IP is Real for Virtual Reality and Augmented Reality Start-ups

Virtual reality and augmented reality are on the verge of becoming the next technological breakthrough. Facebook’s purchase of Oculus for $2 billion in March 2014 epitomised the seriousness with which major players view VR in terms of its potential. The immediate and dramatic induction of Pokémon Go into popular culture, a game which incorporates significant AR features, is also a testament to the potential in AR.  VR and AR are rapidly transitioning from being early stage technologies with applications limited primarily to the gaming sphere into polished, albeit expensive, products with increasingly broad applications. However, there are still major technological hurdles which must be overcome before VR and AR become more widely adopted.

As has already been alluded to above, possibly the biggest issue is the current cost of VR and AR equipment. At the time of writing, the HTC Vive (the most advanced domestically available VR kit) costs in the region of £700. The cost of the equipment does not even include the price of a computer with the required processing power. The Microsoft HoloLens (the most advanced domestically available AR kit) costs even more at around £2,000. The cost of VR and AR is viewed by many as a significant barrier to entry into markets beyond ‘serious’ gaming. Another technological hurdle is reported side effects, such as nausea, which cause user discomfort. These and other hurdles will require solving before VR and AR are likely to be more widely adopted.

All this means that there is great value in technological advancements which overcome these hurdles and which can help take VR and AR toward being universally adopted, making VR and AR an ideal field for start-ups. Investors are certainly taking note. Goldman Sachs published a report earlier this year detailing the potential in VR and AR as well as some of the substantial investments which have been made by VCs and multinationals in VR and AR start-ups in the last few years. Companies which find unique and clever ways of overcoming the technological difficulties associated with VR and AR are likely to be highly sought after by investors. However, this alone does not guarantee investment. Investors need confirmation of a company’s value before they will invest in it.

Most of the value in tech based start-ups is attributed to their IP — be it knowhow, copyright, trade marks, designs or patents. Indeed, many start-ups have little or no other assets but their IP.  Investors will want to know that a start-up has an IP strategy in place which matches the goals of their business and, importantly, which enables them to prevent others from copying their innovations, providing them with market exclusivity or at least a market advantage. As a firm, GJE has a great deal of experience advising start-ups on IP strategy in the computer technology space. We also conduct due-diligence exercises on behalf of investors. Contact one of our attorneys in our Computer Technology group if you wish to explore this type of assistance further.

For more information please contact Gregory at gregory.stclairjones@gje.com.