What is blockchain?
Blockchain technology is the technology behind the cryptocurrency Bitcoin and the Ethereum platform, and in its basic form is an open ledger of information that can be used to record and track transactions and which is exchanged and
verified on peer-to-peer networks. From an
information governance perspective, the real
innovation of blockchain technology is that it
ensures the integrity of the ledger by crowdsourcing
oversight and removes the need for a
central authority, i.e., transactions are verified
and validated by the multiple computers which
host the blockchain. For this reason it is seen
as “near unhackable”, as to change any of the
information, a cyber attack would have to attack
all copies of the ledger simultaneously.
Attractive beyond the world of Fintech What makes blockchain technology so attractive not just to financial technology companies but for a large variety of industries? Different types of data can be added to a blockchain, from cryptocurrency, transaction information and contracts, to data files, photos, videos and design documents, and so on. Blockchain has also been on the radar of various governmental agencies, including the European Union Intellectual Property Office (EUIPO). We set out below a few ideas of how blockchain technology could be utilized in the field of IP. Possible applications in the world of IP Management of intellectual property rights: The utilization of blockchain technology for the management of intellectual property rights is vast and could conceivably cover the registration of IP rights, evidence of creator/inventor/author, and evidence of use. The idea of “smart IP Registries”, with the ability to have a ledger showing when the mark was registered, first used, licensed, etc. may appear attractive and resourceful to some brand owners. Not only would this be an immutable record, but it would also resolve the practicalities of collating, storing and providing such evidence. As well as registered IP rights, this is particularly relevant to non-registered IP rights such as copyright and/or unregistered designs where there is often no register of rights and disputes frequently revolve around ownership, creation and use. The ability to have a blockchain database for unregistered IP rights, such as copyright-protected works, is already being developed by several blockchain startups and could be an interesting and manageable solution for copyright protection as well as digital rights management. Enforcement of intellectual property rights: A ledger showing who owns what and who is an authorized licensee may enable consumers to validate a genuine product from a fake. Equally, from the brand owners perspective, the brand owner has a potential reference point for their rights, use within the market and extent of use. This could be particularly helpful in those jurisdictions where proof of first or genuine use is required or where the extent of use is crucial, such as in disputes or other proceedings involving recognition of well known marks, or defending a non-use revocation action. What is blockchain? Blockchain technology is the technology behind the cryptocurrency Bitcoin and the Ethereum platform, and in its basic form is an open ledger of information that can be used to record and track transactions and which is exchanged and verified on peer-to-peer networks. From an information governance perspective, the real innovation of blockchain technology is that it ensures the integrity of the ledger by crowdsourcing oversight and removes the need for a central authority, i.e., transactions are verified and validated by the multiple computers which host the blockchain. For this reason it is seen as “near unhackable”, as to change any of the information, a cyber attack would have to attack all copies of the ledger simultaneously. BAKER MCKENZIE 5 Record of provenance and authenticity: Blockchain ledgers holding IP rights information may enable consumers to verify the authenticity of a product and provide confidence and reassurance for purchasers or insurers. Blockchain technology could be used to record and track where a product was made and by whom, which could be particularly helpful for bespoke or limited edition pieces, or validating any fair trade/organic/provenance claim attached to an item. Blockchain technology could also show the chain of title evidencing who owned the product – validating any celebrity/historical auction item. Distribution of goods: The ability to track goods on an immutable blockchain could help brand owners enforce their contractual arrangements regarding distribution, spot leaks in their distribution system as well as assist in identifying parallel imports or gray market activity. Tracking distribution of products can also be used to validate warranties. In the case of limited items such as event/ concert ticket sales this could also be a solution to assist in avoiding middlemen and ticket touts. Smart contracts: Often cited in the context of “blockchain” is the concept of “smart contracts”. As some blockchain solutions can so hold, execute and monitor contractual codes, such “smart contract performance” could be of interest to digital rights management and other IP transactions: smart contracts could be used to establish and enforce IP agreements, such as licenses, and allow the transmission of payments in real-time to IP owners; “smart information” about intellectual rights of protected content (e.g. a song) could be encoded in digital form (e.g. in a music file). Outlook As blockchain technology is becoming more and more mainstream, “closed” blockchains, which may only be used by vetted users are developed and shared ledgers are introduced whereby information on the blockchain is split and only shared on a need to know basis. While originally developed for the financial industry, these types of technology are also attractive to IP owners. Various governmental agencies and IP registries, such as the EUIPO, are actively looking into the capabilities of blockchain: the EU Commission has plans for a blockchain observatory and the US Congress has recently created a Congressional Blockchain Caucus. It is therefore only a question of time before blockchain will permeate IP law and practice. To learn more about this, email firstname.lastname@example.org (London). For more information on the applicability of blockchain technology for IP please see the article first published in Managing IP, March 2017 edition: Blockchain, IP and the fashion industry, written by Ruth Burstall and Birgit Clark, Baker McKenzie, London.