October 30, 2014

3-D Printing - The End of Shopping as We Know It

7 min

3-D printing is one of the most disruptive technologies to penetrate the marketplace. While it is currently and extensively used for prototype design, medical devices and creating novelty items, it has the potential for dramatically changing our way of life.

The 3-D printers of today remind me of the 300 BAUD modem days, when downloading movies took days and hours to download a tune; even then the quality was not very good. However, as a result, fast forward a few years we now have Netflix, Kindle, and iTunes. You no longer see any video or record stores and very few book stores. While still a few years away, the potential for having a high-speed sophisticated 3-D printer in our homes is very real. Where, instead of going out to shop for products, we will simply be able to download the files and print out orders ourselves. However, with the rise in the use of 3-D printers, a slew of new legal issues will arise.

As new technologies emerge and business models come online, we often see a lag in the law and the activities of business and the consumer. For example, when .mp3 files first became available, until you had viable business model with legal methods of downloading songs at regular prices, Napster and Grogster ruled and millions of songs were illegally downloaded, and tens of thousands of lawsuits ensued. You still find the same problem with Bit Torrent swarms copying movies and TV shows today.

Fast forward a few years, while you can still go to your favorite online store, order and pay for your product, but instead of it being shipped to you, you will be able to download a file(s) and print out your "purchase." So, the possibility for obtaining massive quantities of illegal products via pilfered 3-D printer files is very real. If someone trades or copies a file(s), even more consumers will get the product for "free." The misappropriating of fee based 3-D files could be a huge problem for suppliers. If one prints out an item without paying the owners for the product or the related intellectual property -- it is no different than shoplifting. The educational process to embed this concept in the minds of the public will be as difficult as it was with music and film downloads. One potential fix might be if all 3-D printing files would be streamed directly to the printer and making illegal copying would be outside the capability of the average user.

Additionally, the whole way we "buy" products could change once we are able to download or stream digital files and print them out ourselves. In fact, we would no longer be buying anything – we would, in all likelihood, be licensing a software file and products from the vendor.

When we buy something, we generally have the right to resell it and use it as we see fit. This is true even with products that are protected by copyright based on the limits of the of copyright owner controlling secondary sales under the First Sale Doctrine. The copyright owner gets to decide who makes the first sale then the person who acquired the lawful copy can resell it (e.g. used CDs, VCR tapes, DVDs books, etc.). However, the First Sale Doctrine does not apply to licensed goods. So, when we license a 3-D file and print out the product, one should not be confused to think they actually own the file or resulting product, it is being licensed. How do we know if we are buying something and own it or are merely licensing it? The answer it seems depends on what the vendor calls the transaction. In a landmark case, Vernor v. Autodesk, Vernor bought legitimate copies of Autodesk from third parties and resold them. Autodesk objected saying the terms of its license prohibit the re-sale. Vernor argued that even though the transactions were labeled as licenses, in fact, based on the circumstances they were sales, thus subject to the First Sale Doctrine. The Ninth Circuit Court of Appeals sided with Autodesk and held the limitation in the license enforceable. As such software and other products are subject to the terms of the license, which can include no resale limits, the requirement to pay a periodic license fee in order to continue using the product, or any other restrictions that the licensor can think of which they deem to be profitable. This issue is not new to anyone who has tried to sell or transfer a downloaded software, a song or an e-book. The licensor controls the if, when and how you can use, sell or give away the tune or book. For example, when you license an e-book from Amazon according to the Kindle Store Terms of Use, "Kindle content is licensed, not sold"...

"Amazon or its content providers grant you a limited, non-exclusive, non-transferable, non-sublicensable license to access and make personal and non-commercial use of the Amazon Services. This license does not include any resale or commercial use of any Amazon Service, or its contents; any collection and use of any product listings, descriptions, or prices; any derivative use of any Amazon Service or its contents… No Amazon Service, nor any part of any Amazon Service, may be reproduced, duplicated, copied, sold, resold, visited, or otherwise exploited for any commercial purpose without express written consent of Amazon."

Or when you license a song from iTunes …


“(i) You shall be authorized to use iTunes Products only for personal, noncommercial use.
(ii) You shall be authorized to use iTunes Products on five iTunes-authorized devices at any time, except for Content Rentals (see below).
(iii) You shall be able to store iTunes Products from up to five different Accounts at a time on compatible devices, provided that each iPhone may sync tone iTunes Products with only a single iTunes-authorized device at a time, and syncing an iPhone with a different iTunes-authorized device will cause tone iTunes Products stored on that iPhone to be erased.
(iv) You shall be authorized to burn an audio playlist up to seven times.
(v) You shall not be entitled to burn video iTunes Products or tone iTunes Products.

(ix) Content Rentals
(a) Content rentals are viewable on only one device at a time…
(b) Once you purchase a rental, you must fully download the rental within thirty (30) days. You have thirty (30) days after downloading a rental to begin viewing. Once you begin viewing, you have twenty-four (24) hours to finish viewing a movie. Stopping, pausing, or restarting a rental does not extend the available time for viewing.”

The Monsanto case is illustrative of this issue. For 100,000 years farmers have used seeds from this year's crops to plant next year's crop. Monsanto created genetically modified seeds and instead of selling them to farmers, they licensed them. A condition of the Monsanto license was that the farmer could not use the seeds from the current year's crop to plant next year's crop, but had to buy new seeds each year. The court upheld the terms of the license breaking a tradition which existed from the beginning of time.

How will the license limitations and restrictions for 3-D printing be policed is a mechanical question, but from a strictly legal point-of-view, of what is permitted whether or not the licenses are capable of being enforced, is irrelevant.

Therefore, when you download or stream a licensed 3-D file and print out a product, how you use it can be limited and eventually if you decide you want to sell it, you may find that you are committing copyright, trademark and/or patent infringement.

Also, all sorts of new liability issues could come into play with 3-D printed products. Let us assume that someone downloads a 3-D file and prints out a product. Several problem areas could be created for the file creator, the company distributing the file and the end user. For example:

    (i) if the product design or features violates someone’s patent, there could be a violation;

    (ii) if the product has a trademark on it and is a counterfeit, those could be a trademark infringement;

    (iii) if the software behind the 3-D file, artwork or text contained in the file, or the product is not properly licensed, it could be a copyright infringement; and

    (iv) if the product breaks or causes injury there will be product liability claims. Who is going to be liable?

In the area of product liability it is possible that not only will the person who designed the product be liable, but perhaps the person who wrote the software for the 3-D printer, the company that sold the files, possibly the manufacturer of the 3-D printer or even the end user who printed out the product.

Advance high speed 3-D printing will not only change our way of shopping, but also how we are able to use our “purchases,” and which parties are held responsible for their safety.