Blockchain and Intellectual Property: How Bitcoin Technology Might Change IP Protection and Registry
The same technology behind the electronic currency bitcoin [1] has continued to find new applications in transactions involving important legal documents and information, including intellectual property. [2] Blockchain technology allows intellectual property creators to store their art or inventions on a secure ledger, so they can keep track of a “verifiable copy” of their original work. [3]
The blockchain, invented by an anonymous cryptographer under the pseudonym Satoshi Nakamoto, [4] is “a shared ledger for recording the history of transactions that cannot be altered.” [5] Typically, when parties enter into an exchange with one another, a centralized third party—usually a bank, or notary—must be involved to validate the transaction. [6] Blockchain allows parties to transact with one another without a third party, through a digital ledger that keeps track of the transaction as a bank would. [7] The ledger is different from a bank, though, because it is not stored in a central entity server, but rather, “distributed across a network of private computers.” [8] Once the transaction is recorded on the ledger, it cannot be tampered with. [9]
While originally used for currency-based transactions, blockchain technology is now on the radar of lawyers, including IP lawyers. [10] Blockchain allows IP creators to safely store their unregistered works in a secure ledger and timestamp them for later registration and protection. [11] By storing their information in a blockchain, they can ensure their work will not be tampered with or lost, and they maintain decentralized proof of it [12] before going through the process of registering with a third party—i.e., the United States Patent and Trademark Office. [13] In theory, the blockchain is a safe and efficient way of cataloguing works, because, like bitcoin transactions, it stores them on multiple private computers rather than a single centralized one. [14]
The blockchain has obvious implications for unregistered copyrightable works, and patentable inventions, particularly when a creator wants to bring an infringement action. For example, authors or patent inventors can safely store a time-stamped “cryptographic digest” of their writing or designs in the blockchain,[15] so that if they decide to bring a lawsuit for infringement before registering their work or while in the process of registering it, they can easily prove when it first existed. [16] Furthermore, blockchain could allow creators to track the use and chain of title of their work through licenses, sub-licenses, and assignments in the system, and “automatically disable a licensee’s ability to trade once the rights expire.” [17] The blockchain’s ability to clearly track IP rights might even find applications in trademark law. [18] Businesses could submit a potential trademark through the chain that would use an algorithm to find whether it is similar to existing marks, and then either grant the trademark or refuse it automatically. [19] The blockchain could also record actual use of a trademark, and notify the U.S. Patent and Trademark Office immediately, thereby lowering businesses’ burden of collecting evidence of use. [20] Finally, just as bitcoin has the potential to create a unified system of transactions across the world, blockchain could enable a more uniform system of IP registry recognized in many different countries. [21]
While the blockchain has the potential to decrease the cost of litigation, and create greater protection for unregistered works, it is unclear whether it can or actually will replace the current system of registries—particularly in the U.S. where these systems hold significant weight in proving rights.[22] Furthermore, if the blockchain does find wide use, it will most likely face some regulation in the process.[23] Until then, the system seems to be an efficient way for creators to give additional protection to their works.
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