Virtual reality and Intellectual Property Rights

INTRODUCTION

The term “Virtual Reality” (VR) refers to an artificial virtual environment that is created with the help of software. [1] VR is a broad term, which includes all computer-generated worlds that a viewer can enter and change through their imagination. [2]In other words, VR includes all virtual environments wherein there is a combination of various sensory perceptions such as sight, sound, touch, and eventually taste and smell, is simulated to recreate reality. The broadest and most modern interpretation of the term “virtual reality” encompasses other new technologies emerging in the computer industry such as multimedia, cyberspace and most importantly, the Internet. [3]  VR came into existence in the 1950s. In the year 1968, the first VR Head-Mounted Display (HMD), The Sword of Damocles, was invented by a renowned computer scientist Ivan Sutherland and his student Bob Sproull. However, the term “virtual reality” was popularized in the 1980s by Jaron Lanier. By the early 1990s began the mass production of VR systems. [4] With such a vast innovation in technology, there arise legal challenges which concern retaining of secrets of companies during the development process and protecting intellectual property rights in the virtual world.[5]

USES OF VIRTUAL REALITY

The ever-expanding scope of VR has led it to be used in many forms. Some of the key areas in which VR is being used currently are listed below:

1. Military

VR is used for the purpose of training soldiers to be prepared in dangerous situations that might befall them during casualties. VR technology is used where the soldiers are required to learn how to react in an appropriate manner to combat difficult situations. For example, VR parachuting simulation is adopted by the air force of some countries. Some of the other military uses of VR include fight simulation, battlefield simulation, medic training, vehicle simulation and virtual boot camp.[6]

2. Education

VR technology has entered the field of education thereby creating new and improves resources to teach and learn. Students are enabled to experience the events of history, or go deep into the human body to study biology. [7]

3. Entertainment

One of the most enthusiastic advocates of VR is the entertainment industry. VR enables the audience to engage with exhibits by wearing VR glasses, through which they can see three-dimensional objects and at various different angles. There are a wide range of VR systems through which the audience is engaged like CAVE systems, augmented reality systems, simulators and 3D display platforms.[8]

4. Computer Games

The most popular form of VR in today’s time is computer gaming. Mattel introduced the PowerGlove in the 1980s, which enabled users to use actual hand movements while playing Nintendo games. Modern gaming offers a wide variety of virtual inputs and outputs using gloves, glasses and various other immersive environments.

5. Medical Field

In some cases, VR is used to train doctors for difficult operations before they actually occur. VR is also helpful for doctors to explore circulatory systems by using an exploratory virtual reality vehicle. Doctors can practice surgery techniques before having to perform it on a patient.

6. Other Professions

Apart from the points mentioned above, VR can be used to improve a person’s ability and potential to do a job. For example, VR can be used to give an experience of walking through a house to see the designs and interiors of that house. Another example can be of recreating a crime scene by a lawyer to understand the case better and adduce evidence.[9]

VIRTUAL REALITY AND INTELLECTUAL PROPERTY

With the advent of such an advanced technology such as VR, there arise various legal questions regarding liability of users for the crimes committed in the virtual world. However, the most important legal issue is that of protection of intellectual property rights. These issues arise with respect to the rights and liability of owners, users and third parties.

1. Copyright Issues

The purpose of copyright is to encourage innovation and creativity in the society by way of protecting original works for a definite period of time. After receiving copyright protection, the owner of the work has the exclusive right to reproduce, prepare derivative works, distribute copies, display the work publically and license others to use his creation following certain terms and conditions. Generally, copyrighted work is protected in the virtual world in the same manner as it is protected in the real world. This can be understood with the help of an example. Say, a person distributes copies of a painting in the virtual world, which is copyrighted by the painter in the real world, then, such person can be held liable for copyright infringement.[10] Another example can be, if a virtual experience by a VR platform is created, which uses real world intellectual property, which is copyrighted, the owner of IP may hold the VR platform liable.

ZeniMax Media, Inc. v. Oculus VR, LLC [11]

ZeniMax Media and Oculus VR’s trade secret disputes originated from interactions between the two in 2012. Around that time, ZeniMax was developing a prototype virtual reality headset that had numerous improvements over current VR technology of the time. For example, ZeniMax’s prototypes lowered the latency between a user moving their head and the VR display updating. Around the same time, Oculus VR (and Palmer Luckey, its founder) were working on their Rift headset. John Carmack, a ZeniMax employee, obtained a prototype of the Rift headset and combined it with ZeniMax’s technology, finding that the combination was particularly powerful. ZeniMax entered into a partnership with Palmer Luckey. As part of that partnership, Luckey signed a non-disclosure agreement providing that “all Proprietary Information” that ZeniMax provided to Luckey would remain the exclusive property of ZeniMax. Not long after, Luckey’s Oculus VR began to deteriorate. ZeniMax continued to provide Luckey with proprietary technology, but Luckey incorporated this technology into Oculus’ Rift VR headset without compensating ZeniMax. Facebook later bought Oculus VR for $2 billion. ZeniMax sued Oculus on May 21, 2014 in the Northern District of Texas, alleging that Luckey misappropriated ZeniMax’s trade secrets. The initial suit resulted in a jury award of substantial damages to ZeniMax, but Oculus was not found guilty of trade secret misappropriation. Oculus was ordered to pay $200 million for violating the non-disclosure agreement, and $50 million for copyright infringement. Separately, Oculus and Palmer Luckey were each required to pay ZeniMax $50 million, and Oculus’ CEO Brendan Iribe was ordered to pay ZeniMax $150 million under a false designation of origin claim for misrepresenting the origin of the Oculus Rift headset. In post-trial proceedings for judgement as a matter of law, the court ruled there was insufficient evidence to prove damages. The damages were then reduced to $250 million, and the individual damages associated with Iribe and Luckey were eliminated entirely. An appeal was filed shortly thereafter by Oculus in the U.S. Court of Appeals for the Fifth Circuit, but was later dropped a few months later. The case settled privately in December 2018 for an undisclosed amount. While the terms of the settlement were undisclosed, ZeniMax was quoted as being, “fully satisfied by the outcome.” Virtual reality technology is at the forefront of technological innovation and may lead to as of yet unforeseen advances in the video game industry. The huge sums and lengthy litigation of trade secret rights here only further compounds the race to the top in the VR space, as well as the lengths companies are willing to take to protect their secrets.

