Posted on January 23, 2023
Blockchain, web3 & IP: what the heck?
Recently, I had the opportunity to speak at an incredible conference in Paris called “Blockchain/Web3 & IP: What the Heck?” and let me tell you, it was a blast! The conference brought together some of the brightest minds in the intellectual property field as it relates to blockchain and web3, and I was humbled to be a part of the discussion panel alongside the heavy hitters Oliver Scherenberg, Alessio Balbo, Laurent Nowak, and the moderator Raffaele Battaglini.
The event was perfectly hosted at French law firm Gide Loyrette Nouel. Big thanks go to Claire Le Floch, Romain Vidal and LES France for the organization.
Introduction to key terms and definitions
The event began with an introduction to key terms and definitions in the field of blockchain and intellectual property. The panelists discussed the historical background of web1, web2, and web3, and how the use case of bitcoin played a major role in the evolution of the technology. They delved into the various aspects of blockchain technology, including cryptocurrency, self-sovereign identity, and the role of smart contracts. Additionally, they discussed NFTs, or non-fungible tokens, which are used to represent digital assets in a unique way. Finally, they touched on the topic of the metaverse, which is a virtual world where users can interact in a decentralized and autonomous manner.
Smart contracts and oracles
In this first part of the event, my job was to explain the concept of smart contracts and oracles . I began by defining a smart contract as a “contract” that is “smart”, meaning it is codified in a program that is stored on a blockchain and runs automatically when a certain condition is met. I highlighted the purpose of smart contracts, which is to automate the execution of an agreement or automate a workflow.
I provided examples of automatic actions that can be triggered by smart contracts such as releasing funds to someone, sending a notification, or issuing a ticket. I also emphasized that smart contracts can provide transparency and trustworthiness because all the information is on the blockchain.
I also discussed the different capabilities of smart contracts on different blockchain platforms. For example, the bitcoin blockchain has limited capabilities for security reasons, it has no loops for eample, whereas the Ethereum blockchain has a Turing complete programming language. However, I also highlighted that smart contracts can only access on-chain data and the need for external data flowing into blockchains and smart contracts.
To address this issue, I explained the concept of oracles which are applications that feed data from outside the blockchain into a smart contract. Oracles can source, verify, and transmit external information. They can also trigger actions in the real world, such as unlocking a smart lock.
I provided examples of the types of data that can be accessed by oracles such as sensor readings, satellite images, web APIs, and also legal data. I highlighted that oracles enable use cases for smart contracts that go far beyond cryptocurrency.
I also briefly discussed the Oracle problem which is how to verify that the data that is injected is correct and the need for trustlessness. I explained two types of Oracles, centralized and decentralized Oracles, where centralized Oracles are controlled by a single entity, and decentralized Oracles find a consensus on off-chain data before it is sent to the blockchain.
Key topics and issues related to the web3 industry
In the second part of the event, the panelists discussed specific topics and issues related to the Web3 industry. Some of the key topics discussed included:
- Licensing NFTs and the “can’t be evil” standard licenses
- Trademark protection in the Metaverse
- Safeguarding/enforcing IP rights in the web3
- Case law on trademark and copyright infringements in the Web3 industry
- New licensing models using blockchain/NFTs, monetization/tokenization of IP assets
Regarding licensing NFTs, the panelists discussed the importance of having standard licenses for NFTs to ensure that they are not used for malicious purposes. They also talked about the “can’t be evil” standard license which is a set of guidelines that should be followed when creating and using NFTs.
The panelists also discussed the challenges and opportunities in terms of trademark protection in the Metaverse. They discussed the importance of safeguarding and enforcing IP rights in the web3, and provided examples of case law on trademark and copyright infringements in the Web3 industry.
The tokenization of IP assets
My job in this part was to discuss new licensing models that are emerging as a result of blockchain and NFTs, and how they can be used to monetize and tokenize IP assets. I began by discussing the concept of tokenization of IP assets, which involves representing an IP right such as a trademark, patent, or copyright with a token (for instance an NFT). I highlighted that this can provide a way to digitally display ownership of IP in a secure, transparent, and immutable manner.
