BLOCKCHAIN AND INTELLECTUAL PROPERTY
Intellectual Property Rights and technological advancement are complementary and supplementary to each other. IP laws are required to protect the growing technological advancements. Similarly, technologies like Blockchain can facilitate better enforcement and regulation of Intellectual Property Rights.
What is Blockchain?
Blockchain, in simple words, is an anonymous online ledger, which keeps a growing list of records, called blocks, linked using cryptography where each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. It is a way of creating a shared database, which can record and track transactions and assets. In theory, any database or ledger could be created and maintained using blockchain.
This ledger can be maintained by the parties themselves whose data is being inserted in it and therefore, no intervention of any other third party is required. Any kind of data can be stored in it i.e. crypto currency, transactional data, design data etc.
How does Blockchain work?
To understand how exactly Blockchain works, the flow of the same is enunciated below.
The flow of information in the Blockchain technology begins from a single transaction. Each transaction is then transferred from one subject to the next i.e. transaction from A to B, then B to C, etc. In this way, a record is maintained right from the inception stage till the final stage and none of the information is lost.
Nexus between Blockchain and IPR
There is a two way relationship between Blockchain and Intellectual Property Rights. Intellectual Property Rights protects Blockchain on one hand; Blockchain can be utilized to strengthen the Intellectual Property regime on the other hand.
Blockchain can serve as a technology-based IP registry where IP owners can keep hashed digital certificates of their IP and use the platform to get royalties from those who make use of their creations and inventions using smart contracts.
Often, the approval wait times of patent agencies and other regulatory bodies are long. This can endanger the first-mover advantage in many industries where incumbents need to act fast in order to protect their inventions and stay at the top of the game. By replacing centralized registration systems with decentralized ones, it will be easier to not only register new IP but also update filings and transfer ownership at any time. With blockchain, regulatory agencies will be able to achieve more with fewer resources.
Copyrights need not be registered and come into existence automatically on creation of original qualifying work. Often, there are no adequate means for authors to catalogue their works. Copyright ownership can be hard to prove. It can also be difficult for authors to see who is using their work, and equally difficult for third parties using a work to know who to seek a license from. Authors are often unable to stop infringements or to monetize their works successfully. Due to the lengthy approval process and the multitude of national IP regulations, there isn’t a clear way of defining who owns IP. By registering their works to a blockchain, authors can obtain tamper-proof evidence of copyright ownership. A blockchain transaction is immutable, so once a work has been registered to a blockchain, that information cannot be lost or changed. Third parties could use the blockchain to see the complete chain of ownership of a work, including any licenses, sub-licenses and assignments.
Trademark and Blockchain: The core of Blockchain is anonymity or as we can say, pseudo anonymity. This feature conflicts with the Trademark Law wherein the purpose is to distinguish the goods or services from one person to that of another. In the case of Public Blockchain, it is built on decentralized system wherein there is no single owner of the Blockchain. The permissioned Blockchain burgeon with the participation by the public. In this case also, there is no single entity that can be known to have the right to register the Blockchain as a trademark under their name. Furthermore, in a lot a countries, the use of crypto currencies is illegal, which is one of the popular uses of the Blockchain technology. In India, though the Supreme Court of India has lifted the blanket ban imposed by the RBI (Reserve Bank of India) on virtual currencies, however in the same breath the Supreme Court has cleared the way for RBI to formulate stringer policies while admitting that the RBI has the authority to regulate crypto currency. Therefore, registration of decentralized Blockchain technology is difficult considering the challenges mentioned above. However, centralized Blockchain can be registered as a trademark as the source of the same can be identified. It is relevant to note that the terms “Blockchain” and “Bitcoin” have been granted trademark by the Indian Trademark Registry.
Patents and Blockchain: Blockchain technology comes within the sphere of computer software. As per Section 3(k) of the Indian Patents Act, 1970, computer programmes are non-patentable in India. It was held by the Delhi High Court in the case of Telefonaktiebolaget Lm Ericsson v. Intex Technologies that “any invention which has a technical contribution or has a technical effect and is not merely a computer program per se is patentable”. This interpretation was upheld by the Delhi High Court in the case of Ferid Allani vs Union of India & Ors. “If the invention demonstrates a “technical effect” or a “technical contribution” it is patentable even though it may be based on a computer program.” Therefore, as long as Blockchain technology has a technical effect or technical contribution, the same can be patented.
