Lawyer Monthly Magazine - March 2019 Edition

44 Special Feature FEB 2019 www. lawyer-monthly .com www.lawyer-monthly.com 44 Special Feature MAR 2019 Blockchain Patent Disputes: What Can We Expect? computers (and specialized cryptographic processors if they are used) that perform the cryptographic functions necessary to build and verify the data blocks that are distributed throughout the system. The uses of the system include what data gets tracked and verified. Patent Offices currently are more predisposed to grant patents on the infrastructure as one can easily appreciate the benefits of a faster running computer or processor. However, how the data is used that has been tracked and verified may also be patentable if its use is not as obvious over other blockchain- based systems, such as, if someone had filed a patent applicationonanimplementation of a smart contract whose code was stored in and executed by a blockchain-based system -- thereby turning a passive distributed ledger into an active perpetual machine. In what ways are patenting blockchain different to the more standard patenting of, for example, a new engineering concept? patentees and adopters alike, Casey outlines below to what we can expect regarding blockchain patent disputes. What efforts have already been made to standardize Blockchain? One of the major standards organizations is the International Standards Organization, and in 2016 it created a technical committee (ISO/TC 307 named “Blockchain and distributed ledger technologies”) to address a number of the standardization issues for blockchain. No formal standards yet exist, and they seem like they are still a long way off. (See https://www.iso. org/committee/6266604/x/ catalogue/.) To at least temporarily fill the gap, a number of industry groups (e.g., Blockchain in Transport Alliance and Health Level Seven) have begun to team together to at least discuss the technology and its potential uses within specific industries. (See https://www. bita.studio/ for transportation and click here for healthcare information.) Have these efforts worked well, and if not, why do you think more needs to be done? The standardization work of the ISO/TC 307 committee is moving slowly compared to the rate at which blockchain is being adopted. In fact, the committee has yet to adopt a proposal for a reference architecture or even a set of terminology. BiTA recently announced that it is going to use the IEEE’s help in order to assist in the preparation of standards, so BiTA too has not yet completed its standardization process. In order to advance this process, industry groups are going to need to focus on more concrete use cases that are potentially industry specific so that small steps can be achieved instead of trying to solve all problems at once. Patenting blockchain infrastructure: can you share the basics behind this? What ought to be patented? And how is the process currently? There is a difference between the infrastructure of blockchain- based systems and the uses of those systems. For example, the infrastructure includes the This situation closely resembles the 2000s technology war involving encoding digital video. From that emerged a number of standards by the Moving Picture Experts Group (MPEG), a working group that established many of the international standards for encoding and compressing video images at the time. Companies having patents covering portions of the MPEG standards relied upon a central licensing aggregator, the MPEG Licensing Association (MPEG-LA), to handle requests for the essential patents of the MPEG standards. “Blockchain adopters won’t want to license blockchain technology from multiple companies individually; they will want to go to a licensing aggregator that provides ‘one- stop-shopping’ and that handles the apportionment of licensing fees,” adds Casey. Being one of a few of attorneys who understands the unique utilizations of blockchain technology, knows what is on the horizon, and has the technical experience to help blockchain With any innovative, new technology, a race to file patent applications and heated battles over IP rights typically ensues – and blockchain technology is no exception. “Efforts to standardize blockchain technology are already in the works, and once a sufficient number of these standards are developed, a patent war to see who gets credit for the various parts of the technology is almost inevitable. Those utilizing a blockchain infrastructure may not know that the blockchain infrastructure may ultimately be patented by other technologists, and those technologists will want to be paid for it,” says Michael R. Casey, Ph.D., Partner with Oblon, one of the largest law firms in the US focused exclusively on intellectual property. “But even bigger questions loom – will industry participants be able to agree what patents are essential for upcoming standards and what will the licensing royalty structures be for those standards?”