I also discussed the concept of proof of ownership of IP, and provided examples of platforms that use blockchain technology to create a timestamped trail of an innovation process. For example, Bernstein.io creates a timestamped trail of an innovation process on the blockchain, providing proof of possession of information (for instance an invention) at a point in time. Binded is another platform that uses blockchain to automate copyright registration and licensing for photographers and other creators.
New licensing models using blockchain and NFTs
Furthermore, I talked about controlling licensing agreements with blockchain-based smart contracts. I explained that this can be used to automate the licensing process, reduce the need for intermediaries, increase transparency, and trust.
I provided an example of IPwe, a smart blockchain-based patent transaction marketplace, where patents are represented by NFTs that encapsulate information about the IP right, including public data and private data. This allows for a transparent and secure way to manage IP rights and automate the licensing process.
Overall, I discussed how blockchain and NFTs can help facilitate new licensing models for IP assets and provide a secure, transparent, and efficient way to manage and monetize IP rights.
Patents for blockchain innovations
In the third part of the event, the focus was on patent protection in relation to blockchain and DLT-based technologies. I had the honor to discuss various aspects of patent protection in this area, including statistics, trends, patentability aspects, and the interplay between patents and open-source, with my mate Romain Vidal, who is the President of YMC LES France, Regional Ambassador of Global Blockchain Business Council (GBBC), and Senior Account Executive at IPRally.
We centered our discussion around three questions:
What exactly do patents protect anyway in the blockchain space?
The first question was “What exactly do patents protect anyway and how do they differ from other IP rights like trademarks and copyright?” I explained that the similarity between the different IP rights is that the owner can force others to stop using the protected thing or allow them to use it in return for a license fee.
However, the difference is what “the thing” that’s protected is. Trademarks and copyrights protect a specific thing in the real world such as a name, a logo, or a piece of code. Patents, on the other hand, protect more abstract things, namely inventions, i.e., a unique way of doing something, a unique functionality.
I also highlighted that patents are not directly tied to a concrete product and there is no patent on Ethereum and nor it the Bitcoin whitepaper patented. Rather, patents can protect specific innovative functionalities such as cryptographic inventions to improve security, computer networking inventions to improve performance, scalability, and detecting malicious events, and all sorts of innovative applications of blockchain technology. I also discussed the patentability requirements for blockchain inventions, which are essentially CIIs, so that the EPO’s typical requirements of novelty and inventive step focussing on the technical contribution apply.
Do patents even play a role in the blockchain space?
The second question was “Do patents even play a role in the blockchain space?” I explained that patents play an important role in the blockchain space.
There are roughly 50,000 patent documents that mention “blockchain” and the number of filings has been growing exponentially since 2018. The top applicants include interesting players from diverse industries:
- tech giants like Alibaba Group and IBM
- pure blockchain companies like nChain
- FinTech companies like Mastercard, Visa, and Bank of America
I also mentioned IPwe’s Blockchain Smart Pool which gives participants access to about 1,200 patent assets of nChain with the aim of providing “freedom to innovate” to the patent pool members.
What should web3 startups do with their IP when they start building their business?
The third question was “What should startups do when they start building their business in the blockchain space?” I recommended startups get some basic understanding of patents and not to fall for the common misconceptions that “software isn’t patentable anyway” or “we use open source so we’re safe”. I also recommended that startups check if their competitors have patents that need to be considered or worked around through a Freedom to operate (FTO) search.
I also emphasized that startups should understand that patents are ultimately business assets and can typically improve the company valuation during a funding round or an exit, but it’s important to start early as a patent portfolio takes years to build up and once something is published, it can no longer be patented.
A typical startup patent strategy, I suggested, would be to file as early as possible and then delay the costly decisions as much as possible.
Get ready for the main event
The conference “Blockchain/Web3 & IP: what the heck?” was a great opportunity for me to dive into the complexities of intellectual property in the blockchain and web3 space. I was honored to be a part of the panel and share my insights on patents for blockchain and web3 innovations.
At the same time, this was only the intro to a bigger event in autumn, where we will delve deeper into various aspects of intellectual property in the blockchain and web3 space. Can’t wait!
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