 In the case law of Kumar Int’l v. Russ Berrie & Co. [11] it was held that originality is the sine qua non of copyrightability. 

 In the case law of Midway Mfg. Co. v. Bandai-Am., Inc [12] it was held that video games in general are entitled to copyright protection as audiovisual works and this includes VR contents. 

In the case law of Incredible Technologies, Inc. v. Virtual Technologies, Inc [13] the maker of Golden Tee, a video golf arcade game, sued its competitor for infringement of it copyrights in the video display of the game. The court determined that parts of the game display were incidental to the standard treatment of a game of golf, and thus not subject to copyright protection, and that the other representations in the game were sufficiently different to make success on the merits unlikely.

2. Patent Issues

Patents allow an inventor to prevent others from making, using, selling, offering for sale and importing a claimed invention for a definite period of time if the invention is found to be useful, novel and non-obvious to a person having ordinary skill in art.[14] The patent owner has the right to sue for infringement is his patented invention is used, made or sold without authorization. While it is common belief that the virtual representation of an invention is a completely different entity, if the VR good operates in the same way and uses laws of physics, then it may be considered as infringing by the court of law. It is important for VR ecosystem owners expressly add in their terms of service that content developers may only reproduce patented VR goods after obtaining proper permission.[15]

In the case law of EMI Group N. Am. V. Intel Corp. [16] it was held that in order to establish patent infringement, it is important to prove that the alleged infringing VR product performs substantially the same functions in substantially the same way, with a substantially similar result as that of the patented invention.

According to reports, despite being in its nascent stages in India, the VR technology is estimated to see compound annual growth of 76 % in the coming years in India. And while gaming seems like the only obvious case of the development of the technology, it is predicted that, in the coming years, the three most prominent markets for VR technologies would be entertainment, manufacturing, and healthcare. The education sector too has started picking up VR as companies like Byju’s are using the technology to bring new scope to experiential learning. Also, with the technology being available in a few apps in smartphones priced as low as 5000 INR, it is predicted that in the next four years, 30-40% of the apps will be VR-based helping achieve the goal of mass adoption of the technology. 

3. Trademark Issues

The purpose of trademark law is to prevent unfair competition and protect the word, phrase, symbol or design that identifies and distinguishes a party’s goods or services.[17] A trademark must be distinctive and it must be used in commerce for it to receive protection. In order to prove infringement, the plaintiff is required to prove that the trademark is valid and the infringer used it for a commercial purpose without the consent of the plaintiff. The plaintiff is also required to prove that the use of the trademark is likely to cause confusion with respect to the source of the good or service.[18]

In cases of unauthorized use of TM in the virtual world even on a finding of trademark infringement or dilution, the use can be immunized through the exceptions provided under section 30 of the Trade Marks Act, 1999 (‘TMA’). In general, for an exception under section 30 to apply, it is necessary that the usage (i.e. the usage containing a mark similar or identical to the registered mark in question) does not imply association with the trademark owner; is consistent with honest commercial practices and does not depreciate the value of the goodwill in the mark. Further, per section 30(1) of the TMA, such usage must not take unfair advantage of or be detrimental to the distinctive character of the mark as stipulated. Section 30(2)(a) permits a third party to use descriptive indications as to the kind, quality, quantity, intended purpose, value, geographical origin and time of production of the goods or services or other characteristics of the goods or services. Descriptive fair use is known to occur when the trademark is used to merely describe the defendant’s own products and not to refer to the proprietor’s products. Thus, section 30(2)(a) of TMA provides that use of a registered trademark, or a mark similar or identical to it, by a third party as a descriptor of its own goods or services, does not count as infringement. [19]

In the case law of Zatariain’s, Inc. v. Oak Grove Smoke House, Inc[19] the court explained that there exist four categories based on distinctiveness, namely, arbitrary/fanciful, suggestive, descriptive and generic.

Under almost all circumstances, the principles relating to trademark protection in the real world also apply to the virtual world. However, there are certain cases where the same rules do not apply in the virtual world. This can be better understood with the help of the following case law. 

In the case of Marvel Enterprises, Inc. v. NCSoft Corp.[20] NCSoft developed an online virtual world called City of Heroes where players could create avatars and design superhero costumes that were nearly identical to superheroes owned by Marvel. The court, however, dismissed Marvel’s trademark claim, holding that because those trademarks were not used in a commercial sense or in connection with a sale, distribution or advertising of any good or service, NCSoft did not commit any trademark infringement.

CONCLUSION

The expanding scope of virtual reality has made it a part of mainstream industries. Even though there is no specific law to govern the use and misuse of virtual reality, Intellectual Property laws still apply and protect the users and owners. As there are vast uses of VR, it is the responsibility of VR developers to be mindful while using this technology and to use it in a responsible manner as it collects increasingly large amounts of user data. The current application of VR will most likely generate IP issues wherein parties will seek for the courts to decide the difference between the real world and the virtual world. It may lead to the courts struggling to maintain the right balance between the rights of virtual authors and the rights of the general public to share and use these virtual works. For all these above-mentioned purposes, there is a need for specific laws that will govern IP aspect of the virtual world.