By: Bailey Reutzel
There''s a patent land grab developing in the blockchain space that could potentially make doing business more challenging for those who want to build upon the open-source technology in the future.
"Everyone is trying to stake their claim and plot out their business strategy," said Ted Mlynar, a partner in the intellectual property practice at Hogan Lovells in New York.
According to Mlynar and his colleague, Ira Schaefer, there are a lot of patents pending related to bitcoin, cryptocurrency, blockchain and distributed ledgers.
Publicly available records show the strong interest in filing patents related to the technology. A search for "blockchain" on the US Patent and Trademark Office website brings up 60 hits, whereas looking up "bitcoin" highlights more than 500 pending patents.
"But it remains to be seen whose claim will be allowed or issued," Mlynar said.
One problem with the claims the two Hogan Lovells partners have seen is that the applications themselves are considerably broad. The Alice Corp Pty Ltd vs CLS Bank Int'l court decision - which singled out financial business methods as abstract concepts that are not likely patentable - means that patent examiners will be taking a stern look at the claims.
Plus, any patent filed after the Leahy-Smith America Invents Act (AIA), which was signed into law in 2011, will be answerable to a post grant review. This allows anyone to oppose the validity of the claim within the first nine months of its issuing, which the two Hogan Lovells partners think will make keeping a blockchain patent difficult.
"All of these are new tools in any kind of patent litigation war, for those who have patents or those who are fighting for patents," said Schaefer.
And this process of narrowing down the scope of blockchain patents and the impending patent war will likely take several years, according to Mlynar.
But Geoff Cohen, PhD, vice president of digital forensics at Stroz Friedberg in Boston, isn't so sure.
"The only reason we haven't seen it yet for all the talk and hype ... is that [blockchain] hasn't turned into huge profits for anybody yet," Cohen said. "On an industrial economic scale you don't have standing companies making huge steady profits over the course of multiple years."
Eve of war
That state of affairs might be right around the corner, however. Several startups and large financial institutions have stoked excitement about the prospect of a commercial launch of their respective blockchain products late this year or early next.
As companies both big and small gear up to launch profit-making products, they're also gearing up to go to patent war.
Patent litigation, at its simplest, generally goes one of two ways, said Cohen. In once instance, a patent-holding small startup might go after a large corporation knowing it'll get a sizeable payout from the corporation.
Under the other scenario, a large incumbent player might launch a lawsuit against smaller companies in an effort to effectively tax the competition by way of court expenses. Sometimes, these efforts even put those on the receiving end of a patent lawsuit out of business entirely.
"It's an investment decision for the startups," Cohen said. "For large corporates, sometimes they sue for strategic reasons."
There's already been a hint of the latter in the blockchain space already, although via trademark infringement. Eris Exchange, an over-the-counter futures market is trying to stop Eris Industries, a well-known blockchain software startup, from using the name.
What's particularly interesting about the case, according to a report by American Banker, is that Eris Exchange's founder and board member, Don Wilson, is also the co-founder and a board member of Digital Asset Holdings, the competing blockchain startup led by Blythe Masters, a former JPMorgan Chase executive. However, it's unclear whether there is a direct connection.
Another soon-to-be plaintiff could be Dell Products LP. The company published an application for computing device configuration and management using a secure decentralized transaction ledger. The patent is a continuation of one the company applied for in March 2015. If that patent is issued, the incumbent company could go after smaller startups using the same process.
But bitcoin and blockchain startups are also securing their stake. For example, Coinbase has about 10 patent applications waiting in the wings.
Raed More >> https://www.coindesk.com/looming-war-blockchain-patents/
