IP Review Autumn 2017

How is it being used today and what does the future hold? The first and most famous use of blockchain is the cryptocurrency Bitcoin. This is where the concept of a blockchain was first proposed in 2008 and then implemented in 2009. Since then, almost 1000 different cryptocurrencies have been launched, and whilst at present cryptocurrencies are the most widespread use of blockchain technology, its potential has been quickly realised and exploited in a wide range of other sectors. Brooklyn Microgrid, for example, is an organisation that is establishing a blockchain-based electricity microgrid. This will enable micro-generators (for example, individuals with home solar panels) to sell their excess power directly to consumers, rather than selling to the electricity grid who then sell on to the consumers. It has the potential to connect energy producers directly to consumers, thereby removing power distribution intermediaries from the transaction process entirely. In another example, Storj Labs Inc offers a blockchain-based cloud storage system. The system uses a blockchain to allow users to rent out their excess storage capacity in a way that improves security and reduces dependency on a single storage provider. Whilst most uses of blockchain have focused on recording transactional information, the possibilities for blockchain are not so limited. For example, it has been proposed that blockchain could be used to store personal identity information such as birth certificates and criminal records, secured using biometric encryption, or to enable reliable and transparent status updates to be sent from smart devices such as autonomous vehicles to insurance companies, thereby improving insurance auditing and authentication. Even though blockchain was first conceived less than 10 years ago, it has already made a significant impact on the nature of currency control and financial transactions through its use with cryptocurrencies, and promises to revolutionise a wide range of other sectors in the years to come. Intellectual Property considerations There are a number of approaches to handling intellectual property that is generated by blockchain innovations. Some blockchain based companies and development collaborations favour an open-source model, where use of technology is freely available under the terms of an open-source licence. The most notable example of this is the Ethereum platform that provides a cryptocurrency called “ether” and smart contract functionality (computer protocols that can be used to facilitate, verify or perform a contract) on an open-source basis. Another is the Hyperledger Project - an open-source collaboration that includes such high profile members as Accenture, IBM and Intel. However, open-source solutions are not always appropriate, and many companies, including some of the biggest software, hardware and banking entities, are pursuing patents to protect their investments in blockchain innovation. Indeed, there is evidence to suggest that some companies are pursuing a two-pronged approach, contributing to open-source projects and also pursuing patents to protect their investment in other areas of blockchain development. The number of patent filings in this area has been steadily increasing and looks set to continue increasing in the future. Despite the relative infancy of the technology, there are already many hundreds of published patent applications relating to blockchain technologies, and that number may be expected to rise rapidly with increased investment and development. Furthermore, despite the typical 3-6 year timescale between filing of a patent application and grant of a patent, over 100 patents have already been granted in the US alone. There are clear signs that despite the challenges that can be faced in pursuing patent protection for software, protection for blockchain technologies is an achievable goal. A number of benefits to pursuing patent protection at an early stage of technology growth are clear. For example, as we have seen from other rapidly developing sectors such as telecommunications, when companies contribute to developing standards that are widely adopted, obtaining patent protection for the underlying technology can be hugely valuable. Not only can this provide financial reward in the form of licence fees for technological contributions, but it may also help to reduce the licensing costs for standards essential patents (SEPs) held by other members of the standards body. Patents may also be useful in commercial negotiations, such as acquisition, merger or cross-licensing negotiations, as well as for joining any patent pools that may develop in the future. So how should companies handle their blockchain Intellectual Property? The answer will vary from company to company and is likely to depend on many factors, including commercial priorities and overall IP strategy. One thing is certain however: careful thought and planning should be given to the decision at an early stage, with regular reviews and reconsideration in the future, as it may have important commercial consequences for many years to come. 11 To find out more contact Philip Horler phorler@withersrogers.com There are clear signs that despite the challenges that can be faced in pursuing patent protection for software, protection for blockchain technologies is an achievable goal.