1. Protecting IP in Blockchain Technology
Paul Horbal
2018

2. What we’ll talk about Types of IP protection
Challenges in obtaining blockchain patents
Who is obtaining patents for blockchain technology?
Licensing considerations

3. What do we mean by blockchain technology?
Not just cryptocurrency
Any application that involves reading data from (or writing data to) a blockchain
Key elements of a blockchain:
Database
Immutable
Distributed
Distributed apps: Microblogging (Eth-Tweet), Crowdfunding (4G Capital), Identity (KYC-Chain), Royalty payments (Ujomusic), Distributed storage (DocStamp), Insurance (Flight Delays Suck), Betting (SportCrypt), Games, etc.
Other applications that store some data in a blockchain

4. Intellectual Property: A refresher
Trademarks
Copyright
Trade Secrets
Designs, and…
Patents

5. Trademark
Exclusive right to use a mark in relation to specific goods or services
Right to prevent others from using confusingly similar marks
Protects “goodwill” related to source
Must be distinctive in the field

6. Copyright Exclusive right to produce or reproduce the work Long term
Examples: software code, marketing materials, etc.
BUT:
No protection against independent creation
No protection for “functional” features

7. Industrial Design Shape, configuration, pattern or ornamentation
Examples: computer icons, animations, “look-and-feel” of apps
Exclusive right to make, use or sell

8. Trade Secret
Exclusive right to use secret for as long as the information remains out of public domain
Requires positive measures to maintain secrecy
Vulnerable to independent discovery
Limited enforceability against third parties
Often the only early-stage protection available

9. Patent Exclusive right to make, use, sell or import 20-year term
Protection against independent discovery
Monopoly in return for explaining the invention to the public
~20 year term of protection from filing date
Exclusive right to manufacture, use, import and sell an invention
NOT A LICENSE
Country-by-country protection

10. Requirements for a patent
Original and new
Not obvious
Useful
Correct subject matter

11. Allowable Subject Matter
US:
“Any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement …”
Canada:
“Any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement …”
NB: Computer code, on its own, doesn’t fall into these categories

12. Exceptions US: Canada: Abstract ideas Mere algorithms Laws of nature
Natural phenomena
Canada:
Scientific principles and abstract theorems

13. What is an abstract idea?
Fundamental economic practices
Hedging
Creating a contractual relationship
An idea “of itself”
Obtaining and comparing data
Using rules to identify options
Organizing information
Methods of organizing human activity
Mathematical relationships and formulas
List of examples from US courts
Tl;dr: Idea of itself == manipulating data

14. Isn’t every idea abstract at a certain level?
US:
Are there elements that amount to “significantly more” than the abstract idea?
Canada:
Considering the problem being solved, are there any “essential” elements used to solve the problem beyond the abstract idea itself?

16. The problem for blockchain technology

17. Overcoming the calculator stigma
Are you making a better calculator?
Faster, more efficient, more secure?
Are you using the calculator to improve some other technology or technical field?
Is there a real-world effect?
What actions are caused by operation of invention?
What hardware is engaged?
Is the effect confined to a particular useful application?

18. What won’t work Mere instruction to “do this on a computer”
Adding well-understood, routine and conventional acts
Generally linking the use of the abstract idea to a particular technological environment or field of use

19. Patent trends (US)
Title, Abstract or Claims contain “blockchain,” “distributed ledger,” “bitcoin” or “ethereum”
Year of Application

20. Patent trends (Canada)
Title, Abstract or Claims contain “blockchain,” “distributed ledger,” “bitcoin” or “ethereum”
Canadian patent coverage is incomplete in this search tool
Possible reasons for lower numbers: PCT gap (30-42 months to national phase), search tools may miss PCT applications
Year of Application

21. Patent trends (PCT)
Title, Abstract or Claims contain “blockchain,” “distributed ledger,” “bitcoin” or “ethereum”
NB: lag between filing and publication can be anywhere between 6-18 months (contrast with national filings where most often 18 months)
Year of Application

