First presented by Satoshi Nakamoto in 2008, the idea behind Blockchain Technology was to enable the creation of the digital currency called Bitcoin. Over the years, blockchain has developed to the point of becoming an authentic new-age technology with the potential to replace many current digital platforms and in the long run, even the conventional digital business infrastructure. The blockchain technology follows the same pattern of digital distribution as used by virtually every service today but what it offers for individuals as well as businesses is far more powerful. The technology is expected to hugely impact the way conventional business dealings are carried out. Due to the nature of blockchain, Intellectual Property (IP) industry is one of those sectors that are particularly expected to be affected by this technology. Let us look at, in detail, what and how the technology functions and how it is efficacious in the IP industry.

What is Blockchain?

Probably the best way to describe blockchain technology in a simplified way is as “a decentralized network built for secure and candid transactions”. Since the idea is to make transactions safe and transparent, the technology is more commonly referred to as being an open ledger using the Distributed Ledger Technology (DTL.)

At its heart, there are two chief elements that are at work in blockchain technology. a) Authentication – identity proof of the parties involved in a transaction or deal. b) Authorization – permission to proceed with the transaction. However, any deal once made in a blockchain network is irreversible i.e. there is no way to cancel the transaction or whatever action required once it has been initiated.

Blockchain technology is “an encrypted database of agreements”. It means that any agreement made between two or more parties, is permanent in nature and neither party can then go back and modify or rewrite the terms. This type of agreement is called a Smart Contract by virtue that it holds both the parties accountable for fulfilling their end of the deal only by way of the course of action decided in the agreement. This elevates the otherwise looming risk factor between different parties engaged in a transaction in the digital world where deception is commonplace.

How does blockchain work?

Originally developed as the way to account for transactions carried out using virtual or digital currencies, blockchain technology is an accounting method at its most basic used to verify, enable and record transaction within digital currencies. Since blockchain is not controlled by single user or organization, there is no centralized version of the recorded entries so to speak. In fact, the chain is widely accessible to the public and any user can view the chronological order of activities in any particular chain depending, of course, on the permissions granted.  Any user looking at the database will see exactly the same order of entries since once something has been added to the database, it cannot be removed.

To understand how the technology works, let us walk through how a transaction takes place on a blockchain.

  • A party requests a transaction.
  • The request is broadcast to a network of computer, called nodes.
  • The nodes then verify the transaction using algorithms.
  • Cryptographic key (access control) holders or the miners, then authorize the validity of the transaction for the nodes.
  • Once verified, the transaction creates a new entry on the chain linking to the prior existing blocks.
  • A cryptographic signature is added to the newly created block.
  • The transaction is recorded and complete.

The use of blockchain technology gives rise to an advanced infrastructure attaining four stipulations:

  • Safer transactions
  • Speedier transactions
  • Cheaper transactions
  • Transparent, incorruptible network

Best known for its use as a technology behind cryptocurrencies, blockchain is in no manner limited to the financial field. The technology can be used to digitize, encrypt and insert virtually any document into the blockchain. The ability of this technology to ensure integrity and enforce transparency, is a factor that speaks volumes for its scope at a much wider scale across other businesses as well as potential role in countering the financial, political and institutional corruption. Separate from digital currencies, blockchain technology can be defined as “a way for untrusted parties to reach agreement (consensus) on a common digital history without using a trusted intermediary”. (link)

Blockchain for Intellectual property

The field of Intellectual Property (IP) is one of the most obvious areas where blockchain technology has immediate efficacy. IP industry is one of those sectors where most violations of copyrights happen. Without the presence of a legitimized system for record-keeping, such as the registry systems for trademarks, there is no adequate method available for authors and agencies to catalogue their work, which results in infringement of copyrights incapacitating owners from safeguarding their content or media and monetizing their work in full measure.

Blockchain technology is the answer to all these concerns as an IP registry, and helps give clarity to copyright authors, owners and agencies. Registering to a blockchain offers a fire-sure proof of evidence for the owners. As the blockchain transaction can neither be removed or changed, the information is safe and secure on the network for any third parties to access and view ownerships and licenses for any intellectual property. Recognizing the importance of blockchain technology for securitization in IP industry, Banu Naraghi, the Associate Attorney for Gerard Fox Law, explained, “Blockchain specifically is critical to the securitization of IP because it guarantees the validity of a transaction by recording the transaction on a main centralized register as well as a connected publicly distributed system of registers. The fact that data is embedded within a public network and updated with each transaction promotes transparency and prevents modification or corruption.” (link)

Uses of Blockchain in IP Industry

Many applications for the use of Blockchain technology in the IP industry are already underway and being further developed at an accelerated rate. The reason for this trend is the heightened security for content and other media that blockchain enables for authors and IP owners, and consequently, the potentially wide acceptance of this technology in the IP industry. Let us look at how blockchain can be of significance for the intellectual property owners.

 

Managing the Intellectual Property

Blockchain allows authors to record their copyright ownership of any material on a centralized as well as a decentralized network making it easy for the owners to see where and how their work is being used on the internet as well as work out licenses with third parties. Also the record becomes much more trustworthy with the entire history of the material being on a single chain.

 

Authentication of Intellectual Property

This is also great for authors since registering their work to blockchain provides them with a digital certificate of authenticity letting the third parties know about the original owners of the intellectual property as well as offering a way for the authors to tackle violations of copyright material.

