One of the clearest signs of a growing technology is the number of new patents that emerge in the space. Last year alone, over 1,200 blockchain patents were filed, an increase from 594 in 2016. Companies like Bank of America, MasterCard, Goldman Sachs, Walmart, JPMorgan, and IBM are among the biggest names filing dozens of patents to secure their position in this fast-changing and highly innovative space.
However, some see the growing number of patents as incompatible with the open-source nature of blockchain technology. What makes Blockchains like Bitcoin and Ethereum market leaders are not their list of patents. In fact, almost all of their code is open source and can be easily replicated. It is the system of governance and the global community of developers who continually advance the network.
This confusion about what should and should not be patented in the blockchain space leads to controversial cases like the recent nChain patent filing, where just yesterday, Ethereum founder Vitalik accused the team of filing a patent for what is already considered well-established technology.
NChain received a European patent for what it describes as a “digital security invention.” According to a Press release on June 25;
“This Deterministic Key Generation technique provides for improved secure communication between a pair of nodes or parties on a network while being able to keep their private keys secret.”
In response to this approved patent, Vitalik tweeted;
This looks like they’re trying to patent plain old public master key-based deterministic wallets, like what we had in 2013. Can’t someone attack it in court with the obvious mountains of prior art?
— Vitalik “Not giving away ETH” Buterin (@VitalikButerin) June 26, 2018
If these accusations are true, it has disturbing implications for the industry as more companies (and patent trolls) seek to get away with patenting open source and already ubiquitous technology that could stifle innovation.
On a more optimistic note, it doesn’t seem likely that many blockchain patents can be enforced (at least not in the same way that a centralized corporation enforces a patent lawsuit against another centralized corporation).
The reality is, most of the organizations that blockchain patent holders would see themselves suing (if these ‘patents’ were infringed) are decentralized and not based in the US. Therefore, patent-holders would have a very hard time enforcing their patents simply because a DAO is unlikely to vote on paying massive settlement fees to centralized old guard companies for the technologies they themselves are pioneering.
It seems like the massive surge in patent filings are from older companies like Goldman Sachs and IBM, who believe that they can secure their position not through innovation, but by using other ‘companies’ out of existence, or controversial Blockchains like nChain and their founder, Craig Wright.
In either case, it is clear that patent lawyers need more education on the open-source nature of blockchain technology in order to avoid approving patents that are neither legitimate in their claims, nor enforceable in their industry.