[caption id="attachment_138121" align="aligncenter" width="616"] Clients using 3D printing may necessitate a fresh risk assessment. (Shutterstock)[/caption] With the rise of additive manufacturing (AM), a wide range of users now have 3D printers at a keystroke, and can produce physical objects without the use of traditional manufacturing tool and die fixtures or injection molding. Inexpensive parts for everyday goods, for example, are now being produced with affordable 3D printers and then sold to consumers by individuals or small businesses. On the other end of the 3D printing spectrum, aerospace, automotive and medical device companies are innovating with machines costing upwards of $1 million. Innovation brings opportunity as well as implications that must be considered. This article provides guidance on how this emerging technology can affect an insured's Intellectual Property (IP) and Product Liability (PL). There also is a checklist of 10 questions at the end for brokers to share with clients as part of their risk assessment. These clients may include product manufacturers, 3D printer manufacturers, product retailers, service bureaus, and printers who provide printing and shipping 3D printed parts, applying cutting edge AM to create low volume, geometrically complex objects or prototypes.

Getting intellectual

Patrick Comerford is a partner at Smith Robertson LLP in Austin, Texas. "The entrance of 3D technology into the marketplace does not change, add or take away a company's IP rights," Comerford says. "What 3D printing has done is change the enforcement of those rights, because this new process has lowered the entry barrier to manufacture, so the scope, breadth and security of manufacturing are now different." Access to CAD files, for example, has dramatically changed along with the capabilities of 3D scanners. These scanners can be used to make 3D files from which AM parts can be built. Every company should know if their products, or knockoffs of their products, are in the marketplace being produced through additive manufacturing. One possibility is that their CAD files have been poached and posted on the internet. Every manufacturer should have tight security, but that isn't always the case. Cyber security can help stop thieves from stealing a company's IP, but conducting a comprehensive risk assessment that includes cyber risk is also important. Knowing which questions to ask is the first step. Aside from advertising injuries, most standard commercial general liability policies do not include coverage for claims related to IP. "By identifying and evaluating how AM impacts the insured," Comerford says, "brokers and carriers, together, can create a risk management plan that not only covers cyber risk, pursuing infringers and litigation costs if sued, but also has controls in place to help mitigate the risk before it becomes a threat."

Product liability: Innovation with implications

Liability is an issue because consumers may think a 3D-printed part is identical in quality and performance to a traditionally made part, but that is not necessarily the case. Additive manufacturing, without proper quality control, will not produce the same quality, tensile strength, porosity or size of the original product, and the printed object can vary every time. So, if the expectation of use is higher than it should be, this is where trouble will begin. For 3D-printer manufacturers that are leasing their high-end machines, there are other issues to consider. For instance:

• Do they know what the end user is making?
• How much control do they have over the build jobs?
• Do they know where and to whom the AM parts are being sold?

These machines are expensive and complex, so extensive training should be considered and possibly connectivity to monitor what and how these items are being printed. This will help avoid damage to the machine as well as mitigate claims. Aside from IP infringement, a cyber attack on a 3D printer could have an adverse impact on users of the end product, and economic impact in the form of product recalls, business interruption and lawsuits. When a traditional production line is locked in place, every part of the process has been inspected and checked in a closed system. Production simply repeats the same process as many times as required. 3D printing is different. A hacker could gain access and design in a flaw or steal an innovation that only would become apparent when the final products or stolen product is in the marketplace. As a result, the parts could either fail or simply not work as intended. As AM is still an emerging technology, brokers have the opportunity to get ahead of the curve now and collaborate with those in the insurance industry who can provide deep technical expertise, and innovation in risk management and claims resolution.

3D or not 3D: That is the question

"It's not a revolution in the sense that it's going to supplant traditional manufacturing," Comerford continued. "For now, it's a revolutionary process that could be a perfect solution a business might use for the proper problem. It is a new and unique tool in their toolkit. For the majority of products, right now, nothing is going to beat traditional manufacturing for cost, speed or durability for the majority of everyday products." That said, there are some applications for AM technology that can open up new revenue streams for certain businesses. For example, a high-end automotive company that offers customizable, decorative items for cars. Comerford asks clients to consider partnering with shipping and office supply businesses to establish virtual, authorized 3D-printing hubs that will print replacement parts for certain products. This decreases costs associated with unused inventory, accelerates the production cycle and puts the would-be infringer on notice. Instead of wasting time scouring the Internet only to end up with a cheap, inferior product, the buyer could purchase a quality-controlled part from an authorized 3D printing hub and have peace of mind that the part is approved by the manufacturer and doesn't void any warranties. He refers to this as, "a virtual, authorized dealer distribution chain."

Asking the right questions

What following is a checklist of questions for clients that may be engaged in 3D printing. Brokers and agents can use these questions when discussing 3D printing with clients and how it impacts Intellectual Property and Product Liability. Troy R. Bickerstaff ([email protected]) is vice president and Loss Control manager for Aspen Insurance. Additive manufacturing is one of his primary research areas. The article reflects the opinion of the author at the time it was written taking into account market, regulatory and other conditions which may change over time. The article does not necessarily represent Aspen's views, and Aspen does not undertake a duty to update the article. See also: Emerging technologies open a new world of opportunities — and risks