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FeaturesThe VR Revolution – Don’t Let the Law Spoil the Party

The home computer game industry exploded on to the scene in the early seventies, then mysteriously died a death and didn’t return until the advent of SEGA and Nintendo consoles a decade later. I was a kid back then and I remember. In much the same way, for those of us old enough to recall (me again), Virtual Reality (VR) was suddenly the next big thing in the early nineties and I remember having a...
Simon Portman2 weeks ago

The home computer game industry exploded on to the scene in the early seventies, then mysteriously died a death and didn’t return until the advent of SEGA and Nintendo consoles a decade later. I was a kid back then and I remember. In much the same way, for those of us old enough to recall (me again), Virtual Reality (VR) was suddenly the next big thing in the early nineties and I remember having a go at the Trocadero in London’s West End, blown away by the 3D immersiveness and the tracking (which still hold up well today) but underwhelmed by the blocky graphics and the weight of the hardware I was lumbered with. It was like being in the video for the Dire Straits song “Money for Nothing” while wearing a toilet on your head, but I still look back on it with nostalgia. TV series like “Wild Palms”, movies like “The Lawnmower Man” and “Disclosure” and sci-fi novels like Tad Williams’ “Otherland” series told us it was the tech that would define our lives, so much that we would (literally as well as metaphorically) lose ourselves in it. Then it went away too, despite all the predictions, and this time the absence, for the general public at least, lasted two decades.

Now VR is back and we are left wondering what the future holds for the sector this time. Will AR turn out to be a bigger sector than VR? Will their applications and markets diverge so much that there is no longer any point in comparing them? Will applications such as immersive TV-watching, training and therapy make XR far more than the 3D extension of the video games industry it started out as? Whatever happens, past experience suggests that we should be less sure of our predictions this time.

Two things are certain, however.

First, a lot of people are saying XR throws up completely new issues in terms of liability, contractual relationships and intellectual property. This is not true. For the most part, be it in connection with hardware, software or content, the issues are pretty much the same as for conventional video games. What makes the industry different is that video game technology is now being applied to areas such as product design, education and healthcare, with all the attendant pitfalls regarding liability and regulation that those industries bring with them.

Second, this means that young entrepreneurs and companies from a software and games background may have a steep learning curve regarding patents, branding strategy, contractual liability and industry standards if they start servicing heavily regulated sectors such as medicine, defence, transport and education and they could all too easily stray into deep water, possibly resulting in them being sued or becoming a big turn off to investors.

The upcoming series of articles by me and my XR specialist attorney colleagues at Marks & Clerk will be flagging up some if these dangers and giving guidance on how best to steer clear of them.

Coca-Cola VR experience

Intellectual property (IP) will form a core part of all these articles. Back in the nineteenth century, the bulk of any business’ value resided in its stock, plant, machinery, premises and staff, even though the first patent was filed in 1421. Now the majority of most companies’ value can be found in their IP; think of what Coca Cola’s brand, Google’s search engine or the active ingredient in a blockbuster drug must be worth. Even though it is intangible, IP is an asset like any other which can be bought, sold, licensed out and used to make and brand products and processes. It can be used to block the competition if they are infringing you or you can make money out them by granting them rights over your IP in a horse-trading exercise. You can even raise money by mortgaging IP in the same way you would a house. It can also be stolen.

The value of IP is evident in the money spent buying and selling companies rich in it and in the millions of dollars that go on patent and trade mark litigation worldwide – huge sums indeed but worth it when one thinks of the astronomical damages that can be awarded.

IP rights fall into two categories, registered (such as patents, registered trade marks, registered designs and domain names) and unregistered (such as copyright, unregistered designs, unregistered trade marks, know-how and trade secrets). What’s more, their precise nature may vary from country to country. Unregistered rights arise automatically and cost nothing. Registered rights have to be applied for but you need to meet precise criteria for your application to succeed and it costs money to obtain and maintain them. However, registered IP can be worth much more and may be easier to defend against infringement. Given XR’s technical and creative elements, IP is immensely important to it but what rights you may qualify for and what ones it may be worth applying for depends on the nature of your product or service as well as your budget. All of this will be dealt with in the coming articles and, who knows, our predictions about the industry might actually turn out to be correct.

Look out for the first one, on patents, next month.

Simon Portman

Simon specialises as a commercial contract lawyer. He co-heads the VR/AR sector group and dedicates all of his time to commercial services. He advises on a wide range of contracts, including licenses, R&D collaborations, manufacturing agreements and procurement documentation. On the regulatory front he has advised on compliance with clinical trials legislation and novel food applications, as well as freedom of information and data protection issues.

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