alleged copyright infringement, the ISP must “expeditiously “take down or block access to the material for a minimum 30 days until either a copyright holder or alleged infringer takes legal action to defend their claims.”

 

Industrial design law

According to Fan, industrial design law may be the area of legislation most relevant for companies threatened by 3DP. Canada’s Industrial Design Act protects registered industrial designs for 10 years. It defines design as “features of shape, configuration, pattern or ornament and any combination of those features that, in a finished article, appeal to and are judged solely by the eye.”

For instance, Thule Sweden AB has registered the distinct shape of its rooftop carriers as a protected industrial design in Canada. Others can make rooftop carriers, but they may not visually resemble Thule’s models in a way that confuses consumers as to which brand of carrier it is.

To qualify for registration under the Industrial Design Act, the degree of design originality must be greater than that required for copyright. “As an advisor to businesses in this field,” says Fan, “if you are a net creator of intellectual property, have a good think as to what is your inventory of industrial design registrations. Do you have registrations for things you really don’t want people to copy — 3D models of your designs that you really want to register?

“Industrial registrations are not the be-all and end-all for enforcement of patents. But given this technology, it’s something to take a look at.” Fan adds that manufacturers should start paying more attention to how secure their design data is, both in-house and when outsourcing product design. “Whereas historically you might not have cared so much about your design shop supplying you with designs, you may now suddenly be negotiating supply agreements a lot harder than you might have in the past, just to prepare for that liability.”

If a company loses control of a part, says Fan, “without strong contractual legal remedies your enforcement options get thinner. It’s not cost-effective to sue everyone [who copies your products]. So you’re going to have to pick your targets much better.”

Biernacki at Smart & Biggar worries many companies tend to focus on one type of IP protection they are familiar with. With 3DP on the rise, he says, “It would behoove them to think more broadly.”

 

Patent protection

Patents are another tool in the box. Under the Patent Act, “novel” inventions are now protected in Canada for 20 years after registration. The Act grants patentees “exclusive right, privilege and liberty” to use, make and sell their invention to others. Unlike the Copyright Act, the Patent Act has no personal use exceptions. But, asks Turco, would it hold to account someone who scanned the shape of an object into a copyable digital file, then 3D-printed it or shared the file with others? “There’s no express language about digital files in the Canadian Act,” says Turco.

Then, as with copyright and industrial design law, there’s the enforcement issue. It will be difficult to go after, say, someone printing Oakley sunglasses out of his basement to sell illegally to others. (It would be legal to make them for personal use, especially without the Oakley trade-mark.)

Of course, 3D printers make it easier for criminal organizations to forgo typically more complex traditional counterfeiting factory operations and set up 3DP operations practically anywhere. “3D printing is potentially a game-changing tool for infringers,” says Fan. “If I want to knock off part A today, and then change my mind and knock off part B tomorrow, I don’t have to retool a factory. I just have to reload different data files and hit print again. We’re in the world of speculation at this point as to how this will be fought. You wonder if you can move too soon to change the laws.”

 

The legal ink

So far, little to no new legislation has passed in Western countries to specifically address the unique threats 3D printing poses to a growing plethora of products — from Disney figurines to Boeing aviation parts. Because of current lobbying efforts and the size of its manufacturing market, the US will likely be the incubator of new 3DP-targeted laws, says Turco.

But corporations – using hard-learned cues from the entertainment industry – may find ways to combat 3DP infringements other than through laws. Some manufactures, Turco speculates, may, for an additional fee, sell equipment to clients bundled with 3D files, enabling them to print certain components themselves. For instance, an offshore oil company, rather than having to expensively fly in critical components for a drilling rig in the event of a breakdown, might be permitted to 3D print those parts onsite through a strict licensing agreement.

Whatever the case, now is the time for manufacturers to develop marketing and legal strategies to get ahead of the 3DP wave. “One strategy,” advises Biernacki, “is to layer your IP rights to the extent that your product can be protected by multiple forms of intellectual property, be it copyright, patent law, industrial design or trade-mark. You should acquire and perfect those rights so you have a greater arsenal to apply against would-be infringers.”

Hasbro, says Mikus, is one of the first companies to come to grips with the disruptive forces of 3DP. Better to work with the fans of your products than against them and risk a PR backlash. Instead, Hasbro works with fans who might have been former infringers of its copyrights and gotten many to pony up for the figurines they once copied for free.

“That’s a perfect example,” says Mikus. “I can envision other companies providing customers the designs to manufacture products themselves. The manufacturer would avoid the actual cost of manufacturing and shipping. It would keep customers engaged … and build brand loyalty. It would only help their business.”