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The 'gold rush' for 3-D printing patents

3-D printer creates a sculpture of a woman at the DMY International Design Festival at the former Tempelhof Airport Hangar on June 5, 2013 in Berlin, Germany.
Timur Emek | Getty Images
3-D printer creates a sculpture of a woman at the DMY International Design Festival at the former Tempelhof Airport Hangar on June 5, 2013 in Berlin, Germany.

The technology behind 3-D printing, which seems limited only by our imagination, could very well upend patent and intellectual property law. Goldman Sachs recently cited 3-D printing as one of eight trends poised to disrupt industries.

From utilitarian processes to the final appearance of designed objects ranging from jewelry to spare machine parts, get ready for a patent land grab of 3-D intellectual property. Industrial manufacturers are making shapes from fused bits of plastic and metal powder; shapes that previously weren't possible. They're looking up from their work on the shop floor and wondering, "Do I need a patent?"

"The last time I saw this kind of gold rush for patents was during the dot-com boom" of the late 1990s, said Peter Canelias, a patent attorney based in New York.

The 3-D technology has kept the Patent and Trademark Office busy, too. During the last decade, it has received more than 6,800 patent applications related to 3-D printing (also known as additive manufacturing). Since 2007, about 680 patents a year have been filed—39.6 percent more than 2002, when 487 patents were filed. Since 2003, the office has granted 3,500 patents related to 3-D printing.

But new technology of course brings questions and risks.

A unique phenomenon of 3-D printing is the "perceived right of public access to this technology," said Terry Wohlers, co-author of a recent report from consulting firm Wohlers Associates. Some groups advocate that 3-D programs and software should be "open source" and available to all users for the sake of innovation.

As prices fall and the technology spreads, it doesn't take a rocket scientist to imagine the speed at which counterfeit knockoffs can be printed.

"Additive manufacturing technology permits production of extraordinarily accurate duplicates of objects that are the subject of IP protections," said Teresa Rea, acting director of the Patent and Trademark Office, which is part of the Commerce Department.

From a smartphone cover to a replacement screw for a broken household item, just borrow a design you like from the Internet and print it yourself.

"Additive manufacturing technology has the potential to rewrite the rules for how we think about product liability," the Wohlers report said.

(Read more: 10 ways 3-D printing will blow your mind)

A wrench made with a 3-D printer
Heesun Wee | CNBC
A wrench made with a 3-D printer

Temptation to print knockoffs

"While the potential for legitimate uses of this technology is breathtaking, such as the production of custom prosthetic limbs at a fraction of the cost of standard manufacturing, additive manufacturing also presents a number of potential challenges," Rea said at a January meeting on additive manufacturing hosted by the Patent and Trademark Office.

(Read more: How technology is reinventing the prosthesis)

Its growing affordability has made the technology accessible to smaller businesses, artists and consumers. Several retailers have unveiled sections dedicated to 3-D printing, including Amazon, Staples and, most recently, UPS.

"The entry barrier for infringers is modest, especially as technology improves and prices fall," Rea said. "As a result, we should anticipate that this will be a growing challenge for right holders and law enforcement."

Chester F. Carlson, inventor of xerographic printing, in October 1948.
AP
Chester F. Carlson, inventor of xerographic printing, in October 1948.

Innovation: From mass production to customization

Growing pains with a new technology is nothing new. The debut of printed copies a few decades ago sparked cries of the death of publishing and books. American inventor Chester Carlson made his first xerographic image—a precursor to the modern photocopy—in Queens, New York, in 1938.

And if the photocopy and other innovations such as the Ford Model T showcased mass production, 3-D printing is about mass customization at reduced costs. You can create a toothbrush holder, tie, surgical instrumentall to your exact liking.

Such customization also appeals to big business. Boeing, for example, 3-D prints 300 distinct airplane parts at a cost savings of 25 percent to 50 percent per part, according to an Aug. 7 Goldman Sachs note.

Rising role of the consumer

But what sets 3-D printing apart from past innovations is the part the consumer plays.

Traditional production and manufacturing have a linear chain of events: an identifiable product designer, manufacturer, distributor and retailer. In additive manufacturing, that chain of events can get capsized.

Take a hypothetical Web-based start-up that sells a digital design for an object to a person or small company. That party, in turn, tweaks that original design before printing the final product.

"Additive manufacturing upends this system by allowing consumers to get involved in the design process," Wohlers said.

And with so many people tweaking and borrowing ideas, can intellectual property related to additive manufacturing even be enforced? Experts say patent history may offer some clues. As previous patent battles related to the Internet and pharmaceutical drugs have shown, big companies shell out big bucks to protect valuable patents.

"There's always going to be some infringement below the radar," New York attorney Canelias said. "But to get to commercial scale, patents would be enforced."

(Read more: 3-D printing set to be this generation's 'moon shot' moment)

Billions of 3-D bucks at stake

Additive manufacturing has been around for roughly a decade, quickly outgrowing its roots as a prototype platform and plaything for hobbyists and tech geeks. The global market reached $2.2 billion last year—up 28.6 percent from 2011, according to Wohlers estimates.

Those impressive numbers are dwarfed by the broader printing market, however.

Xerox, for instance, has annual revenue of about $23 billion, mostly from its services business that includes document management and imaging technology. The company also has been supplying the 3-D printing industry with printing heads for the past decade.

Kevin Lewis, head of Xerox's 3-D initiatives, said, "I just think the [additive manufacturing] market will be small [for Xerox]."

But that doesn't mean industry leaders aren't taking notice of 3-D printing's possibilities. Prototyping has given way to advanced printing of fully functioning parts. The technology is also stretching into printed electronic parts. The idea is to fuse microelectronics with mechanical components. These two trends have "gotten our antenna up," said Xerox's Lewis.

Amid so much growth potential, it's unclear how insurers will underwrite the liability for open-sourced digital designs, which could be altered and customized. According to Wohlers, "These novel questions will eventually be answered by the manufacturing and insurance industries, and ultimately, by the courts."

By CNBC's Heesun Wee. Follow her on Twitter @heesunwee

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