The Impact of Intellectual Property on Virtual Reality

Introduction

What do Oculus Rift, Google Cardboard, Sony PlayStation VR, Samsung Gear VR and HTC Vive have in common? They are all virtual reality headsets capable of transporting their users to a new reality by immersing them in a simulated world or stimulating their presence in the real world! Virtual Reality (VR) has been defined by Merriam Webster as an artificial environment which is experienced through sensory stimuli (such as sights and sounds) provided by a computer and in which one's actions partially determine what happens in the environment[1]. VR traces its origin to the 1800s in the form of 360-degree artwork drawn to immerse a person in the scene.[2] VR is one of the most discussed concepts today and is poised to impact a wide range of industries in almost all spheres ranging from Healthcare and medicine to Military Training, Corporate Training, Design And Architecture, Education, Entertainment, Virtual Travel, Sports, Broadcasting, Social Media, Retail, Automotive, Construction, Navigation, Gaming etc. As per an article in the Business Insider, which refers to a report from BI Intelligence, VR shipments will create a USD 2.8 billion hardware market by 2020[3]. It is also predicted that by 2025, the AR and VR market could be worth USD 11.6 billion.[4] VR and other forms of technologies have had significant contributions during the COVID-19 pandemic, such as the near-eye display technology in the medical field as well as the “VIVE Ecosystem Conference” held by HTC, a virtual event which had about 2000 registrants across 55 countries.

However, VR is still a relatively nascent and unchartered territory and it has led to the development of considerable IP issues and several other legal ramifications. The use of IP in the virtual world can end up being a major cause of concern for IP owners. Several games display the trademarks of third parties to create a realistic experience for their users as well as allow players to purchase merchandise, exchange virtual cash for real cash, import images, music, brand names etc. which could violate the IP rights, especially trademarks and copyrights of various brands existing in the real world. Thus, there is potential for massive IP infringement in VR. In this article, we aim to briefly touch upon some of the ways in which various types of IP can be infringed in the VR space.

Copyright

Computer Software can be granted protection as a copyright and this can lead to disputes over the ownership of the copyright in the VR software. One of the most noted cases in this regard was the case of ZeniMax against Oculus VR, where Oculus was directed to pay USD 50 million amongst others, for copyright infringement[5], but the matter was later settled out of court for an undisclosed amount. The lawsuit involved the theft of ZeniMax’s computer code and proprietary information that was used to develop Oculus products.

Trademark

In an attempt to create a realistic experience for the user, developers or users often base the virtual world on a real world and in this regard, end up using trademarks in the virtual world of various proprietors from the real world. This may result in the owner of the trademark filing a suit against the developer for unauthorised use of his mark. In this regard, since Indian trademark law is based on the principle of likelihood of confusion for a consumer with average intelligence and imperfect recollection, use of an identical or deceptively similar well-known trademark, such as the arches of McDonald’s for depicting any fast-food joint in a game, would lead to association with the original McDonald’s. Further, such use of similar marks in VR also exposes the brands for disparagement, blurring, tarnishment and in turn, trademark dilution.

A well-known example of a case for unauthorised depiction of a trademark in the VR space is the case regarding the famous game “The Grand Theft Auto: San Andreas”, wherein the Plaintiff had alleged that the Defendant had based the city of “Las Santos” on “Los Angeles”, the neighbourhood "East Los Santos" on “East Los Angeles” and the club “Pig Pen” on the Plaintiff’s club “Play Pen”. However, the Circuit Judge defended artistic expression in this regard and on finding inadequate evidence for likelihood of association between a strip club and a video game held that this use does not amount to IP violation and a reasonable consumer is unlikely to assume that a company owning a strip club in Los Angeles can also possibly produce a sophisticated video game.[6]

In another instance, wherein the Defendant’s videogame ‘City of Heroes’ involved creation of certain characters based on Marvel’s characters, which a player could choose to pose as, the Court dismissed Marvel’s claims and held that since use of such names or characters was not for commercial purposes or in in connection with any sale or advertising of goods and services, there was no infringement of a trademark.[7]

In the Indian context, for the defense of fair use to apply in cases of unauthorized use of a trademark in VR, reliance can be placed on the exceptions provided under Section 30 of the Trade Marks Act, 1999[8], as per which the use of the mark by the Defendant should not imply association with the owner of the trademark, should be consistent with honest commercial practices, should not depreciate the value of goodwill in the mark and should not take unfair advantage of or be detrimental to the distinctive character of the trademark. Further, in cases where the Defendant is merely using the trademark for reference to the proprietor’s goods and not using the same, defense can be taken under Section 30(2)(d) of the Act.[9]

Patent

As per a report by Lexinnova[10], the majority of patenting activity under VR technology has occurred in technologies related to ‘Interface Arrangements’, ‘3D modeling’ and ‘Data Processing’. This Report also stated that India is an emerging jurisdiction for filing VR patents. Further, as per a report by IPlytics, the number of VR and AR patent applications approximately doubled from 2014 to 2018.[11] Thus, patenting of VR technology as well as lawsuits regarding patent infringement in the VR space, have been on a continuous rise.

