There has been a great deal of talk about Virtual Reality (VR) being the 'next big thing'. Some have even predicted that it will be bigger than social media. Not that much has been said, however, about the legal considerations around this technology and the implications its increasing ubiquity might have for intellectual property rights holders.

Virtual reality is not new technology. It has been around in some form or another since the mid-twentieth century. It has only recently had a resurgence of popularity, however, thanks predominantly to a combination of the vast technological advancements that have been made to VR devices and an increasing availability of fast mobile data services. VR devices are also becoming more affordable for ordinary consumers with prices predicted to reduce even further over the coming years due to increased competition in the market.

The difference between VR/AR and MR

We should first address the difference between VR, AR and MR as this is something that often requires clarification. "Virtual reality" environments consist of a computer-generated, three-dimensional, virtual world. These environments are self-contained and do not allow users to interact directly with the real world around them. "Augmented reality"/"mixed reality" conversely provides a live view of the real world with virtual computer-generated elements superimposed on top of it. Examples of this include Pokémon Go and certain filters on Snapchat. The terms "augmented reality" and "mixed reality" are sometimes used interchangeably and sometimes to describe different technologies but, in essence, both can be said to combine elements of the real world with virtual, computer-generated enhancements. By way of example, Microsoft describes its new HoloLens technology as using "mixed reality" while Pokémon Go is said to use "augmented reality" despite their both using essentially the same technology. For the purposes of this article we will use the term "VR" to refer to VR, AR and MR collectively.

Many of the considerations surrounding trade marks in the context of VR are not new and rather than revisit them, an interesting area to consider in this context is the use of third party trade marks. VR service providers seeking to feature third party trade marks on their headsets or in their content should always question whether they need to get permission from the relevant rights owner to avoid the risk of trade mark infringement. Use of a trade mark without permission will not automatically amount to infringement - this will depend on how the mark is being used. Incidental inclusion of a registered mark, for example, may sometimes be deemed to be fair use. The rules around incidental inclusion have long been a point of contention, particularly in the context of TV and film. In the United States, for instance, there have been several occasions when brand owners have objected to the use of their trade marks in films/TV series, often when they've felt their brand is being portrayed in a negative light. The brand owners argue that such use results in the tarnishing/dilution of their mark. The courts have frequently found in the film/TV producers' favour and protected their right to feature the marks without needing to seek permission from the rights holders.

If the trade mark is being used "in the course of trade" (and, therefore, the VR provider is deriving a commercial benefit from it) there is a risk of trade mark infringement. So if, for example, a VR service provider starts selling an item such as a t-shirt or a handbag in a game or a fashion-based VR environment (a hotly-tipped future use of VR technology),and the t-shirt or handbag bears a third party's trade mark, this is likely to amount to trade mark infringement. This would be true even if the sale was made using a virtual currency.

Copyright issues

Avoiding liability for copyright infringement

Unlike in trade mark law, copyright infringement can occur regardless of whether or not a copyright-protected work is reproduced in the course of trade. Any reproduction of a copyright-protected work without the owner's permission will automatically constitute infringement unless an exception applies. An example of an exception that might be relevant in the context of VR is the temporary copies exception. This permits reproductions of copyright works which are transient or incidental and an integral and essential part of a technological process. This may be applicable when the real world is filmed for the purposes of VR and CGI content is superimposed on top of it, for example. Whether or not this exception applies has yet to be tested.

If an exception does not apply, service providers will need to ensure they have the correct permissions in place to reproduce/stream the copyright-protected works. This may mean reviewing and renegotiating existing licence agreements with rights holders. Converting content into VR may require more modifications/edits to the content than usual entertainment licences will typically allow, meaning that extra permissions and controls will be needed. Discussions may also need to be had about who owns the VR version of the content. Content licensors will typically push to own what are effectively derivative or "translated" versions of their content so VR licensees will need to be prepared for this. Key areas where this will be relevant include live events, film and TV content streaming. Based on the amount of revenue VR technology is predicted to generate, granting such permissions could have significant financial implications for all parties so it will be important to ensure the relevant licence agreements clearly set out whether or not VR streaming of content is permitted.

Protecting original content created for VR

As well as being mindful of having the correct permissions to use copyright-protected content, it will be important to ensure that any original content created for VR headsets is adequately protected. One of the main risk areas that springs to mind is piracy. This is currently a big issue in the gaming and film industries so is likely to be in VR too. At the moment a lot of piracy in gaming is curbed through the use of technological protection measures (TPMs). These prevent pirate games from being played on gaming consoles. This kind of technology could be used in VR to help battle piracy issues by tying VR content to specific VR headsets. There are, however, limits on the use of TPMs. In order to justify their use, the measures must be shown to be proportionate and must not prohibit activities that have a commercially significant purpose or use other than to circumvent the technological protection.

Branded VR advertising regulations

Another area of consideration for VR content is advertising and more specifically when VR content will be subject to the current advertising regulations. It is very likely that VR will be treated by the ASA similarly to product placement and/or content that is commissioned or sponsored by a brand owner in order to promote the brand's identity and value. This means that the CAP code and CPUT Regulations will apply. It seems that the ASA has already started taking VR into account when drafting new guidance/publications. This can be seen from their new guidance on "Electronic cigarette advertising prohibitions" published in February 2017 which lists "in-game advertisements (including augmented reality and virtual reality environments)" as one of the media channels in which ads featuring unlicensed nicotine-containing e-cigarettes are prohibited. This suggests that the ASA is being careful to ensure it captures VR within the scope of its advertising regulations. VR service providers should be mindful of this when featuring branded/sponsored content to ensure they are complying with the rules.

Conclusion

There are many other legal areas that will be relevant in the new VR age including data protection, patents, defamation and product liability. VR is set to be big business and that means getting ahead in the market and having the most sought-after technology will be priceless for developers. The extent developers are willing to go to in order to secure the best technology was highlighted recently by the news that Facebook's VR company, Oculus has been ordered to pay $500m for a breach of a non-disclosure agreement containing details of ZeniMax's Rift VR headset technology. Zenimax is also seeking injunctions to prevent Oculus from distributing products containing their code.

At the moment there is very little case law relating to VR technology. However, as illustrated by the Oculus lawsuit and the endless possibilities for VR and AR in areas such as healthcare (surgery simulation, phobia treatment, robotic surgery and skills training), travel, fashion (shopping experiences where shoppers can make purchases simply by nodding), live events and even dating apps, this is unlikely to be true for long. In the meantime, it seems that much of the present law will continue to remain relevant despite the futuristic nature of VR.