The rise of cryptocurrencies and blockchain technology has intricate implications for many industries ranging from finance, healthcare, media, arts, real estate, supply chains and logistics, voting systems and so on. And even though blockchain has been around for a while now, it is only in the past couple of years that it has caught momentum, being predominantly associated with cryptocurrencies but also and intellectual property (IP) transactions and management.

Blockchain is a versatile technology standing for transparency, security, accountability, with great resilience to fraud and relatively low maintenance costs as this technology is creating a shared database that can track and record all transactions and assets altogether. And since no single user governs the blockchain and thus there is not any centralized ledger and the chain is constantly updated and users have access to the entire chronological activity, the moment something is on the chain, it cannot be removed. All these traits have a lot to do with IP, as there are in fact a good couple of areas where IP and blockchain cross paths.

Blockchain is here to stay (cross-industry reach)

This so-much-talked-about blockchain technology is a decentralized, shared, immutable distributed ledger technology (DTL) that records the provenance of digital assets, basically, a system that records information. Since blockchain is a DTL, there has been recorded a surge in the number of patent and trademark filings related to the core technology and adjacent brands and with the United States Patent and Trademark Office (USPTO) alone, after a quick search, you can find around 7333 records. However, these are not the only implications of the rise of DTL, and we should expect more a more elaborate application of blockchain for IP in the years to come.

To picture that, consider that if in 2020 there were just about 5000 cryptocurrencies, now – at the time of writing – there are around 6453 cryptocurrencies, with a total market cap of $2,550,514,112,015, and a total trade volume of $161,653,900,929. From all the 6453 cryptocurrencies, you have probably heard of Bitcoin, Ethereum, Binance Coin, Dogecoin or Tether, especially since many businesses and even states have started to use it.

See the already famous case of El Salvador President, Nayib Bukele, declaring in June that Bitcoin, the very first cryptocurrency, would become legal tender and within days Bitcoin Law was passed, becoming a legally recognized payment instrument, a financial mean accepted by the legal system, that is, in this case translated into the requirement of businesses to accept Bitcoin for all payments.

Amazon, Microsoft, Nvidia, PayPal, Walmart, Alibaba, Samsung, Toyota, Nestle or Coca Cola are amongst the public companies that have adopted blockchain. For example, Spotify uses blockchain technology to match the artists with the license agreements whilst De Beers uses blockchain technology to secure and track their diamonds across the value chain, from the mine to the cutter, polisher and eventually to the jeweler.

So, can blockchain and IP really “waltz”?

Think of tech startups and the new wave of innovators, inasmuch as all the fully fledged companies that are keen on protecting their IP in a business environment extremely competitive in which, in many cases, exclusivity is the key to success and here is where blockchain comes in handy.

First of all, blockchain can be used an IP registry where all IP owners can keep the digital certificates of their IP and make use of the platform in order to get royalties from others using their inventions or creative works via smart contracts.

Secondly, a smart contract is a computer program based on blockchain technology that automatically gets executed whenever a determined conditions is met, which means simpler procedures in terms of enforcing and establishing legal rights. These self-executing contracts can prove very useful in patent transactions for example, that usually involved multiple steps in the process: verifying the assignment of the patent, its validity, negotiating the sale agreement, paying and notifying the relevant patent offices of the given transactions.

Smart contracts can be used by inventors that seek investors but that simultaneously want to protect their work. So, through a ledger comprised of a brief description of the project, inventors could market their product and protect allowing others access to more information by accepting the terms and conditions of a smart contract. In this way, patent holders could expand their pool of licensees for know-how and trade secrets, whilst not jeopardizing their IP rights, especially since information published on blockchain might be used as evidence in IP related law proceedings.

Thirdly, blockchain technology can be used to store and catalog different types of original work, especially since there are not proper means for authors and creators to catalog their works. In turn, this­ means that ownership, creatorship and origin can be difficult to prove. In the age of internet, exercising copyright can be challenging since anyone can download or copy the content created and use it, but with blockchain, authors can see in real time who is using their work, stop copyright infringements or identify licensing opportunities and monetize their creations.

Blockchain can help secure proof of ownership by obtaining hashed digital certificates of the IP assets, which serve as a solid proof of evidence. In addition to that, blockchain can be used as an authentication tool in validating the integrity of the IP asset as it does not allow for duplication, and it can thus prevent piracy being used to distinguish genuine from counterfeit assets by using the ledgers.

Conclusion

Intangible assets have become key feature of the economy and their safety is part of a sane and sound business strategy. And, with the use of blockchain technology it is expected an increase in terms of the execution of IP rights and royalties whilst becoming more mainstream, more regulated and continuously driving innovation.