Race to Patent Blockchain

If you keep up on what’s going on in technology and cryptocurrency in particular, you’ve heard a lot about blockchain. It’s the technology backbone for ownership and transfer of cryptocurrencies like bitcoin.

However, blockchain is about to explode into a game-changing technology across countless industries — far beyond the cryptocurrency applications.

This technology stores data on multiple digital nodes to allow for complete privacy on a network during transactions. At the same time, it allows for more transparency between those involved.

Ultimately, blockchain could revolutionize everything from banking to music streaming. Yet, a major race is on to patent this tech based on how it could literally change the world.

The problem: Bitcoin’s original creator is unknown and never officially sought a patent. Now it’s basically in the public domain. Bitcoin was only the first cryptocurrency.

Now the blockchain technology is being implemented in many different ways.

Without any central authority, many companies ponder whether they should jump first on filing patents individually. If they don’t file fast, they’re afraid that their competitors will file first.

In other words — file your patents fast or risk getting blocked.

A Major Challenge For The Banking Industry

Despite this interesting patent challenge affecting many, the banking industry is already stocking up on blockchain patents. Since numerous banking institutions use blockchain elements in their applications, it otherwise could spell trouble in someone else claiming ownership.

As such, the biggest names in finance and banking (like Goldman Sachs to MasterCard) recently filed patents on blockchain applications they developed. Prior to this, the thought was that because the tech is open source, patents were unnecessary.

This isn’t true since many companies like banks could find themselves being sued by one-time collaborators. With this in mind, it brings another warning about using the “first to file” law to avoid future litigation.

Banks And Beyond

Of course the big banks aren’t the only ones filing for blockchain patents. Applications of blockchain are super important. These applications of blockchain technology are leading to a patent race. The big banks of course are filing for patents like crazy — but so are companies from Amazon to Verizon.

If your company wants to implement or use blockchain technology, you need to think about filing for a patent — fast! Over 1/3 of all US patent applications ever published in this area were published this year. The number of blockchain patent is increasing exponentially.

And since patent applications take 18 months to publish, who knows how many more will become public in the next year?

The best defense is for your company to file fast — so that you file first!

Challenges Involved With Open Source Software

Since blockchain is open source, it’s going to require using different open source licenses to make it work. Many blockchain patent analysts point to the five most common licenses and what their rules allow in the way of patenting.

All of them differ, which could make it difficult for some companies to patent an application. Everything from MIT licenses to the GNU General Public License should have careful examination to determine whether you can legally patent. In some cases, a company may discover they’re boxed in and can’t protect their application, leading to major legal risks.

It may have to come down to patent pledges in the future to avoid a massive and complex patent war between major companies. Some companies have already done patent pledges to amend, though there’s also talk about developing a patent pool with cross-licensing.

Dealing With The “Abstract Idea” Problem

Obtaining a patent as quickly as possible for a blockchain application might sound practical enough, yet roadblocks are potentially out there. One of the biggest ones is The Supreme Court’s Alice Corporation vs CLS Bank International case from 2014.

In this case, the court addressed the “abstract ideas” problem, meaning applications not possessing any novel or unique features to differentiate from others.

Unfortunately, this means a lot of blockchain applications could become designated as overly abstract and not adding anything new to the technology. Even the mysterious inventor of blockchain (named Satoshi Nakamoto) would possibly find himself corned on whether it’s a patent-worthy technology.

Whether he would or not comes down to an effective patent description with complete clarity. Describing in one paragraph what a blockchain application does can better clarify whether it’s truly abstract.

In this case, it provides a new valuable lesson on not only filing early for a blockchain patent, but also writing a compelling description. What’s important is for companies to study whether their blockchain applications truly add improvements, like data structures, or encryption.

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Originally published at kisspatent.com.