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Augmented reality (AR) and virtual reality are perhaps the best known of the “Immersive Technologies” promising to revolutionise the world of retail. Big name brands are already investing in and implementing new technologies aimed at creating unique customer experiences, and although some of the associated legal issues are becoming clearer, much remains to be worked out, writes Patrick Wheeler, partner and head of intellectual property and data protection, and Zoe Deckker, trainee solicitor at Collyer Bristow.

Patrick Wheeler.

AR technology takes the physical environment and adds a digital layer to it, integrating the AR user’s real-world surroundings with digital elements such as text, objects, and audio etc., offering a plethora of possibilities to retailers.

Some have invested in in-store AR technologies; these require the customer to be in the store, where their experience is enhanced by AR handheld devices or AR enhanced mirrors, which allow users to virtually interact with products and potentially personalise them. Out-of-store AR allows consumers to virtually test out different products without visiting the store at all, from suiting glasses frames to their face, to the placement of furniture in their homes.

This article will not examine the intellectual property (IP) rights in AR technology itself. Instead, it will look at the issues that IP rights owners and retailers should be aware of in the use of AR in-store and online. The most significant areas at present are IP infringement and Data Protection.

IP Rights issues

Retailers selling brands from multiple sources need to consider trade mark, design and copyright issues. A trade mark (which can be registered or unregistered) is an exclusive indication of the origin of a product or service. It is usually a word and/or a logo. Product designers and manufacturers will usually own a range of trade marks covering their different goods. Copyright and design rights (which again can be registered or unregistered) protect the design and appearance of products, although the rules about exactly what protects what are highly complex.

It is important for retailers not to suggest that a product originating from one manufacturer or supplier is the same as or has a business connection with a brand owned by another entity or use AR to change the appearance of a product. A retailer who wishes to use AR in-store to promote different products, including competing products from different manufacturers, should give careful thought to the way in which AR will present or enhance the product experience. Discussing their proposals with IP rights owners could help to ensure that the AR experience does not result in a misrepresentation about specific products.

A big incentive for retailers to adopt AR technology is the potential to grow product and brand awareness through social media content. This should lead to greater engagement with, and promote loyalty from, the customer base. However, if the use of AR by retailers is not subject to any control by IP rights owners, there may be a concern that such use may conflict with brand guidelines and contravene brand values. Rights owners may therefore want to consider granting a licence to retailers to promote their brands using AR. A licence can contain provisions which specify what a retailer can and cannot do and provide sanctions if those rules are broken.

The world of NFTs (non-fungible tokens) has started to provide examples of the tensions that can arise in the protection of IP rights. Both Nike and Hermes have brought IP infringement claims in the US to protect their brands against unauthorised uses of their trade marks and copyright in the metaverse.

Zoe Deckker.

Data protection considerations

This is an especially important area, as a key benefit of using AR in retail is the ability of immersive technology to collect large quantities of customer data and process it in order to track customer preferences.

AR has the potential to harvest not only standard personal data, but also more sensitive “special category” data such as biometric data, and data relating to health, racial, religious, and sexual orientation, which require very careful consideration. AR headsets, for example, can track facial behaviour and eye movements. There are very strict rules governing the collection, storage, use and transfer of personal data in general and special category data in particular.

Retailers should think broadly about all of the possible implications and also consider how the use of AR might evolve. Information Commissioner’s Office (ICO) guidance is regularly reviewed, and data protection legislation is also changing right now. A failure to keep up to date with developments could well catch out both retailers and IP rights owners.

One of the key data processing principles is that it should be proportionate, and so retailers must think about what they need to collect and avoid collecting any personal data that is not strictly necessary. They should also give careful thought to not keeping the data for any longer than they really need it.

Biometric technologies are an area of key concern for the ICO, which published a study in October 2022 with accompanying guidance on how to deal with the challenges. Retailers should adopt a transparent approach to data collection, with a focus on education of employees and consumers, targeted advice and design features and prompts.

The ICO has also highlighted the issue of covert surveillance as affecting both retailers and users. AR headsets (for example) have the potential to capture third parties, which may give rise to objections from other customers visiting a store where such headsets are in use.

The ICO recommends location-based notifications, prompting users to minimise or cease recording in particular situations, or embedding redaction technology that will automatically blur or mask parts of the footage.

Conclusion

AR offers great opportunities to retailers and additional benefits to their customers and can therefore be seen as a very attractive option. However, as with all new technologies, it is important to consider the impact on existing rights, both IP rights and the personal data rights of individuals. The design of AR interaction should give careful thought to preserving the integrity of these rights and allow flexibility to adapt and change if the use threatens to conflict with those rights. It will be an exciting, but also challenging time for all concerned with the roll out of AR.

 

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