Blockchain strengthening IP Regime
To protect the Intellectual property rights effectively, the IP system needs to be very strong. Traceability and verifiability is a must for establishing a sound IP regime. Currently, Intellectual property rights are managed by third party authenticators. These authenticators are mainly, government or administrative bodies based in various geographical regions. As all the data is not contained at a single place, there is a very high possibility of this data not being in sync with other data. In these circumstances, the accuracy of data is lost. Also, updating the data becomes a big challenge. With the emergence of Blockchain innovation, IP workplaces across the globe can be gigantically profited by utilizing these advances in maintaining their IP registers.
The essential features of Blockchain technology are reliability, immutability, efficiency, security etc. These features can be used throughout the life cycle of Intellectual property rights starting from registration to enforcement.
Blockchain technology can be used in IP regime in the following ways:
Evidence of use of Intellectual property
Blockchain technology has the ability to identify the first owner in the case of patent/trademark. This can prove very beneficial in the cases wherein the first use is crucial in determining the rights of the parties. This is relevant in the disputes or court proceedings where in the main question is whether a mark is well-known mark or not.
For example, if the details of the trademark and its use are stored in a Blockchain technology based register, as and when the trademark will be used, a notification will be sent to the trademark office. This will enable the trademark office to keep a record of use of trademark. This use determines as to by whom the trademark was used first, who is the genuine user and owner of such a trademark, if the mark has obtained distinctiveness in the market etc. Patenting of technologies that are prior art can be also protected in the similar manner through distributed ledger technology.
· Smart IP rights
IP rights can now be recorded in a distributed ledger technology as opposed to the conventional method of maintaining a record. This will transform these rights into “Smart IP rights”. The idea that is associated with it is creation of such a database i.e. Smart IP registries, which will be run by a centralized system wherein all the records right from the beginning of a life cycle of intellectual property will be maintained. It could encapsulate all the information such as registration of a trademark/patent etc. licensing and assignment of these rights etc. This brings with it various advantages such as IP right audits will be smooth, due diligence exercises in this regard will be simpler, confidentiality concerns can be resolved too etc.
· Smart Contracts and Digital Rights Management
A smart contract is a computer program code that can facilitate, execute and enforce a contract by itself. The contractual terms are pre-programmed. This reduces the administrative burden and cost. Using smart contracts, IP licenses can be self-executing upon the use of a work.
Smart contracts can also be used for micropayments for use of content. The author could assign a Bitcoin address to an IP work, which then allows the user to make a micropayment to the author in return for using the work. This system can eliminate the need for financial intermediaries and thus enable the author to remunerated without having to pay the high transactions costs. The system also introduces simplicity and transparency in IP related transactions.
Wherein the details are available right from the inception of the idea till the enforcement of rights, it will be very easy for the customers or authorities, to distinguish between genuine products and counterfeited products. With the use of Blockchain technology, the details as to where the products are made, manufacturing process, source of raw material etc. These details provide utmost clarity as to the genuineness and authentication to the product.
Another way in which this technology can be used is by attaching scan-able Blockchain connected tags or tamperproof seals to various products. This would facilitate in finding out the counterfeit products.
Limitations of Blockchain and IP
The acceptability of Blockchain ecosystem in the court of law is being permitted as admissible evidence in some cases but it still has a long way to go to be admitted in the court of law completely. The transaction process is still slow in Blockchain technology; therefore, legal experts are still required. The continuous use of Blockchain technology is extremely expensive. The continuous use of all nodes requires very high power consumption which in turn makes it a very expensive process.
There is, without a doubt, a colossal potential for the utilization of Blockchain technology to support IP industry. It will definitely solve a lot of problems that have been faced by the IP rights holders across these years. Be that as it may, just like any other technology, Blockchain also has its limitations and challenges that cannot be ignored. The use of Blockchain technology in each and every aspect is still far off but it is definitely something worth considering.