Source3 Takes on IP in the Physical World & Digital World
Michael Molitch-Hou posted on September 14, 2016 |
Source3 uses data mapping and image recognition to introduce licensing opportunities for brands, con...

You know how your blog received a Digital Millennium Copyright Act (DMCA) takedown notice for that meme you made featuring that scene from Independence Day where Will Smith punches the alien in the face? Well, the days of DMCA takedowns may be coming to an end. Instead, you might even get paid for your memes.

Ok, well we shouldn't go that far. Your memes are probably worthless, but derivative works may no longer be the thorns in the sides of intellectual property (IP) holders that they once were. A much-needed change is taking place in the world of IP, and it begins with 3D printing and a startup called Source3.

In an interview with, Source3 CEO Patrick Sullivan walked us through the company’s approach to IP. The discussion went far beyond the world of 3D printing and extended to the very understanding of IP as we know it.

The Birth of a New IP Model

Before launching Source3, Sullivan started a company called RightsFlow in 2007, which brought IP mapping, data management and monetization technology to the world of online media, particularly music. The firm was ultimately purchased by Google in 2011, with RightsFlow playing a key role in the music licensing services and royalty payment solutions associated with YouTube.

With Content ID, YouTube was able to create a fingerprint for works under copyright, typically sound recordings and video content. Once a fingerprint for a video or sound recording was stored in the Content ID database, Google could match all video uploads - future and past - against the fingerprint database in order to identify copyright infringing videos, such as, say, a home movie featuring Madonna's “Borderline.”

RightsFlow's data-mapping technology was able to take this one step further to identify the IP embedded in a sound recording, ie the underlying musical composition (melody, lyrics, who wrote the song, who controls the copyright, etc). If YouTube did not already have a license with the copyright owner for that content, the next step would be monetization of user-generated content. For instance, RightsFlow would make it possible to address the writer of “Borderline,” Reggie Lucas, and the music publishers, and then enable the video to be monetized by ad revenue (and later on, subscription).

In turn, YouTube users in certain cases have the opportunity to share with the copyright holders in royalties produced by the video, essentially bringing derivative works under the umbrella of the copyright system, rather than leaving them open to lawsuits. Imagine how different his life would be if Vanilla Ice made royalties instead of owing royalties for sampling Queen and David Bowie.

Managing the complex web of countless YouTube users and copyright holders is no easy task, and technology and team from RightsFlow has made it possible to automate and simplify that process. Before the acquisition, Sullivan estimates that over 20,000 companies, including Google and Clear Channel, used RightsFlow technology to license IP at a massive scale before the Google acquisition.

3D Printing as Digital Manufacturing

The RightsFlow team and technology are still operating at Google, but Sullivan and his co-founders have expanded beyond music and video to move on to managing the IP of physical goods. Sullivan is quick to point out that, while he may be moving into the material world, the method of creation for most music and video assets and physical assets in the 21st century is still often digital.

“Digital manufacturing occurs when people create and consume products on demand. I think of ‘digital manufacturing’ as taking place when there’s no inventory requirement in order to sell the actual goods or products,” Sullivan said.

Source3, then, is aiming to take YouTube's model and apply it to all digital manufacturing, which could be in the form of a t-shirt on an Etsy-style marketplace, a 3D animation, a 3D-printed object or a digital file that might be used for some form of short-run manufacturing. “Source3 replicates what YouTube did for IP and what RightsFlow did for YouTube,” Sullivan explained.

In other words, Source3 is managing and mapping IP for licenseable digital content so that it can be produced on-demand for customers. With data- and image-matching technology, the company is able to identify IP being used in products and media on partner marketplaces in order to authorize IP usage and monetize content.

The kids of South Park for the first time in 3D-printed form. (Image courtesy of Source3.)
The kids of South Park for the first time in 3D-printed form. (Image courtesy of Source3.)

Right now, the company has partnered with leading brands and marketplaces to launch various products associated with popular brand assets. For instance, Source3 has partnered with South Park to make 3D-printable versions of Stan, Kyle, Cartman and Kenny figurines available to fans through 3D printing marketplace Shapeways and Amazon, which launched with a contest featuring autographed sets by the show’s creators, Trey Parker and Matt Stone.

3D-printed Grumpy Cat designed by Manuel Poehlau. (Image courtesy of Volim Photo.)
3D-printed Grumpy Cat designed by Manuel Poehlau. (Image courtesy of Volim Photo.)

