The future of blockchain in IP Management

Blockchain and IP

Intellectual property (IP) rights, and particularly patents, are often thought of as being associated with the latest and most advanced technologies. It is thus ironic that the registration and management of IP is dependent on the most ancient of information technologies: the document. Whether physical paper or digital, documents and good document management practices are critical to managing IP.?

Documents, however, come with certain inherent challenges: human error, lack of transparency, and intentional fraud. In this blog post, we take a look at how a truly transformational technology, blockchain, can revolutionize the IP industry.

Blockchain in Time

?In their influential 1991 paper “How to Time-stamp a Digital Paper”, computer scientists Stuart Haber and Wakefiled Scott Harnetta sought to answer what now seems an obvious and logical issue: how to certify when a?document ?was created or last changed. Winning the Discover Award for computer science the following year, the relatively simple model they made became the basis for one of the most revolutionary developments in the world of finance, namely Bitcoin.

The abstract of their paper noted that the world was witnessing an increasing digitization of all forms of data, such as documents, pictures, videos etc. The challenge was developing a way to time-stamp the data to render it tamper-proof. The method, which later became known as blockchain, focused on decentralization, rendering the process free of a central, overarching control and developing unique algorithms called?hash,?which act as proof of authenticity.

Understanding Blockchain

Unlike a traditional database that organizes data in a table, blockchain technology collects data in blocks. Simply put, a block can be seen as the receptacle of information with a finite capacity. Every time new data is entered into a computer system, it is stored in a block. Once the block is complete, it is linked by a chain with the next block, which becomes the destination for the next piece of information until full. The system is unique because each block is given a unique time stamp allowing users to identify the exact time when a particular data set is added to the block.

Safety

Blockchain technology, also known as?Distributed Ledger Network, ?utilizes multiple features to ensure the safety of data stored in the system. First and foremost is?Distribution. Blockchain ditches reliance on any individual third party to check the veracity of the information and the transactions carried out on the network. The hierarchical system is done away with in favor of a peer-to-peer network which gives multiple users access to the entire network to verify the transactions. Furthermore, a blockchain permits storing the same data set within multiple network nodes at diverse locations. Thus, any hacker or virus attempting to alter the data stored in the blocks can, at best, hope to change it on one network while the other networks remain intact. Further, any attempt to manipulate the data can be thwarted in real-time. All the users on the network can witness the entire process of the data being stored in the blocks in real time; hence efforts to go back to the blocks and alter the content can be collectively challenged.

Another key feature is the conversion of data into a?hash. A hash is a computational algorithm that converts any input, regardless of length, into an encrypted code of fixed length. What makes the hash safe is that a hacker can't use a hash to decipher the original information where the hash was created, as the hash is one-way, making reverse engineering impossible.

One of the key benefits of blockchain technology is that it allows multiple parties to access and verify the same information without the need for a central authority. This feature makes blockchain an ideal solution for industries that rely on secure and transparent record-keeping, such as finance and supply chain management.

Uses of Blockchain

Since its introduction, blockchain has held out its advantages to various industries looking for an immutable and transparent method to document their work. Its security and transparency can be of particular use in the Intellectual Property (IP) field. It does, however, have its challenges.

Authentication and Verification

Proof of ownership of intellectual property rights is one of the industry's biggest challenges. With its peer-to-peer network, wherein the entries to the block are viewed in real-time by multiple users, simultaneously authenticating the origins and authorship of a particular work can be easily managed using blockchain technology. Furthermore, as discussed earlier, due to the use of the immutable hash, once data is entered and time-stamped, it cannot be tampered with, leading to an exact determination of the source of a piece of work.

In particular, time stamping becomes crucial for documents which precede a specific idea or invention.?Digital stamping, as offered by blockchain, becomes valuable as it makes it possible to confirm its origin.?Further information is protected between the parties using a unique algorithm known as zk_SNARK (zero-knowledge succinct non-interactive argument of knowledge).?

One of the significant obstacles faced by holders of IP Rights is when competing individuals or organizations challenge the holder’s authorship or creation of the work in question. This challenge is rendered useless when IP rights are recorded over a Blockchain. Once entered into the blockchain, data does not respond to any individual’s request for deletion or modification. Hence?the records for an entity can always be appended but not?reversed .?This becomes a virtually irrefutable proof of authorship and the time the work is created.

Another strength of the blockchain system is the innovation of smart contracts. Nick Szabo, an American Computer Scientist?rumored?to be the?real Satoshi Nakamoto (inventor of Bitcoin), invented?smart contracts and defined them as?computerized transaction protocols that execute the terms of a?contract .?Due to its self-executing nature in a secure environment, the sanctity of contracts are also enhanced.??Removing the need for human involvement, these contracts can automate the process of completing the contract terms, leading to higher efficiency and reducing overhead costs of consumers.

