When the term blockchain is thrown around, most people think about Bitcoin, Ethereum, and other cryptocurrencies that often populate headlines. While blockchain technology gained popularity and recognition in the area of cryptocurrencies and financial transactions, at its core, the technology has applications far beyond this narrow subset.
What is Blockchain Technology?
Blockchain is a decentralized ledger that is spread across a peer-to-peer network and relies on consensus of the ledger (list of transactions) among each computer on the network or node. Essentially, it is a large public data base that confirms individual transactions by seeking approval by all the members of the network rather than a central authority. Blockchain is simply the most common implementation of this decentralized ledger technology. In blockchain, each block in the chain or ledger contains specific transactions that are implemented into the chain. Each block contains a cryptographic key that serves as an ID and also links to the block before it, thereby creating the chain. This chain effect creates the security because in order to change one block, all blocks after it must be changed, requiring a massive computing effort that grows the farther down the chain a block is.
One particular field where blockchain technology could potentially lead to changes is the field of intellectual property. Intellectual property includes patents, trademarks, and copyrights which all use a central registration system that relies heavily on dates of registration and application. In this way, it is very similar to the electronic payment system that led to the development of cryptocurrencies. Due to this similarity, there is speculation that incorporating blockchain in intellectual property systems could lead to benefits similar to what is seen in the cryptocurrency space. However, there are some key differences that may make it difficult to implement a universal system like this.
Potential Benefits
If a universal decentralized ledger for intellectual property rights could be created, the benefits would likely be great. Most importantly, this would create a ledger that incorporates rights without regard to geographic boundaries. One of the most difficult aspects of this area of the law is that acquiring broad coverage requires filing in multiple countries and following the specific procedures and nuisances of each. Even just searching and transacting for these rights requires accessing each individual country’s system. Additionally, a blockchain system would allow detailed tracking and logging of specific dates publicly without disclosing specific content. Finally, if approval could be achieved on a decentralized consensus basis, huge administrative costs would be eliminated.
Hurdles
A major obstacle to this type of system is that there are no universal standards for intellectual property rights. Although steps have been taken to make the different systems interact more fluidly, the laws and procedures vary from country to country. This makes it impossible to implement a ledger that incorporates rights across many countries. Additionally, there is not a clear way to validate transactions. This is one big difference from cryptocurrency because the process is much more complicated than just checking that there are sufficient funds available that have not been previously spent. Specifically, with patent law, the application process typically involves several interactions with the Patent and Trademark Office and revisions to the submitted application. This hurdle is smaller for trademarks and copyrights since there is less agency involvement and more reliance on public opposition. Regardless, the current system was created in an era without the great digital technologies available today and would need to be revisited to facilitate such changes.
What is Happening Currently?
While these challenges mean that a universal decentralized ledger on the blockchain is not likely in the near future, there are still other ways to utilize blockchain technology in more targeted ways. There are several companies looking to improve current intellectual property systems by adding blockchain features rather than by disrupting the entire system. These implementations often focus on copyrights and trademarks since these involve simpler registration processes—but smaller aspects of the patent market, such as licensing, are also being addressed.
For example, Binded takes copyright registrations and logs them on the blockchain. This allows them to create a permanent, immutable, and readily available record of the registration. Bernstein is a company offering a blockchain solution for registering documents tied to intellectual property. Registering records on the blockchain tie these records to an immutable date without making the information public—as it is locally encrypted. IPwe is another company creating a blockchain platform to allow for more efficient licensing practices for patents. The platform allows users to offer licenses for patents that they have registered on their blockchain and allows buyers and sellers to connect and transact with smart contracts on the platform.
These companies show that although implementing the entire intellectual property system on the blockchain may not be feasible at this time—both from a technical and regulatory perspective—pieces of these systems can be improved incrementally by blockchain implementations.