However, the next step is to enable user-generated derivatives of famous brands in which both the copyright and trademark holders and community artists are able to earn royalties from the products. 3D printing designer Manuel Poehlau, for example, would have the opportunity to share royalties for his 3D-printed Grumpy Cat–inspired models. (Yes, Grumpy Cat is IP-protected).

Sullivan says that Source3 is not quite at that stage yet, but that this is the direction his company would like to head in. “The idea is to bring licensed content that the design community can access from a licensing perspective to then do derivative creation,” Sullivan explained. “This is a game-changing concept, and as such is slow moving, but the ultimate goal is to create the ability like YouTube does for creators to access the intellectual property and then create new derivatives to create a valuable consumer purchasing experience.”

An existing example of this model is one that Shapeways actually launched in 2014 when the marketplace partnered with Hasbro to allow My Little Pony superfans to design their own 3D-printed figurines, demonstrating that both brands and fans can benefit from fan art.

Industrial Fan Art?

This model isn’t limited to 3D-printed figurines or even 3D-printed objects at all. Recently, Source3 joined the Digital Manufacturing and Design Innovation Institute, a member of the U.S. National Network for Manufacturing Innovation, as a Tier 3 industry partner.

DMDII, like its 3D printing–focused sister organization America Makes, aims to drive new manufacturing technologies through public/private–funded research. Source3 hopes to offer its IP mapping technology to the extensive industrial members of the organization, which include such giants as GE and Lockheed Martin, as well as academic, public and nonprofit leaders like Northwestern University, the Association for Manufacturing Technology and the Department of Defense.

Source3's membership is still new, but Sullivan believes that the firm's image recognition and databasing technology would be just as valuable to industrial companies as they would be to consumer brands. “There are organizations that collaborate on IP for research and development, and that research and development results in commercial derivative uses,” Sullivan said. “In order to enable that content or that IP in an industrial way to be utilized, there have to be licensing infrastructures. What we’re trying to do with DMDII is to bring in an ability for them to enable content licensing and payment around the uses for industrial.”

He added, “There is a world that exists with America Makes and DMDII to enable people to access their IP for research and development purposes and then commercialize it. I think that it's very similar to derivative use and user-generated content. In this case, the user becomes another industrial company, and the beneficiary becomes the original IP holder. Why not replicate a very similar YouTube-type licensing mechanism?”

Obstacles to Change

As you might learn from any millennial who has just simultaneously downloaded the entire series of The Wire and Madonna’s complete discography, the copyright system just hasn't evolved with the rest of our culture. Brands and legislators may not be as open to these changes, however.

For brands, according to Sullivan, the loss of control over IP assets is a frightening prospect. Sullivan explained, “When creating business agreements with brands today, you have to agree and adhere to their terms of quality, which can be very limiting in creating a successful product. The biggest challenge for brands is very analogous to the challenges they have with user-generated content on YouTube, which is how to control the quality of the use and the distribution of IP.”

Sullivan's answer? Get over it and change with the times. “It’s unstoppable,” he said. “That's one of the principal laws of user-generated content: There's no way to stop people from creating products with intellectual property in it, whether it’s on your phone or your computer or you're distributing it on social media. It's an unstoppable proposition that brands have to get over so that they can rethink IP, just as YouTube was able to create an environment around engagement with its audiences, engagement with consumers, engagement with creators and ultimately engagement with brands to create monetization around their IP.”

For legislators, the issue is a “sit-back-and-wait-and-see attitude,” said Sullivan. “There are initiatives dedicated to liability around trademark takedowns in which DMCA can protect marketplaces as it relates to copyright takedown, but there’s no effective ability for a marketplace or online IP to be protected from trademark compliance or trademark takedown,” he pointed out.

Source3 has been to Washington, D.C., twice this year already, and they will be heading back this week to speak at the CTA Innovation House on the changes taking place in IP alongside such companies as Autodesk, HP and Local Motors. He believes that the issue of how to deal with IP in relation to physical goods, whether they're 3D printed or sold on Etsy, will be eventually addressed. “But it won't come from Washington,” he said. “I think it will be addressed through litigation.”

Right now, the IP system involving physical goods is as fragmented and archaic as the music industry once was, but Source3 plans to change that. Sullivan concluded, “It's an uphill battle, but we don’t think anyone in the world is trying to solve that problem at scale. We want to become the world's first IP licensing platform and disrupt the consumer and industrial way of licensing that exists today.”

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