In the Indian context, as per Section 3(k) of the Patents Act, computer programs per se is not an invention, however, certain computer programs, having a technical application and in combination with hardware may be patentable. Thus, subject to other necessary criteria, applications for VR technology along with hardware features should be patentable in India.

Even though India does not have a landmark judgement in this regard, we can place reliance on several lawsuits of various jurisdictions for the same. A complaint has been filed by Lennon Image Technologies for infringement of its patent entitled “Customer Image Capture and Use Thereof in a Retailing System,”[12], against the Defendant Mattel, wherein the Defendant has a website which can manipulate images of a customer and uses the Virtual Fitting Interface. In another case[13], the Court had rejected the Plaintiff’s claim alleging infringement of a design patent for a physical article by a virtual article, inside a video game, on the ground that no reasonable person would purchase the video game believing that they were purchasing the Plaintiff’s “stun guns,” which resembled brass knuckles and no reasonable person would have confused the virtual with the real.

Conclusion

Summarily, there are no specific laws regarding VR yet, but existing IP laws are still applicable for the same. The Indian IP jurisprudence in this field is at a relatively burgeoning stage and judgements of other nations serve as beacons for Indian Courts. However, owing to the rapid expansion in this field, lawsuits in India will be inevitable as well. Thus, since internet reality is soon going to be the norm, the existing laws should be construed to develop good practices and balance the interests of the parties. Laws should be interpreted in a manner which foster the development of VR as well as safeguard the interests and rights of the IP holders. Further, there is an imminent need to spread awareness regarding the risks associated with unauthorised use of IP in VR and it is advisable for developers to remain wary of using the IP of others in the virtual world.

[1] https://www.merriam-webster.com/dictionary/virtual%20reality

[2] https://interestingengineering.com/whats-in-a-name-the- long-and-short-history-of-virtual-reality and https://www.vrs. org.uk/virtual-reality/history.html

[3]https://www.businessinsider.in/tech/Virtual-reality-headset-sales-are-set-to-take-off-Heres-how-the-market-will-grow/articleshow/47085932.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[4]https://www.goldmansachs.com/insights/pages/technology-driving-innovation-folder/virtual-and-augmented-reality/report.pdf

[5] ZeniMax Media, Inc. v. Oculus VR, LLC, United States District Court for the Northern District of Texas, Case No.: 3:14-cv-01849-K

[6] E.S.S. Entertainment 2000, Inc., v. Rock Star Videos, Inc., November 5 2008, No. 06-56237

[7] Marvel Enterprises, Inc. v. Ncsoft Corporation, United States District Court, C.D. California, Case No. CV 04-9253-RGK

[8] Section 30 (1) in The Trade Marks Act, 1999 - Nothing in section 29 shall be construed as preventing the use of a registered trade mark by any person for the purposes of identifying goods or services as those of the proprietor provided the use—

(a) is in accordance with honest practices in industrial or commercial matters, and

(b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.

[9] Section 30 (2)(d) in The Trade Marks Act, 1999 - the use of a trade mark by a person in relation to goods adapted to form part of, or to be accessory to, other goods or services in relation to which the trade mark has been used without infringement of the right given by registration under this Act or might for the time being be so used, if the use of the trade mark is reasonably necessary in order to indicate that the goods or services are so adapted, and neither the purpose nor the effect of the use of the trade mark is to indicate, otherwise than in accordance with the fact, a connection in the course of trade between any person and the goods or services, as the case may be;

[10] https://www.wipo.int/edocs/plrdocs/en/lexinnova_plr_virtual_reality.pdf

[11] https://www.iplytics.com/report/patents-virtual-augmented-reality/

[12] Lennon Image Technologies LLC v. Mattel Inc., Case Number: 1:12-cv-00901

[13] P.S. Prods., Inc. v. Activision Blizzard, Inc., 140 F. Supp. 3d 795

The article was originally published on www.lexology.com on September 22, 2020 and can be accessed here.