IP Issues for Retail Businesses Advertising in Augmented Reality

With the advent of augmented reality systems, unique opportunities exist for retail businesses. The ability to provide dynamic and layered advertisements can add a new dimension and effectiveness to attracting consumers to a brick-and-mortar retail location. However, a number of intellectual property pitfalls appear to be awaiting those retailers that utilize the emerging augmented reality platform to reach and attract customers. For instance, a retailer may find that they do not own the exclusive rights to display augmented reality content to customers despite the customers being physically present in their own store.

The Possibilities

Through the integration of digital content with physical locations, augmented reality systems have introduced a new world to retailers with in-person stores and inventory. Unlike traditional billboards that are in known locations with relatively static content, augmented reality can provide pictures, video, and graphics assigned to display on a user’s personal device upon reaching a physical location or recognizing a product. Indeed, displaying digital content in augmented reality systems provides opportunities to utilize previously unintelligent physical space, such as walls, ceilings, floors, or doors, to convey information, advertisements, and signage that enhances customer satisfaction and potentially increases revenues.

The assignment of digital content to appear in response to actions of a customer allows for dynamic advertising and content customized to specific locations, such as a designated geofences in and around a store. Technology of augmented reality systems can allow for analysis of user actions to provide tailored advertisements and information about products available for sale, which can increase sales and customer satisfaction without burdening the on-site retail workforce. Using augmented reality to aid product checkouts, customer returns, and product questions can further optimize on-site employee’s efficiency to reduce the number of on-site employees while providing greater effectiveness of retail overhead expenditures.

Potential Pitfalls

With augmented reality, the question is not can a retail business digitally advertise, but where is advertising appropriate and what digital content is legal to advertise to a consumer? The generation and use of augmented reality content is not regulated and has yet to establish legal precedent that serves as guidance to answer who can advertise what content, and where. As such, use of augmented reality poses risks to a retailer associated with intellectual property infringement, poaching advertisements, and intellectual property theft. That is, a retailer can be faced with intellectual property issues corresponding with who owns the right to display digital content within a retail location regardless of whether the retailer is utilizing augmented reality to communicate to consumers.

Anytime a retailer uses, displays, or induces a customer to capture an image of physical content, logos, brand names, or slogans that do not belong to the retailer, copyright or trademark infringement can be possible. The safest plan is to use only original content for augmented reality activation and the augmented reality content. While exceptions, like fair use and derivative works, can exclude a retailer from copyright and trademark infringement, the use of content potentially owned by others can pose an unnecessary liability for a retailer.

While the creation and utilization of augmented reality digital content can present future trademark and copyright infringement threats, the presence of numerous issued United States patents pose current risks to retailers employing augmented reality to connect to customers. Various patents generally cover the devices, generation of augmented reality content, interaction with augmented reality content, purchasing real items through augmented reality, and dynamic content adaptations in response to sensed activity of a user. *See U.S. Patent Nos. 10,282,911; 10,943,229; 9,613,463; 10,859,834; 7,693,702.

In an example of how the existence of issued patents can cause retail shop owners heartburn, augmented reality systems that license, or own, issued U.S. patents, such as 9,390,563 or 10,127,735, can correlate adverse advertisements to physical locations within another store owner’s facility. For instance, a car dealer may find an augmented reality advertisement for a competing dealership upon a customer looking at the front door, sign, or entrance of the car dealer’s facility. As another example, a dress shop may purchase augmented reality advertisements that provide a sale, sweepstakes, or other enticements in response to a customer looking at a dress at a different retail shop. The sophisticated capabilities of patented augmented reality technology can allow for direct and dynamic advertising based on the detected facial gestures, walking routes, time within a particular store, and purchase history, which can potentially result in aggressive and robust influencing of customers without knowledge of the activity by a retail shop owner.

Risk/Reward

The currently unregulated nature of augmented reality content, generation, and display, coupled with the plethora of augmented reality patents owned by a diverse variety of entities and individuals, can pose a rather large risk/reward analysis for retail store operators. For instance, a retailer could be the victim of advertisements from competitors intended to poach customers from within their own store with one augmented reality device while providing in-store product and checkout information with a different augmented reality device. Such benefits and risks all operate under the threat of infringement from issued patents that, arguably, own the generation, assignment, or displaying of digital content as part of an augmented reality. Accordingly, a retailer may have liability for patent infringement despite utilizing augmented reality to supplement their own products or business.

It appears that augmented reality will inevitably be employed by the consuming public. The advisable response for a retailer is to play offense and defense to guard against poaching advertisements from competitors and mitigate the risk of intellectual property infringement. A business playing offense may take actions to license issued patents and trademarks associated with their type of retail sales while defensive actions may involve securing the exclusive rights to display augmented reality content within their own store. As augmented reality evolves and is more widely adopted, retailers are best served in considering the intellectual property risks along with the rewards afforded by the potential of augmented reality.

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