• IPTT Team

BLOCKCHAIN TECHNOLOGY: BOON OR BANE FOR INTELLECTUAL PROPERTY RIGHTS

We are excited to bring to you a guest post by Shaurya Shukla the participant who secured the 5th position in our 1st National Essay Competition, 2020. However, this post is the author's personal views and the Blog/Website does not personally endorse any work.


The blockchain does one thing: It replaces third-party trust with mathematical proof that something happened.” -Adam Draper

The blockchain technology is the brainchild of Satoshi Nakamoto. If one tries to find blockchain’s definition then he/she will find a typical definition“ blockchain is distributed, decentralized public ledger. But blockchain is actually much easier to understand than this typical definition sounds.[i]

To put it simply blockchain is just a chain of blocks that stores data of a person’s transaction in blocks and they are interconnected in a big chain and they are not in control of any central authority but they are managed by a cluster of computers. Each block can store data up to 1 Mb.

These blocks store data about date, time and amount of transaction and to distinguish the blocks from one another the blocks are given a unique code named “Hash”. For a block to be added into the blockchain four conditions are necessary:

² There should be an existing transaction.

² A transaction should be verified before adding it to the block.

² After verification transaction must be added into the block.

² The block must be given a hash because it not only gives it a unique identity but also reduces the susceptibility of blockchain to the hackers.

Each computer is connected to the blockchain network as a “node”. Each computer receives a personal copy of updated blockchain and spreading the information on a big network of computers makes it more difficult to manipulate.

Adding a hash also makes a bockchain less prone to be hacked as if a hacker attempts to hacks a blockchain and hacks the hash of one block and adds a new hash but then also he would not be able to hack the blockchain because the hash of the adjoining block will remain the old one . So, for hacking a blockchain a hacker must hack at least 51% of the computers which in itself is a impossible and futile task because hash (unique code of block) is a extremely difficult mathematical problem and for cracking it a computer needs a great amount of calculative power and in making such a computer a large amount of money and that is the reason why hacking a blockchain is a impossible as well as futile task. Even the computers that are added in a blockchain network are selected through a consensus model. A consensus model is necessary to maintain security and to maintain the consensus between the nodes, if this will not be present a transaction can be stalled. Consensus model also selects the nodes which are capable to be added to a blockchain network. If a node (computer) is not capable of solving a hash and adding block then that node can disturb the whole blockchain network. The blockchain technology became popular with the launch of Bitcoin ( a cryptocurrency ) in January 2009 . When someone purchases any commodity by using bitcoin , a race is started among the nodes to solve the hash and verify the blocks and whosoever does it successfully is rewarded with cryptocurrency . This process is known as mining and this process happens in only few kind of blockchain networks such as a blockchain network of bitcoin.

There are various uses of blockchain:

  • Blockchain can be really useful in banks , when any person deposits a cheque in a bank during the working days , then also the money will be deposited in that person,s bank account in almost two to three working days. If blockchain technology is implemented in banks, the transaction of a consumer can be processed in almost 10 minutes.

  • Blockchain technology is very useful in field of crypto currencies. Currencies like dollar, pound, rupee is under control of central administration or government. If any country has a inefficient government so the value of currency can be endangered as these currencies are at whim of the government. Blockchain being a distributive ledger is not in hands of any centre or government but in hands of a cluster of computers reduces this risk of value deterioration of currency.

  • If used in voting in elections, blockchain technology reduces the chances of fraud in election as if data is stored in blocks with a hash it will reduce its susceptibility to hackers.

  • Even hospitals can use this blockchain technology to store the data of their patients because blockchain technology will help to keep it confidential.

“ Intellectual Property Rights are the rights given to persons over the creation of their mind. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.”Intellectual Property Rights are available to a normal person as well as a juristic persons such as companies. These rights gives the owner a privilege to use their own ideas , expressions, invention without worrying about competition because these rights will restrict any other person from using that particular thought, idea, expression,design,invention,etc. for a certain period of time. If these rights are infringed , a law suit can be filed by the person whose rights are being infringed because these rights are enforceable in court of law. The main motive of giving these rights is encouraging invention without the fear of competition. [ii]

SOME MAJOR IPR WHICH HAVE REALTION WITH BLOCKCHAIN TECHNOLOGY ARE :

  • PATENT

  • COPYRIGHT

  • TRADEMARK

  • TRADE SECRET

Patent is a right or authority given to a person who has made a new invention to protect his invention from being manufactured and sold by someone else . Patent is granted by the government for a fixed period of time. The time period for validity of a patent is 20 years from the date of application and a renewal fee has to be paid every year to maintain or sustain the validity of a patent for 20 years and if the renewal fee is not paid in time the rights of a patent holder can be taken away from him. Patent only protects novel inventions such as engines, machines, solar panels,etc. An invention can be patented only if it satisfies some essential conditions.[iii]

  • The invention must be a new invention and not a old one and it must be a original invention and not a copied invention.

