IPR strategy for industry 4.0: what can we learn from 3D printing?
January 2018 | SPECIAL REPORT: INTELLECTUAL PROPERTY
Financier Worldwide Magazine
January 2018 Issue
The impact of additive manufacturing (AM) or 3D printing on the efficiency, sustainability and competitiveness of the manufacturing industry is potentially vast. It pushes the boundaries of part design, makes it easier to produce different (replacement) parts at no extra cost, minimises manufacturing footprints and reduces inventory costs. While companies currently face high warehousing and transportation costs, their future may come in the form of flexible arrangements and proximity to the customer. Requiring minimal tooling operations and based on the creation of finished parts directly from a digital CAD file, AM will shorten time-to-market and open myriad possibilities for on-demand production.
The growth potential for AM and the digital creation that comes with this technology cannot be understood without assessing the impact of intellectual property rights (IPRs) on the AM value chain and vice versa. The situation is different when talking about 3D printers replacing mass production for end-consumers and the deployment of this technology by industrial end-users, such as OEMs and various suppliers.
Major challenges for AM and IPRs
Large scale 3D printing by end-consumers will challenge traditional mass production and protections currently granted by IPRs. Will these rights remain effective or should they be reformed? The question is also whether lawmakers should be reactive or proactive. A proper economic analysis of the current legal framework and its interaction with existing and new technologies seems indispensable. Ultimately, we need legal rules that contribute to and enable the rapid market uptake of AM technologies, while avoiding misappropriation and protecting the legitimate interests of right holders. Moreover, given the trans-border nature inherent to 3D printing files in a multinational and internet context, purely national laws will not be sufficient to address the corresponding challenges. Ultimately, companies will most likely have to rethink their production strategy, not only from an IPR perspective but also with regard to product liability and safety. Particularly for highly-regulated products the risks are high, meaning that insurance companies will have to review their coverage policies.
And while some people may believe 3D printing is revolutionary and still far away, others are already experimenting with 4D technologies, which make it possible to create objects capable of changing their shapes and properties, for example in combination with certain substances.
Approaching the 3D printing and AM markets
Investing in AM entails betting on a growing, though still emerging, high-tech area with a low stability range and a high level of uncertainty over possible short-term returns on investment. Besides new investment opportunities, AM arises as a variable that can drastically impact industrial value chains all across the world. We know that AM can offer great proven benefits; thanks to topological optimisation, one can produce mould inserts with conformal cooling channels that can lead to much higher production rates. The use of expensive materials, such as titanium, can be drastically reduced thanks to powder-based technologies, which allow for an optimal use of material. And these are only a very few selected examples of all possibilities offered by the technology.
Still, there is a remaining expectation gap: the distorted view of the time in which return on investment may be expected has led many investors to disappointment, and sometimes overvaluation on the stock market.
Key barriers to AM and 3D printing deployment
Why is this expectation gap still impacting the AM industry? Primarily, it is because the deployment of 3D printing techniques has been slower than expected. And it is slower because of persisting obstacles to acceleration. Among other issues, IPRs seem to be an emerging challenge that can sometimes be ‘real’ (when litigation is observed) or only ‘perceived’ by the organisations at stake, leading to a lack of trust and blocking the adoption of printing technologies by a number of companies.
Why do IPRs matter?
The importance of IPRs in AM and 3D printing are not limited to the 3D printing industry itself. They can impact all economic sectors. For corporate investors, the deployment of AM will strongly impact a wide range of sectors and market players. Not only will the manufacturing industry be impacted, so too will the service sector, and especially online marketplaces which are growing in number. It can both act as a threat or opportunity to the next investment round. In other words, IPR valuation can be a key investment factor. The current state of IPRs may hamper technology diffusion, restrain possible adopters and affect the possible vector of international market distortion.
End-consumers and mass production
Designers and businesses relying on mass production will have to rethink their IPR protection strategies as the deployment of AM becomes more widespread. IPRs traditionally aim at offering exclusivity rights to original creators over reproduction and distribution, two essential steps in the commercialisation process of a product. End-consumers with access to a 3D printer, software and raw materials will most likely challenge product design in the same way as the internet did for the audio-visual industry. The more blueprints for 3D designs and the corresponding printing software become easy to use, the more end-consumers become cost-reducing designers and manufacturers themselves. User-generated objects are likely to boost end-user creativity, as was the case for user-generated content. This will also lead to new purposes and customised improvements for existing objects and modular construction models based on shared designs. Equally, the need for distributors will diminish drastically, which will lower costs for popular designs even more. Open source and creative commons will only speed up that process. Consequently, enforcing registered designs and patents will become more difficult. Experience with online audio-visual content has shown that enforcing IPRs against individual consumers (infringers) and even against online platforms and file-sharers (contributory infringers) is costly, time-consuming, inefficient and therefore not sustainable in the long run. Moreover, aggressive enforcement strategies tend to lower general support for IPRs in our society. Professional creators may want to focus on unique designs and high-quality materials, as well as new revenue models based on added value to end-consumers. They may even want to create a community with end-consumers through open-source licensing agreements allowing for product improvements. Such an approach can go hand in hand with DRM protection measures on blueprint software files.
Lawmakers will most likely have to rethink IPRs protection in a decentralised environment where end-users can simply seize design blueprints from the internet, reverse engineer certain products or co-create new designs to further materialise them where they want and when they want. The only other option would be to highly regulate the 3D printer market, for example by requiring all 3D printers to be registered in a central database and by tracking all activity on such printers. The latter option seems neither feasible nor desirable.
For senior decision makers in the manufacturing sector, the issues will be numerous, both for the technology and its applications. Manufacturing companies may see their product and part designs stolen and reproduced elsewhere. The flexibility of 3D printing design also makes the reproduction of any printed trademark easier than it has ever been before. Other industrial end-users, such as OEMs and various suppliers, will have to assess how information is protected and exploited throughout the entire value chain. Such protection will be offered, in particular, through licensing schemes for IPR protected 3D printing data and NDAs for non-IPR protected data. Securing the confidentiality of trade secrets is particularly relevant because there is a strong need for the involvement of external partners in the 3D production process, either through cooperation or through actual outsourcing. Companies, researchers and innovators will want to keep critical business data confidential to gain or maintain a competitive advantage. One key aspect of a trade secret is that its holder is not the owner of an exclusive right over its creation. In other words, competitors and other third parties can independently discover, develop and freely use the same trade secret. That lack of exclusivity means that trade secrets differ from IPRs, such as patents and copyright, which do confer an exclusivity right of use and disclosure upon an IPR holder. Trade secrets complement IPRs as they are heavily used in the creative process where investment and research is required for innovation. Trade secrets may give a ‘first-mover advantage’ and an opportunity for subsequent commercial gain. This is also the case in the 3D printing sector.
Geert Somers is a partner at time.lex and Pierre Padilla is a senior consultant at Idea Consult. Mr Somers can be contacted on +32 (474) 890 420 or by email: firstname.lastname@example.org. Mr Padilla can be contacted on +32 (483) 142 813 or by email: email@example.com.
© Financier Worldwide