What role does Blockchain play in the future of IP?

In this article, Toni Nijm, Chief Product & Strategy Officer, CPA Global, outlines what blockchain technology is and how it could impact the future of IP

The current Intellectual Property (IP) industry landscape already has third-party authenticators for trademarks and patents in the form of national patent and trademark offices, as well as some international organisations. So how could the industry benefit from Blockchain technology?

Blockchain is a technology that enables transactions to be recorded in what is described as a “decentralised ledger”. The ledger is a public database accessible by all participants. It records transactions between two or more parties in a permanent way and distributes a copy to all relevant parties, without the need for a third party to authenticate the transaction.

Blockchain remains accurate because records reside on not one but many computers globally. Each new block in the chain is created with a copy of the previous block attached, meaning that in every case a past record is included in the next version of the Blockchain. The whole system is secured by military grade cryptography.

Blockchain’s role in the IP industry

Current IP regulators and authenticators were created in the pre-digital age. Most countries around the world have their own systems for IP management. Whilst there is some consistency, there is also a great deal that is different in each individual jurisdiction.

Before international trade was ubiquitous, this was less of an issue. Businesses grew their home market first before concentrating on internationalisation. More recently, particularly since the advent of the internet, this has become more of a problem. Ideas are international from inception. Businesses that exist on the Internet can internationalise incredibly quickly and effectively but managing their brands and ideas over multiple territories is incredibly challenging, demanding a great deal of time and cost. Blockchain could potentially help to make this less of an issue.

Blockchain could provide a solution for the IP industry in three areas.

• Ideas generation

When ideas are created, individuals and companies that create them must make important decisions about how to protect them. In cases where there is a clear and obvious technical development or new product or service, companies may look to patent this for commercial advantage.

Blockchain could take away such issues by enabling individuals and companies to identify their own innovation and place it on record within a Blockchain. Any future issues around who was the first to create an idea would then be easily identified through the Blockchain’s timestamp. This could resolve any number of complex and costly legal challenges that take place today around the initial creation of an idea that has not been immediately protected.

• Ownership and licensing

Whilst the purpose of the IP system is to enable companies that innovate to be rewarded for their ideas when complex products such as computers or cars are created, there are questions around IP ownership. This is exacerbated by the fact that verifying ownership of patents can be challenging. Companies trade IP assets without always updating ownership status, making it hard for even well-intentioned companies to legitimately license others’ IP.

This leads to far more patent disputes that are necessary and a slew of litigation. Blockchain technology could provide clear and accurate ownership records of IP assets for an industry. Licencing agreements could even be created and recorded via the Blockchain itself, providing an accurate and up to date ledger.

• IP transactions

Managing IP in a globalised economy is extremely challenging. Companies need to decide where to seek protection for ideas and then individually apply for protection in relevant geographies. Any company with more than a handful of ideas will face a mountain of paperwork and complexity across the globe. Just managing this process is time-consuming and expensive.

Blockchain offers the opportunity to place an initial idea on a Blockchain and then update it, creating a geographical scope for it. If the same Blockchain is being used by a network of law firms globally, each could action the process of protection and update the Blockchain accordingly. This significantly reduces complexity, potentially encouraging more companies to protect ideas.

Looking forward

Blockchain technology has the potential to significantly support idea generators and those that work with them to create revenues from innovation, but this will not happen overnight. It was simple to adopt Blockchain for cryptocurrencies, where no central verification method existed to support the new currencies. Applying Blockchain to an industry that already has proven (albeit often slow and challenging) methods will be more challenging.

Ultimately Blockchain could be more impactful on the IP industry than it has been even to the financial services industries. The challenge will be in creating the right adoption path for the technology.