 

Monitor and Control of Use

Currently, it becomes extremely difficult for IP owners to track, monitor and control the use of their content once it has been uploaded to the internet. By contrast, blockchain provides a complete, fully updated database for IP owners to monitor their work allowing them an access across a host of different sources to identify who is using their work and develop any licensing requirements they may wish to create.

 

Smart Contracts

One extraordinary feature of the blockchain technology is that any agreements made on blockchain are self-executing – called Smart Contracts. A smart contract is, in fact, a computer program code that is able to expedite, implement and enforce a contract on its own. This also means low administrative costs for the parties as the terms of the contracts are pre-programmed and do not need to be manually executed.

 

Encourage Legal Practices

The direct link between IP owners and users also encourages users to seek legal means to use an IP instead of opting for illegal practices because of high costs or difficulties associated with license processing. Further explaining the scope of blockchain for IP owners, Nathan Lands, the CEO of Binded – a startup democratizing copyright – commented that “the ideal future system is where there is a universal database for claiming ownership of creations and for paying royalties and making it as simple as possible for people to do the right thing.”

Micropayments for IP Use

The development of smart contracts can also be morphed into a system of micropayments for the use of an IP. The way this will work is that the IP owner can assign a Bitcoin address to their work which will enable the users to use the material in exchange of a small payment. This is a fair and transparent method for both the parties where the IP owner will get paid the royalty for their work and the user will also be able to avoid the intermediary costs of the conventional financial networks.

Startups providing Blockchain backed services for IP industry

There are a number of ventures already using applications based on Blockchain Technology for safeguarding and managing intellectual property. Some of these ventures are as follows.

ascribe

ascribe enables creators to secure their copyright; marketplaces to source legitimate content; and collectors to own authenticated digital content. The company enables formation of whole new businesses, such as unique digital editions, and secondary markets for digital property.

Binded

Formerly known as Blockai, Binded helps artists claim their copyrights and protect them affordably. An artist puts their work on Binded, such as digital art or photos, the platform creates a timestamp in the blockchain and gives the artist copyright certificate as proof, all of which is visible on the artist’s public profile.

Bernstein

Bernstein allows companies to create a digital trail of records of their innovation processes using blockchain technology.

Blocknotary

Blocknotary facilitates their clients for Blockchain enabled (a) timestamps for media files, proof of ownership, proof of integrity, and proof of existence on mobile devices; (b) video interviews for remote identity verification, fraud prevention, and customer service automation; (c) modern official electronic journal for US notaries.

Copyrobo

Copyrobo enables security of copyright anywhere in the world in less than 60 seconds, using technologies such as Blockchain and Qualified Timestamps to help clients prove and manage their copyrights.

Proof of Existence

POEX.io offers services to anonymously and securely store an online distributed proof of existence for any document. The documents are not stored in the database or in the bitcoin blockchain, so the clients do not have to worry about their data being accessed by others. The key advantages are anonymity, privacy, and getting a decentralized proof which can’t be erased or modified by anyone (third parties or governments).

Signatura

A digital signature platform enabling services such as:

Digital Signature – Sign or approve documents between multiple parties through a simple, secure and legally binding process.

Notary – Notarize any document, generating publicly verifiable proof of its origin, date, authenticity and integrity, without exposing its contents.

Custom Integration – Easily add blockchain-based digital signature and notarization to any application using Signatura libraries and API.

Stampery

Stampery enables users to notarize digital transactions and certify the existence, integrity, and ownership of any file or communication. Stampery is a verification and certification platform that generates legal proofs for all its customers’ sensitive documents using bitcoin’s blockchain.

 

Limitation of Blockchain technology

As efficient as the blockchain technology seems to be, it has its limitations like any other technology and may also be discussed here for the sake of clarity. There are three major issues that the blockchain technology yet has to reconcile.

Decentralized Information

The first and foremost issue facing this technology is the very way blockchain works which creates redundancy of data. It can be better understood in comparison with the technology of Cloud Computing where all the information is in a single database accessible by nodes everywhere. Whereas the blockchain technology works in sharp contrast creating thousands of private copies of the same database to be held by thousands of nodes. This is inefficient and unnecessary.

Scaling of Data

The second and perhaps even more significant concern is the scaling of data. Since there are constant updates for each and every private node holding copies located all over the world, this gives rise to high latency (the amount of time it takes for data to move through the network). This ultimately results in scaling issues. For instance, Bitcoin can only process 3-4 transactions per second. Ether can relay no more than 20 transactions per second. Whereas, Visa can process over 1,500 transactions per second. (link)

Irreversibility of Agreements

In IP industry, the permanency of the contracts can become a problem in the long run when any material is left orphaned. Once their owners are no longer available, their work will either become a history or there will be an unregulated record of copyright authorship.

Conclusion

Despite its drawbacks at the time, blockchain technology has enormous potential in the IP industry and it can develop into a godsend solution for IP owners and users everywhere. The technology will surely further develop to overcome its present shortcomings but it is here to stay being an incorruptible and transparent technology offering speedier transactions for reduced costs.

Blockchain advocates have pressed the importance of technology for future infrastructures for its transparency and low costs of maintenance. Different businesses are already showing interest in adopting the technology to update their existing systems. In case of IP industry too, blockchain has piqued the interest of IP owners in streamlining and simplifying the management of IP materials. Blockchain is still a long way from becoming the mainstream technology in the IP industry, but it is surely getting there.

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