Most people, when they hear the word "blockchain", think of bitcoins and the FinTech industry. Blockchain is not equal to Bitcoin – although it came about as a result of the cryptocurrency Bitcoin, blockchain is not equal to ICO – this short-lived bubble: blockchain is a technology. Blockchain is so much more than that one application; blockchain has the potential to revolutionize records management in all manner of industries across the world, impacting upon so many areas from supply chain management and provenance issues for trade, food security, intellectual property and so much more.
What is blockchain?
Blockchain can be defined as an open ledger of information that is distributed and verified across a peer-to-peer network. In other words, it is a computerised public ledger that can apply to almost anything you may usually save to a spreadsheet or database. Each transaction or block is transmitted to all of the participants in the network and must be verified by each participant node (or computer hosting the blockchain) solving a complex mathematical problem. This process can involve thousands of computers. Once the block is verified, it is added to the ledger or chain. Different types of data can be logged to a blockchain, from transaction information to photos, videos and design documents.
The benefit of blockchain
It is un-hackable, immutable, auditable, transparent. It reduces the number of intermediaries. In the IP space, blockchain can help perform a number of activities: Evidence of the rights, record keeping, register and clear rights, control and track the distribution/trade of rights, establish IP contracts.
Why blockchain is a perfect fit for patents
Patents are distributed across countries by nature. There is no single registry for patents, but many dispersed around the world. Hence, the idea of a distributed network provides a smart solution to patent offices. But the real benefit of blockchain is the presence of smart contracts.
Smart contracts are pieces of code that execute on the blockchain in a distributed, consistent and secure way. If you take a transaction as simple as buying a patent, you need currently a different service provider for every step: check the assignment of the patent, check the validity of the patent, negotiate the sale agreement , execute and pay the transaction and then finally inform all relevant patent offices of the transaction (which is so complex that it is rarely done). Suddenly in the blockchain space, all those tasks get fully automated. The benefit is a drastic reduction in transaction and complexity.
The other interesting aspect of blockchain is to allow various governance schemes. Today, the blockchain-based registry that IPwe built is fully managed by IPwe. But IPwe pledged to change the governance of their registry and hand it over to a group of users, patent offices as soon as a legitimate group of interest appears. This is made possible by the blockchain. On the downside that is often referred to, the speed of transactions is mentioned. The good news is that in the patent space, you don’t need to handle 100 transactions per second. When one transaction per minute will be reached, the face of the patent world would have been changed forever.
Benefits for SMEs
The illiquidity and inefficiency of the patent ecosystem specifically deter players like SMEs and universities, to protect (and finance) their ideas. Blockchain technologies have the potential to bring greater simplicity, transparency, less intermediaries and ultimately foster innovation among entities that had a difficult access to the patent world.
Long term implications
It is fair to warn about possible side effects of blockchain. Much like Artificial Intelligence, blockchains aggregate a lot of data and therefore market power and abuse thereof. Every blockchain (and AI) project needs a carefully thought after governance strategy and implementation.
Author: Pascal Asselot (https://www.linkedin.com/in/passelot/)
Managing Director IPwe