Patentability of Blockchain Technology: Is it the future?

Mr Amit Aggarwal is the Co-Founder and Director of Effectual Services

Blockchain can be defined as an anonymous online ledger which makes use of the online data structure and thereby simplifies the way we transact. Basically, it is a growing list of records, called blocks, which are linked using cryptography where each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Invented in 2008, as a Peer-to-Peer Electronic Cash System in the form of the cryptocurrency Bitcoin, the technology was the conception of a creator known by the pseudonym Satoshi Nakamoto.

Decentralisation of data is the most important and distinctive feature of the blockchain technology. Basically, with blockchain, multiple people can submit entries into a record instead of a central source and a group of users can control the way the new data is appended and the chain is updated. As pleasing as it sounds, the idea of a secure transaction without the involvement of a centralised third party eliminates a number of risks that come with data being held centrally.With the trump card of digital data being distributed without being copied, this technology has paved the way for a new and revolutionised form of Internet. The tech community is now focused at mining new ways for its usage other than the initial adaption in the form of cryptocurrency.

Finance is one of the leading areas this technology is traversing its roots into.The early birds to file a patent on blockchain were big financial institutions such as Bank of America Corporation, Mastercard International, Goldman Sachs.The main focus of these patents being the settlement, management and conversion of cryptocurrencies. In India, a few patent applications based on the technology have been filed as well. Other than this, smart contracts, shared economy, governance, file storage, Internet of Things(IoT), identity management, data management, stock trading, healthcare and life sciences sector, e-commerce,pharmaceuticals, automotive, luxury and consumer goodsetc. are the fields in which the technology is gaining pace. Leading institutions like OpenBazaar,Samsung, IBM and AT&T,Linq,ASX (Australian Securities Exchange), the Deutsche Börse (Frankfurt’s stock exchange) and the JPX (Japan Exchange Group) are among the biggest bidders working on the development of blockchain.The patents filed by these maturing sectors are expected to be “end use” patents i.e. the ones built with the same base technology but having different application areas.

During the recent years, the filing of patent applications based on blockchain technology has seen a spike in countries like the United States, the United Kingdom, Canada and India. Started in 2009, the patent filing activityhas witnessed as many as 4000 patents being filed on the technology, 20% of which have already been granted by the various patent offices according to a research.But, the underlying twist comes into play when meeting the criteria for patent filing on blockchain technology. The highlighting principle of the technology i.e. the use of a peer-to-peer network using proof-of-work to record a public history of transactions is also a problem in the path of its patentability. It is like getting a patent on an algorithm, directed towards to an abstract idea, which is considered to be an exception to patentable subject matter.In India, a recent debate at Delhi High Court in Telefonaktiebolaget Lm Ericsson v. Intex Technologiesconcluded that, “any invention which has a technical contribution or has a technical effect and is not merely a computer program per se” is patentable. Thus, the invention could still be considered patentable subject matter even if it involves the use of the algorithm in solving a technical problem, as long as it not merely a computer program per se.

In spite of the spike in the number of patent applications being filed in the field of blockchain technology, it is going to have a hard time in the coming years. The patentability of the technology is also not going to be a smooth ride as it is going to have a hard time proving the inventions based on it as patentable subject matter, novel and non-obvious. Following this, there is also a dire need to develop and train legal practitioners specialized in this field to facilitate better legal advice to the innovators. Also, patent offices need to issue certain guidelines to discern which category of blockchain-based services will be patentable so that innovators can channelize their efforts in that direction. In a nutshell, the future of the technology is prosperous but it is going to pass a long night before it sees the light of the mass markets.

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