Considerations when Pursuing Patent Rights in the Blockchain Technology Space

Considerations when Pursuing
Patent Rights in the Blockchain Technology Space

  

A blockchain is a subtype

of distributed ledger data structure, in which transactions are grouped into “blocks” that reference each other in cryptographic hashes.  Technologies are developing that implement blockchains to solve all sorts of problems related to transactions: privacy, security, data integrity, double-spending, dynamic/smart contracting, payments, interoperability, etc.  I started in this space at a time when there was very little published literature on blockchain technologies, including published patent applications. Times have changed; now patent applications for blockchain technologies are readily available, with many patents granted.  Blockchain technologies are a red-hot investment and development space right now and will be for at least the next couple of years. Many blockchain technology innovators begin with the same concerns. These concerns inspire the following five points of considerations for innovators in blockchain technologies who are interested in securing intellectual property rights.

Time is of the essence.  In 2011, the United States passed the America Invents Act, which was legislation that changed the patenting regime such that between two competing inventors filing an application for patent rights in the same or similar invention, generally the first inventor to file with the United States Patent and Trademark Office (USPTO) is the one who gets to claim patent rights on the invention.  Development in the blockchain technology space is moving at break-neck speed; a  compilation shows that since 2014, there are at least 275 patent applications in the blockchain technology space (and this list is missing quite a few groundbreaking publications).  Notice that blockchain-technology patents granted in the US tie the inventions to the physical computer processors. 

That’s yet another Alice-inspired patent application drafting adaptation.Strongly consider filing a provisional patent application as soon as feasible.  A provisional patent application does not need to be as detailed as a nonprovisional patent application, thus they are drafted quicker than are non-provisional patent applications.  The earlier a proper patent application is filed, the smaller the body of “prior art” from which the USPTO can pluck references to use against the invention’s patent application. Because time is of the essence, inventors will want to be organized enough to so that their patent attorneys can directly get to the meat of the innovative features of the invention. Patent attorneys benefit greatly from white papers and commented code. The attorney will be more efficient if s/he is able to reference well-drafted technical specifications. Great organization is a leg up in the race to file to the USPTO.

Find an appropriate patent attorney.  Not just any patent attorney– one with a technical background in computing applications.  The laws surrounding software-implemented inventions are quite convoluted and complex since the Supreme Court case Alice (2014) took us all down the rabbit hole.  So much so that many patent attorneys, who do not understand software applications well enough to understand the highly nuanced evolution of case law in this area, will say bizarre and wholly misleading things like “software can’t be patented.”  The intended meaning of the statement is absolutely false; software-related patent applications are granted nearly every Tuesday by the USPTO.  Likewise, if a candidate patent attorney gives the aura of being a master in this patent space, s/he does not have the mindset serve any blockchain technology client.  This space is developing so fast– no one understands or can hope to understand all of it anytime soon.  For now, all attorneys (even those with highly relevant computational technology backgrounds) must lean heavily on their inventors to understand the relevant aspects of blockchain technologies–things are moving rapidly for blockchain technologies.  That being said, though, an attorney who has worked with some clients in this space likely will have some foundation upon which to build an understanding of the invention.  When interviewing attorneys, ask about their relevant technical backgrounds.

If the patent application is simple, it’s stupid. Inventors and their patent attorneys should study granted patents in this space (most of which are well post-Alice!).  Not a single granted patent application in this space is written such that a layperson can easily understand the invention. This is absolutely appropriate because these applications are judged by the examiner under these criteria: they must be written so that a ‘person having ordinary skill in the art’ (PHOSITA) would be able to replicate and innovate off of the allowed patent application after the original invention’s patent term runs out.  Even with a software development background in network science, parallel computing, and trade-settlement technologies, and experience with blockchain technology patents, there are many concepts in the blockchain technology space that are still challenging for me.  I take care to probe my inventors as a PHOSITA.  Be careful about how much the attorney simplifies a patent application in the software-related arts space; it’s this dumbing down that’s led to the rejection of patent applications for truly innovative and nonobvious inventions (and began a progeny of absurd case law interpretation, a la Alice).

But do keep it neatly comprehensible. Remember that examiners and judges at the USPTO that will be reading the patent application, and that an assigned examiner might not know much about blockchain technologies yet.  Good patent applications for cutting-edge technologies set definitions early and conspicuously in the patent application. Define blockchain!  Blockchain networks and distributed ledger systems are not synonymous.  There is even disagreement as to the whether or not ‘blockchain’ is a concrete noun.  If consensus protocols are integral to the invention, patent application drafters should take care to define and describe them.  Many rejections of patent applications are as result of indefiniteness in the language of the application.  Drafters should not assume a USPTO examiner is just going to do an internet search and learn about these fundamental definitions on some widely-used wiki.  Have consistency between the language of the claims and the specification part of the application.  Claims inherit meaning from the relevant sections of the specification.  Patent prosecutors can and remind examiners of that when the examiner strays from proper claim interpretation.

Many inventors will pursue patent protection on the down low as they try to figure out what exactly they’re going to do with the invention.  Maybe the inventors are ultimately going to altruistically share the rights of to the technology for the greater good (altruism is a central cultural ideal and consideration in the original blockchain technology space or to get the network effects of a robust network of nodes.  No one yet knows for sure, however, what the future of blockchain technologies will look like. This is why inventors and their investors may want to bundle the rights in their IP now so that their choices for disposition are not foreclosed at the outset. As examples, opportunities may be foreclosed by another entity claiming the invention or the inventor’s own public disclosure.  Many inventors pursue patents for “defensive” purposes.  In any case, attorneys are bound by the highest level of confidentiality and may not act in ways that are averse to their client’s interests and wishes.  Patent attorneys in this space should seek to understand the culture of inventors and inventions in this space.

Blockchain technology innovators, in my experience, have great foresight and can understand many advanced concepts in patent law, perhaps because one must understand the economics of incentivization/gamification to implement true blockchain technologies.Raina Haque is the founder and lead patent attorney of Erdos Intellectual Property Law. Her technical background is in software engineering and bioinformatics. Prior to joining the legal profession, she was a business analyst and software engineer at a major Wall Street financial firm for global portfolio trading technologies. She was a research fellow at the National Institutes of Environmental Health Sciences in the Neurotoxicology and Nuclear Magnetic Resonance labs. At Wellesley College, her alma mater, she majored in bioinformatics. She serves the intellectual property needs of high tech and design clients. For more information, or to contact Raina, please visit her firm profile page.

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