Virtual reality

Augmented reality and virtual reality: IP considerations

Intellectual Property and Technology News

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The augmented reality (AR) and virtual reality (VR) market forecast for 2019 is $16.8 billion and is expected to expand dramatically in the coming years, with market forecasts for 2023 eclipsing $160 billion. As new AR and VR technologies emerge, so do legal questions arising from their use. This article examines certain intellectual property considerations for publishers and users venturing into this space in the United States.

Defining AR and VR technology

Augmented reality is a technology that overlays virtual content on the real-world environment. Marker-based AR requires a marker (eg, an image) that users can scan with their smartphone camera to bring the virtual content to life. Location-based AR overlays virtual content based on a user's location (using GPS). Examples of existing AR systems include Nintendo's Pokémon Go app, IKEA's Place app and photo and video filter apps like Instagram and Snapchat.

Virtual reality is a technology that immerses users into a completely virtual environment. Examples of existing VR systems include the Oculus Rift, PlayStation VR and HTC Vive.

Mixed reality combines AR and VR technology, allowing users to simultaneously interact with both real-world and virtual environments.

In the AR and VR realm, intellectual property rights are commonly divided into two categories: (1) use of real-world intellectual property in the virtual world; and (2) use of virtual intellectual property in the real world.

Use of real-world intellectual property in the virtual world

Under US intellectual property laws, use of trademarks, such as names and logos of products or brands, and use of copyrightable materials, such as photographs, text, video and music, require permission from the owner of the trademark or copyright regarding applicable rights. However, to prevail on a claim of trademark infringement under federal law, a plaintiff must establish that the defendant used the same or a similar mark "in commerce" in connection with the sale or advertising of goods or services without the plaintiff's consent. Thus, the user of a real-world trademark in an AR or VR environment may attempt to escape liability under federal law by claiming that the "in commerce" prong of the trademark infringement test cannot be satisfied.

“Use of trademarks… and use of copyrightable materials… require permission from the owner of the trademark or copyright regarding applicable rights.”

Similar problems arise for an aggrieved party faced with the fair use defense available to the public under US copyright laws. Under the Copyright Act, the copyright owner has the exclusive right to reproduce, distribute, perform and prepare derivative works based on the copyrighted work. However, under the doctrine of fair use, the user of a real-world copyright in an AR or VR environment could potentially escape liability if the four fair use factors are satisfied. Arguably, the most important factor would be whether the allegedly derivative work is transformative, which is determined by analyzing whether the copyrighted material has been transformed through the addition of new original material and whether the new material adds value to the original. 

Use of virtual IP in the real world 

Similar infringement claims (and similar defenses to such claims) arise with the use of virtual IP in the real world. In the AR environment, publishers incorporate the real world into the AR environment generated for its users. This means that IP in the real world may be incorporated into the AR environment, giving rise to infringement claims, particularly where AR replicates, distorts or replaces trademarked or copyrighted works. 

For example, copyright infringement could occur if the AR environment encourages users to take pictures of an artistic work, or trademark infringement could occur if the AR environment utilizes third-party logos captured on a smartphone camera to trigger features within the AR environment. This type of technology could also lead to a business being tagged with undesirable or misleading content (and the creators of such tags could escape liability using the defenses set forth above). On the other hand, this type of technology could change the face of marketing campaigns by making such advertisements as movie posters, storefronts or billboards more interactive, offering businesses new opportunities to connect with consumers. 

As the law evolves

There are enormous possibilities in what AR and VR technology can do to enhance existing forms of entertainment, social media and advertising. AR and VR technology offer users an immersive experience, allowing them to connect with their environments, and the movies, TV programming, brands and products in their environments, in an unprecedented way. As these new AR and VR experiences and uses continue to develop, publishers and users of AR and VR technology must consider the legal implications on their IP rights and the IP rights of others while the laws governing such media also continue to evolve.