Bringing Blockchain to IP

If a significant number of global PTOs were to implement blockchain in the future for patent registrations, this could?eliminate the need for clients to visit multiple offices for each task such as registration of Patents, checking its assignment payment execution, etc. Once the parties agree on the terms, the Smart Contract will take over, and the process will become automated. This also reduces the time to register a patent, as even voluminous data can be uploaded and verified in minutes rather than months.?Furthermore, once?anything is uploaded to the system, it is time-stamped, and the encrypted ID of the relevant person (the IP rights holder) is also linked to the document. As a result, whenever someone looks at the paper, it becomes obvious who the originator was and when the record was time-stamped for?protection .

While the strengths of blockchain technology seem apparent and its applicability to recording and verifying IP seems intuitive, challenges remain.

Complexity and Integration

Like any other technology, blockchain technology is complex, and it has a learning curve. Since the advent of IP registration, records have been maintained manually in offices worldwide. They often take the form of documents, maps, designs etc. The system would become truly beneficial once most IP registration is shifted onto the blockchain. This would prevent duplicity of registrations, and scouring databases to identify patents, trademarks etc., would be smoother as all the data is in one place. All this is easier said than done, as all the major players in the arena would have to agree to part with their data and allow it to be uploaded on the blockchain. Companies and individuals would have to be educated on the system's benefits and assured of improved efficiency and security without a concurrent cost increase.?

Finally, prospective users must be assured of security and data protection using blockchain technology. Bitcoin, the frontrunner in adopting blockchain technology, has been relatively safe and shown that the technology is tamper-proof. Still, companies and individuals looking to transfer their sensitive information, some of which can be critical to the underlying strength of their business, would want reassurance about the safety blockchain provides. It is also complicated because information entered into a block can only be appended and not modified; hence if the information from a copyrighted work needs to be revised, there is no way to go back and remedy the error.

Additionally, when a client has an ‘on chain’ token representing an ‘off chain’ good, it is critical to ensure that changes made to the off-chain good such as a book, are incorporated into the on-chain token to avoid discrepancies.

Current Efforts to Leverage Blockchain and IP

In recent years, there has been a growing interest in using blockchain technology in the IP field by both government organizations and private players. Patent and trademark offices (PTOs) have initiated forums to understand blockchain's potential benefit, while private companies have already developed solutions leveraging the technology.

USPTO’s Eastern Regional Outreach Office (EROO) started a virtual information series last year to showcase the underlying technology and utilities of blockchain and IP. The World IP Organization (WIPO) has established a Blockchain?Task Force ?to draft a new WIPO standard to support the potential applications of blockchain technologies within IP ecosystems. The Korean IP Office has launched a blockchain-based application intermediate server that distributes and shares filing data to provide 24/7 online application filing services.

Several companies are leveraging blockchain technology to manage IP on the commercial front. IPWe, working with IBM, has created a global IP platform for comprehensive IP management by combining blockchain technology with artificial intelligence.?This approach has claimed to have increased the transparency and flexibility within the patent sphere benefitting both buyers and sellers.

In addition, artificial intelligence has increased the pace at which patent information can be analyzed. This data is valuable for identifying opportunities while avoiding risky or overcrowded areas. A growing number of early-stage companies are focused on creating artificial intelligence systems that are optimized for working with patent data.?WISeKey has developed functionality on its TrustedNFt.IO platform to tokenize patents, making it easier to license, sell, and commercialize them. IP Chain is a blockchain-based platform providing a decentralized system for managing IP rights, including patents, trademarks, and copyrights. Brainbase is building an end-to-end product ecosystem for IP licensing, while Copytrack uses blockchain technology to trace copyright infringements. Finally, Spaceport is building a blockchain-based protocol to streamline IP licensing and make it easier for creators to receive royalties.

These companies' solutions offer benefits such as increased visibility and flexibility within the IP sphere, the ability to tokenize patents & trademarks, providing proof of authorship, and streamlining the licensing process. By leveraging blockchain technology, these companies offer innovative solutions to enhance the management and protection of IP rights.

Overall, it is evident that the IP industry is keen on exploring the potential of blockchain technology. While PTOs are still in the process of understanding the technology and its implications, private players have already started developing solutions to enhance IP rights management. The solutions offered by these companies could revolutionize how IP is managed, protected, and commercialized.

The IP industry has taken steps to incorporate blockchain and artificial intelligence into the domain.?While blockchain technology can improve authentication, verification, and piracy prevention in the IP industry, there may be better solutions for all the industry's challenges. Moreover, adopting blockchain technology in the IP industry would require significant investment and collaboration among stakeholders, which may take time.

The registration and management of IP has been evolving since Thomas Jefferson used his shoe boxes to store patents. From simple human error to intentional decisions to not require ownership transparency, the risks to stakeholders in the IP ecosystem have never been higher. Blockchain technology's promise of immutability and time stamping holds promise for the industry. However, like any new technology, its impact must be carefully studied, and its potential benefits and drawbacks assessed before making significant investments.