Blockchain is steadily becoming a big-business to the largest industries in the world and they are scrambling to file patents, the numbers of which are rising quickly.
Patents are one of the ultimate weapons in business and innovation; they prevent the competition from making, using or selling an invention, and grant the owner of the patent all of those denied privileges.
A patent war to remember
Famously, a seven-year-long patent war took place between tech giants Apple and Samsung, namely over their smartphones and their “key components”. Initially, after the first trial in 2012, Apple was to be awarded USD 1 billion in damages.
However, after a good few more years of appeals and counterclaims, reducing the damages cost by nearly half, the nitty-gritty details were finally ironed out at the United States Supreme Court in 2016, though it wasn’t over until July this year when the companies appeared to have made an out-of-court settlement.
Time intensive, costly and almost pointless, by this time, none of the products claimed as “infringing” were on the market. Patents are filed at dizzying rates from giant companies such as these and there are growing concerns that major competitors in the blockchain industry are mounting huge arsenals of patents in anticipation of an extremely competitive market.
Blockchain technology evidently touches far more sectors than phone technology does: retail, governance, supply chain and medicine, the list goes on. For the most part, the financial sector as well as the technology industry, are filing patents at accelerating speeds.
In June 2018, attorney and co-chair of the Blockchain Intellectual Property Council at the US Chamber of Digital Commerce, Marc Kaufman, conducted research that found approximately 350-blockchain related patents worldwide.
His findings illustrate that the top three patent owners are the controversial EICT Holdings, Bank of America and IBM who appear to be stockpiling patents. Furthermore, China is presently leading in the blockchain patent race, making up over half of the total blockchain patent applications in 2017.
The License on Transfer (LOT) Network is a global non-profit community of companies that is committing to the risks and costs posed by Patent Assertion Entities (PAEs) and patent privateering.
The LOT Network offers an immunity model on their patents, of which CEO Ken Seddon believes suits blockchain well, saying, “Blockchain is facing enough headwinds as it is and needs to do everything it can to make it an easier technology to adopt.”
He also said to Fortune.com that banks appear to be “receptive” to the model, adding, “Banks are taking a defensive posture when it comes to blockchain. They’re filing for patents to protect innovation and have leverage in negotiations.”
Seddon believes a patent war similar to that of smartphones is unlikely thanks to the US Patent Office issuing fewer “flimsy patents”.
IBM is also a founding member of a defensive patent pool called the Open Invention Network.
All this appears to be at odds with the very nature of blockchain: it is inherently decentralized, which promotes cross-company and public collaboration.
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