Patenting Blockchain

Definition of Blockchain and Terminology

The Blockchain concept appeared in 1991 in relation to a time-stamp for a digital document so that it is infeasible for a user to back-date or to tamper with the document. Blockchain technology aims to ensure the integrity of each transaction as well as the immutability of the entire history of transactions recorded on the Blockchain database and Blockchain.

The Blockchain database is often referred to as a distributed or decentralised ledger. Since the Blockchain is distributed any modification to the Blockchain is recorded in real time in every computer of the network that shares the Blockchain. This makes any change to the Blockchain transparent to everyone in the network.

Various applications of Blockchain

Since the inception of Bitcoin, Blockchain technology is being rapidly adopted in various fields to provide decentralised services, transparency, integrity of records as well as proof of origin. The various fields in which Blockchain can be used include the Health industry, finance, supply chain industry, the automotive industry. When used in supply chain management, Blockchain eliminates the risk of dispute regarding transactions because all entities on the Blockchain have the same version of the ledger. In banking, cryptocurrency using Blockchain can reduce the cost of financial transactions because of the absence of third-party intermediaries.

Patent landscape of Blockchain

Together with the fast-growing interest for Blockchain the number of patent applications filed in Blockchain has increased in recent years. The following graphs illustrate the IP landscape of Blockchain and show exponential trends of the number of Blockchain patent families filed worldwide and targeting Europe.

As global filings increase, the number of patent applications targeting Europe is also increasing. About 70 % of these are filed as direct filings at the EPO. Both graphs display a sharp increase since 2015.

The EPO is anticipating further growth in the number of filings of Blockchain patent applications. The EPO presented tools and practices it has adopted to carry out search and examination of Blockchain patent applications. The EPO treats Blockchain patent applications as Computer Implemented Inventions and assesses these according to the relevant guidelines and the evolving case law.

Challenges of patenting Open-source technology

The fundamental elements of the Blockchain are open source and therefore not patentable. For instance, the cryptographic Hash function “SH 256” used in the Bitcoin Blockchain is a standard function which is available freely to anyone. Therefore, patentable inventions in the field of Blockchain must concern technical means that add value to the fundamental elements of Blockchain. Newly identified problems in the field of Blockchain may lead to patentable solutions. Such problems include the lack of communications between different Blockchains, scalability issues, and challenges relating to privacy.

Blockchain has been built as an open-source technology and the industry currently develops most Blockchain systems using open-source software codes shared through collaborative projects.

Open-source software used to write Blockchain codes serve as prior art with the potential of destroying the novelty of some Blockchain patent applications. The EPO has started to use various open-source libraries to identify relevant prior art when carrying out prior art searches for Blockchain patent applications. The huge amount of open-source software publicly available through collaborative efforts might prevent the grant of overly broad Blockchain claims.

Pitfalls to avoid when drafting Blockchain claims

Blockchain by nature is a distributed technology which operates across geographical territories having different jurisdictions. When a method claim involves several nodes, some steps may be carried out by a node inside the jurisdiction where the patent is enforceable while others may be carried out outside where the patent is not enforceable. In this case, the blockchain patent owner may have to rely on contributory infringement, which may be more complex to prove and to remedy than direct infringement. Ideally the patent proprietor would only rely on direct infringement. To facilitate enforcement of a Blockchain patent, it is preferable to draft a method claim such that all the method steps are performed by only one node. In this case, the patent can catch an infringer in a single jurisdiction. For this reason, it is advisable to avoid, wherever possible, the drafting of a method claim that includes several cooperating nodes. In the Blockchain field, this is often possible since the same mechanisms are often repeated at each node.

Mitigating the risks of litigation

The first patents related to Blockchain have started to grant in recent years and very few litigation cases have taken place. There is a risk that when litigation occurs early in the history of an emerging technology such as Blockchain, it may prevent the technology from blossoming and from reaching its full potential. Certain stakeholders which actively develop open-source Blockchain technology are collaborating through organisations such as “Licence on Transfer” (LOT), or “Open Application Network” to defend themselves against the risks of patent litigation.

For further information, please contact Stephane Antoine, Patent Scientist.