22. Patent trends Some leading applicants: Bank of America Mastercard IBM
Coinbase
Intel TD
Accenture

23. Example #1: US Patent No. 9,842,216 Enhanced security
Improvement to a technical field
Interaction between two servers
Confined to a particular useful application
1. A system for securely recording voice communications, comprising:
an authentication server computer [configured to]:
provide a timestamping authority to-generate a timestamp;
publish the timestamp as a zero-sum block chain transaction using a distributed block chain network; and
generate a hash for use in encrypting interactions comprising communication recordings; and
a recording server computer [configured to]:
receive an interaction via a network comprising one or more conversations of at least one of the following types: audio, video, electronic mail and short message service (SMS);
generate a recording of the interaction;
receive the timestamp and the hash from the timestamping authority;
verify the timestamp has not been tampered with by validating the block chain transaction associated with the received timestamp;
encrypt the recorded interaction with the timestamp embedded therein using the received hash; and
store the encrypted recorded interaction in a secure database.

24. Example #2: US Patent No. 9,824,013 More efficient processing
Interaction with two devices
Confined to a particular useful application
1. A method implemented by at least one hardware processor of coalescing transactions between trusted and un-trusted parties, the method comprising:
receiving first transaction data from a computing device associated with a first trusted party […];
receiving second transaction data from a computing device associated with the second trusted party […] the second transaction data comprising a third pending transaction between the second trusted party and the un-trusted party;
analyzing the first and second transaction data to determine whether more than one trusted party has a pending transaction with the same un-trusted party, wherein the analyzing comprises generating a transaction graph […];
determining based on the analysis that the first trusted party and the second trusted party each have a pending transaction with the un-trusted party […];
modifying the first pending transaction, the second pending transaction, and the third pending transaction based on the determination […].

25. Example #3: US Patent No. 9,807,106 Enhanced security
Improvement to a technical field
Interaction with blockchain network
Confined to a particular useful application
1. A computer implemented method for detecting malicious attacks presenting a threat to a blockchain associated with a blockchain data structure of a computing device comprising:
defining by the computing device a transaction creation profile according to which transactions can be generated and submitted to the blockchain;
submitting a transaction to the blockchain, the transaction causing the generation of a profiler data structure in the blockchain including executable code to generate profile transactions to be submitted to the blockchain according to the transaction creation profile;
monitoring by the computing device the blockchain to identify profile transactions based on profile transactions submitted by the profile data structure generated in the blockchain; and
comparing identified profile transactions with the transaction creation profile to detect a deviation from the transaction creation profile, such detection corresponding to a malicious attack occurring with respect to the blockchain.

26. Potential uses of blockchain patents
Offense:
Exclude competitors
Leverage with competitors
Potential license/royalty revenue
Build up/reinforce value of company for sale
Defense:
“Clear the field” to prevent others from patenting the same idea
Cross-licensing in patent dispute

27. Speaking of licensing…
Open source blockchain projects:
Bitcoin Core = MIT
Ethereum C++ client = GPL 3.0
Ethereum Go implementation = LGPL 3.0
Hyperledger Fabric = Apache 2.0
May be more than a license to copy and modify

28. GPL 3.0 on patents
Automatic patent license for any modifications contributed back
Retribution clause
Prohibition against patent infringement claims v. downstream recipients
Benefit transferable to a third party
“Each contributor grants you a non-exclusive, worldwide, royalty-free patent license under the contributor's essential patent claims, to make, use, sell, offer for sale, import and otherwise run, modify and propagate the contents of its contributor version”
“[…] you may not initiate litigation (including a cross-claim or counterclaim in a lawsuit) alleging that any patent claim is infringed by making, using, selling, offering for sale, or importing the Program or any portion of it.”

29. Apache 2.0 on patents
Automatic patent license for any modifications contributed back
Retribution clause
“[…] each Contributor hereby grants to You a perpetual, worldwide, non-exclusive, no-charge, royalty-free, irrevocable patent license […] where such license applies only to those patent claims […] that are necessarily infringed by their Contribution(s) […]”
“If You institute patent litigation against any entity […] alleging that the Work or a Contribution incorporated within the Work constitutes direct or contributory patent infringement, then any patent licenses granted to You under this License for that Work shall terminate as of the date such litigation is filed.”

30. Paul Horbal phorbal@bereskinparr.com
Questions?
Paul Horbal
2018