  • If that invention is not totally original then also there must be an inventive step to find a new use of that invention.

  • The invention must not be a futile invention, it should have some application in any field.

If a blockchain technology gets patented, the interoperability (ability of a computer system or software to exchange and make the use of information) of a organisation and it also reduces the level of innovation. In current scenario , blockchain is often compared to open source protocol- Transmission Control Protocol and Internet protocol (TCP/IP) because after this protocol was created only few people having access to this technology for several years. Blockchain also has the same case scenario as it is too obscure for many people to understand it in depth and this recent rise in filing of blockchain patents will exclude many people and several organisations as well (who don,t understand it in depth) to use it in a innovative way without obtaining costly licenses. Blockchain can be used very innovatively in future . If we take one example of use of blockchain technology in field of health care (as discussed in the introduction itself), blockchain can be used very vitally and innovatively as it has blocks which have a particular hash so blockchain technology can revolutionize this process by helping in keeping the medical records safe and stored in any particular language and if any organisations will obtain blockchain patent , it will be difficult for the non assignees to use this technology in a revolutionary and innovative way.

The reason for the rise of the companies seeking patents on blockchain technology is patent trolls, so what is a patent troll, any company that obtains the rights to one or more patents in order to profit by means of licensing or litigation , rather than by its own good and services is a patent troll. Patent trolling is a practice performed by companies to enforce patent rights against accused infringers far beyond the patent,s actual value or contribution to the prior art. This practice is also known as patent hoarding. Without the fear of patent trolls, such rise in patents of blockchain would not have been experienced by people.

Copyright is a right which protects artistic , literary and cinematographic works of an indivisual according to law . Copyright is also available for a definite number of years i.e. 60 years . This right honour creativity of a indivisual . Having copyright on a work gives an individual:

  • Right of reproducing that work.

  • Right of communicating that particular creation to the general public.

  • Right to make any cinematographic film on that creation.

  • Right of making an adaption of that work.

  • Right of issuing copies of that work.

Unlike patents no registration is required in copyright , it is acquired automatically after the creation of work but if any legal dispute arises regarding creation of that work then a certificate of registration is required to be served as a evidence. When the copyright is granted for any work of music, art, drama,etc. The period will be life of author + 60 years but when copyright is granted for any cinematographic film , recording , publication,etc. The period of copyright (60 years) will be counted from date of publication.[iv]

The intellectual property sector is hit by many copyright violations and there are several reasons for that copyright violations such as:

  • There is no proper digital registry for keeping the records as compared to trademarks.

  • There is no proper catalogue for safeguarding the interests of the authors and musicians.


If a infringement if copyright occurs then the author or musician not only loses monetarily but also looses the authority if his/her creation. Blockchain can reduce the alarming rate of copyright infringement as any transaction if completed remains on the blockchain permanently because its record cannot be edited because of blockchain,s less susceptibility to hackers and the data remains more secure as it is stored on a decentralized network as well as a centralized network .

With the development of a blockchain application a creative person can record his ownership on his legitimate literary work on both the networks , by doing this an author or creator can keep track of his/her work, blockchain technology records every thing right from the work is registered on its network and it also makes it easier for the author to make a licensed agreement with the people who want to use his/her work because it provides a certificate of ownership to the author to show authenticity. Blockchain also records any violation of copyright regarding the work of author. Currently there are no strict provisions for the the owner of copyright but with the advent of blockchain technology, it will give the knowledge to author about who,where and when is using his/her material or work. So the way in which blockchain technology reduce the copyright infringement are:

  • By securing the Copyright.

  • By helping the authors to deal via smart contracts.

  • Ensuring timely payments to authors via cryptocurrency.

