During the past few years, a new technology – blockchain – has developed, which is expected to replace many current digital platforms. Since digital distribution is at the core of almost every service today, the technology is also expected to deeply affect our society, and therefore it has been called the biggest revolution since the internet. The IP-industry will also be affected and there will be a need to address many issues relating to the adoption of blockchain technology.
The blockchain technology concept was first presented by Satoshi Nakamoto in 2008 and was used by Nakamoto to create the digital currency Bitcoin. Satoshi Nakamoto is an alias for the still unknown inventor, who claims that anonymity is necessary in order to protect both himself and the technology from authorities and industry-protecting organizations once the technology really starts to affect financial systems and other areas of society.
Today, Bitcoin is thriving, with a current market cap of over 70 billion USD and its value has risen about 600 percent on a year-over-year-basis, so that the price of one Bitcoin (BTC) today is around 4000 USD. Additional blockchain-based so called cryptocurrencies are being constantly issued, such as Litecoin, Dash and Zcash, of which many have reached an impressive market cap. These currencies are also gaining acceptance as payment by serious market actors such as Amazon and Hotels.com.
The blockchain technology, however, supports much more than cryptocurrencies. With the launch of the Ethereum platform and the related token Ether (ETH) in 2015, it is possible to build blockchain-based applications for use within practically any sector. These are used to record any transaction of value through smart contracts, whether it is traditional (”fiat”) money, commodities such as gold or oil, energy, real estate contracts – or for that matter – intellectual property rights.
An advantage of using the blockchain for transactions is that it allows for instant, decentralized and secure transactions, for which there is no need for intermediaries such as brokers, agents, etc. Data stored on the blockchain is generally considered incorruptible. The innovation is ingenious and desirable, making the development seemingly unstoppable, in a similar way to non-fossil fuel-driven cars becoming the future. Numerous blockchain-based applications have already been adopted or are currently under development. Most of these are funded through so-called ICOs (Initial Coin Offerings) at which value tokens are issued. The tokens give the investor a stake in the company behind the application, or the opportunity to trade the token on cryptocurrency exchanges. In this way, considerable amounts have been raised. The blockchain start-up Tezos, for example, raised over 230 million USD in a few days. The amount of capital being pumped into this new industry also speaks for the importance and continued development and adoption of the technology.
At this still quite early stage, the upcoming paradigm shift has been recognized foremost by financial institutions. Some of these have therefore started to enter into partnerships with blockchain companies, engaged in own development and have even started to file patent applications for blockchain technology innovations. The largest Swedish banks for example, have joined the global cooperation Distributed Ledger Group (DLG), a cooperation dedicated to develop blockchain applications for the financial industry.
For the IP industry as we know it, blockchain technology is expected to open up a range of possibilities as well as challenges. Some of these are already underway, while others may take considerable time due to e.g. regulatory constraints and the need for wider recognition within the IP community. Some examples of such are:
Regular creation of IP – The number of patent and trademark applications relating to blockchain technology is likely to increase dramatically. Currently, when searching the EPO’s database Espacenet, the search returns 165 patent filings that mention the word ”blockchain” and 69 that mention ”bitcoin”. A few years ahead, these breakthrough patents may well prove very valuable. The millions of lines of code written can also constitute highly valuable IP, protected by copyright, database protection or kept confidential.
Blockchain protection – Blockchains use various time-stamping schemes which opens up for more reliable recordal of intellectual property assets, possibly resulting in fewer disputes, facilitating collection of royalties etc. Several blockchain start-ups are currently working on IP-related blockchain services. One example is Po.et (Proof of Existence 2.0), which is a shared, open, universal ledger designed to record metadata and ownership information for digital creative assets.
Blockchain authentification – For detection of counterfeit or fake goods. Several applications have already been built or are underway that aim to track and identify products such as diamonds or fashion items and make duplication impossible, such as Blockverify, Everledger and VeChain. The latter is a chain management solution which can be used to track any kind of item.
Smart IP contracts – Smart blockchain-proofed contracts and recordals may spell the end of backdated documents with e.g. invention dates and assignment dates. They will add reliability to the IP system to the benefit of IP owners and stakeholders. Agrello, based in Estonia, has received considerable hype lately. The company is developing an application for legally binding smart contracts, which are produced with the assistance of artificial intelligence and reflected in a public blockchain.
IP registry services – When the IP registries replace their current centralized systems with blockchain technology, the records will become more trustworthy and also able to be updated and shared immediately. Useful applications can then also be built on top of these records without having to await or physically verify the data.
In summary, blockchain technology is most certainly here to stay and its possibilities seem endless. It is therefore a good time to start exploring what potential opportunities or risks that blockchain may create for your business.