New Regulations

Additive manufacturing technologies, such as 3D printing, have the potential to radically change the way many industries work. This will have implications for business – and by extension for the law, most obviously in the field of intellectual property (IP).

This isn’t a theoretical science fiction concept. It is here now, and it is already causing radical shifts in manufacturing practices across a vast range of industries, overturning established economic models in the process.

Companies in sectors such as oil and gas, technology and defense are already using additive manufacturing to produce highly complex parts on demand. And this is only the beginning. Research is well underway into using the technology to make everything from medicines to meat.

Because this type of manufacturing negates the need for economies of scale – it being as cheap to produce one item as many – it is being used widely in the creation of individual prototypes. For example, an international shoe company can now create prototypes swiftly in the West rather than send the designs to a manufacturing base overseas, which is often costly and time-consuming.

As such, additive manufacturing could be a big boost for first world economies based on knowledge rather than cheap labor.

Blurring boundaries

But it is not just manufacturing that is set to change. We may see a paradigm shift in the way businesses are created and financed, as well as profound changes in the role of IP and the way the insurance industry values risk in the digital design sector.

The opportunities are clear: speed to market, rapid prototyping, on-demand production and consequent economic growth in those countries from which innovative engineering solutions originate.

A central question is how the current legal framework will hold up against these radical developments. If we look at IP, the risks could be enormous as the boundaries of multi-jurisdictional IP laws are yet to be tested by what this technology has to offer. Without an appropriate legal framework, we run the risk of repeating the same mistakes that have arisen in relation to online copyright and file sharing, which are only now being addressed.

Although the original data files created for the design of a product are protectable by copyright law, a far bigger problem is the treatment of ‘rival’ data files for objects very similar to an original protected product. This is due to the fact that the scope of protection for the same work may vary in different countries. Fundamental questions may also emerge about the nature of trademarks. It will be hard to say that a trademark is an indication of who manufactured a product.

But the legal challenges run beyond the immediate IP issues, especially as dangerous objects can now be made using these technologies. There is widespread controversy around the use of 3D Printing Technology t0 produce gun parts and other weapons.

Impact on regulation

Many now believe we are entering into a new world of regulation. As a result, it could be important for manufacturers of additive printers to make appropriate disclaimers around the materials that should be used in the printer to help protect companies and designers from potential product liability claims.

Professional indemnity cover is another area of insurance that could be affected. Product designers producing computer-aided design (CAD) files for an additive manufacturing process may face exposure if one of their designs could be shown to have caused the creation of a defective product.

If that product was to result in damage to property or personal injury due to a design fault, the door may be open for third-party claims (which would fall within the ambit of professional indemnity insurance).

We also need to think about how this technology affects investment and finance. This method of manufacturing could lead to less machinery, smaller premises and fewer physical assets with which to provide security to investors – therefore affecting both the way companies are structured and the way money is lent to these businesses.

Imagine if it really took off, in terms of valuation of assets – would IP need to be valued in terms of potential and categorised as a different type of asset? The reality is that stock might change from completed products to amounts of powder ready to be turned into products and, therefore, the margin between stocks and raw materials will become blurred.

A sea change

In short, big change is on the way. It might not be as rapid as some are predicting. But as the technology becomes more economically viable and versatile, then the automotive, aviation, white goods and, in time, the pharmaceutical and health sectors will be changed irrevocably.

Developments in additive manufacturing are quietly changing the way manufacturers do things, which will ultimately alter everything from the supply chains to the way businesses are created, valued and financed. Lawyers will have to move fast to keep pace with this profound shift.

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