Advancing the AM Business Model: IP Considerations

Advancing the AM Business Model: IP ConsiderationsPosted by Mauricio Castro

The opportunities for additive manufacturing (AM) seem endless, but as anyone following disruptive technologies will note, there is also the opportunity for litigation. Matt Widmer, a principal with Deloitte Financial Advisory Services LLP and head of Deloitte’s Federal Advisory practice, has seen this happen numerous times. He believes that businesses interested in AM should take three things into consideration now:

  1. Landmark intellectual property cases lag behind disruptive technology. Stakeholders should take note of preceding cases to see how it could apply to them
  2. Intellectual property disputes are prevalent in many industries. AM will be no exception
  3. Act now. Stakeholders should be proactively evaluating and addressing IP concerns

Landmark IP cases lag behind disruptive technologies

Consider the disruptive technologies of the past, like Sony’s Betamax video tape recorder (VTR) and Napster. These new technologies enjoyed brief periods of growth only to be set back by IP-related litigation. Both Napster and VTR manufacturers were sued due to fears of content-stealing.

  • The VTR brought about the ability to finally record videos, no longer requiring people to tune in live in order to re-watch a show or event. VCRs flourished due to the various personal recording uses outside of recording copyrighted material. Due to its many non-infringing uses, the courts did not find Sony at fault. In this case, AM manufacturers can find precedence in non-infringing uses aiding their case if future litigation appears.
  • Napster popularized the ability to share songs with others online for free. Ultimately, Napster was deemed illegal largely due to its original intent―to share music without remunerating the proper parties. Additionally, courts would find it difficult to catch and punish all users that shared music, so the creator of the application was sued instead. The Napster case was a roadblock for consumers, but they eventually migrated to legal alternatives in the form of iTunes and now Spotify, services through which artists and companies receive some form of payment and their IP is protected. Depending on the purpose of the application, AM stakeholders should be aware of whether or not their application directly f acilitates IP infringement for end users.

Although both cases took place in different periods of time, they serve as reminders that when copyrighted material is involved, there will eventually be a defining court case that will likely determine what becomes widely adopted. More information on both cases can be found in the paper: “3D opportunity for intellectual property: Additive manufacturing stakes its claim”―available through Deloitte University Press.

IP disputes are commonplace

IP disputes are prevalent across all industries. They arise from companies alleging that they were not fairly compensated for their patents/licenses (and sometimes, not compensated at all). The ongoing smartphone patent wars have been the result of a multitude of lawsuits, counter-suits, and trade complaints between many well-known smartphone makers for breaching patents owned by a specific company. The defense industry is continuously engaged in litigation, with both the government and the private sector using lawsuits to determine who owns specific technologies in various cases.

Act today to evaluate and address IP concerns

Stakeholders can benefit from proactively evaluating and addressing IP concerns now. The growth of AM will very likely change the way we view intellectual property. Because computer files last forever, companies will no longer be able to say that they can’t make a part anymore. Companies will need to determine a new type of compensation structure for on-demand printing, and the earlier stakeholders work out compensation plans, the better.

While there is no one-size-fits-all approach to addressing IP concerns, being proactive now is better than the prospect of being the subject of litigation in the future.

One organization working to reduce its IP litigation is the US Department of Defense, through its Better Buying Power 3.0, which is changing the way the government does business with the private sector to reduce IP litigation. With the third iteration of Better Buying Power, the government aims to better define what portions of a system they own in order to not be tied up either by potential litigation or to a single supplier when looking for subsystem upgrades and additions.

These three considerations―IP law lagging behind disruptive technology, the fact that many industries experience IP litigation, and acting now to prevent future litigation―should guide companies forward as AM continues down the path of innovation. While there is huge potential for AM to change the way things are made, the potential for the prospect of IP litigation derailing a lot of the progress that is currently being made is just as huge. By recognizing that litigation lags behind disruptive technology, that IP disputes happen in many industries, and that future litigation can be mitigated now, the additive manufacturing industry can avoid a Napster-level setback and set itself on a clearer path to widespread adoption.


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