  • Ensuring better privacy between the owner of the literary work and consumers or people willing to buy that particular literary work.[v]

Trademark is a type of intellectual property right that deals with logos , designs which represent any person or any organization . A person can recognize the owner or manufacturer of a product by looking at the trademark on that product . A trademark can be held by any individual , organization or any legal entity as well. Many companies also display their trademark on their office building to maintain their corporate identity . [vi]

There are many uses of blockchain technology in the trademark world:

Ø If there is any case of dispute for trademark the trademark will be given to the senior user i.e. who has used the trademark first and has provided services and products under that trademark. But the question here is of proof of use and if any entity wants to prove that they are senior user they will have to show receipts, invoices from the website and they can also show the testimony of customer but this will be a long and costly legal battle and if the data

is recorded on blockchain with time and date it can be used as a evidence in a court of law and it will reduce the cost, time and uncertainity from such legal disputes.

  • Smart contracts are self executing contracts which are executed without intervention of any individual on the basis of public available data , once they get the data they are executed automatically. This principle can also be applied to trademarks as this will eliminate a lot of editing, book keeping and legal fees and this will lead to more such agreements taking place which will become a great source of income for trademark owners .

  • Trademarks owners on physical products often face a problem of counterfeiting . Counterfeiters often found innovative ways to rip off the logos and UPC codes of products but this problem can be solved by bringing blockchain technology into the picture . It doesn’t matter if it is a dress or a mobile phone, if their logos are attached to the blockchain it will protect it from counterfeiting and it will also make easy for distributor , seller and consumer to recognize that product.


Trade Secret is a type of intellectual property right which covers formulas,practices,designs , instruments and any information that has some economic value but its economic value is not capable to be ascertained by all. An owner of the trade secret takes all the reasonable measures to hide the way by which that trade secret is giving some economic value. A trade secret is not known to all so, it only gives economic benefit to its holder and holder should always use reasonable ways to hide that trade secret. [vii]

Blockchain technology are unchangeable global registers and it can be highly useful in proving existence and ownership of trade secrets . Confidentiality is not compromised in blockchain technology , the only information that is public is the hash ans the time stamp which indicates the time at which the transaction occurred . Blockchain can assist at various stages of a trade secret as it takes reasonable measures of protection for enforcement of a trade secret. Blockchain technology also helps in proving that information has been kept secret in any event of misappropriation. Blockchain is also very helpful in securely sharing any information with third parties by giving that information confidentially and not disclosing agreements and also evidencing their transfer.

As a blockchain technology is a very effective way of securing the intellectual property rights of many people but in case of some intellectual property rights such as patent, it cannot be that fruitful because if a blockchain technology gets patented its interoperability gets reduced and level of innovation comes down as many people rush to get their blockchain patented because of patent trolls and it leads to less innovation as as non assignees are not able to use it anymore. But blockchain technology is also very helpful in protecting some intellectual property rights such as copyright, trademark, trade secret,etc. So, if a balance is maintained in using blockchain technology for protection of intellectual property, this will leas to a better world of less intellectual property rights infringement and threats to intellectual property and a safe environment will be established for the creators, artists, organizations ans individuals.

We need to come up with the cases for this technology that drive clear benefits for individuals and institutions- these are our customers. Too often wee see bitcoin and blockchain technologies as solution in the search of problem. We don,t just need these systems to be technically better than the alternatives - we need them to be more user friendly . Abigail Johnson [viii]


REFERENCES:

[i] Nathan Rieff, Blockchain Explained, What is Blockchain ?, 29 March 2020, 2:46 pm, https://www.investopedia.com/terms/b/blockchain.asp [ii] What are intellectual property rights, 2 April 2020, 8:07 pm, https://www.wto.org/english/tratop_e/trips_e/intel1_e.htm [iii] Patents,What is patent?,4 April 2020, 3:56 pm, https://www.wipo.int/patents/en [iv] Copyright, What is Copyright?,5 April 2020,12:57 pm, https://www.wipo.int/copyright/en/ [v] Rohit Madaan, Role of Copyright in reducing copyright infringement, Need for blockchain development services, 6 April 2020, 3:09 am, https://www.signitysolutions.com/blog/blockchain-reducing-copyright-infringement/ [vi] Carla Tardi, Trademark, What is trademark, 5 April 2020,https://www.investopedia.com/terms/t/trademark.asp [vii] What is trade secret,7 April 2020,5:56 pm,https://www.wipo.int/sme/en/ip_business/trade_secrets/trade_secrets.htm [viii] Abhigail Johnson, Abhigail johnson quotes, 8 April 2020,https://www.brainyquote.com/quotes/abigail_johnson_848043

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