BLOCKCHAIN AND IP: A MATCH MADE IN HEAVEN
Updated: May 31
Introduction to Blockchain Technology
Blockchain technology has become famous as the technology behind cryptocurrencies such as Bitcoin. It is basically an open ledge of information that is used to track and record information and transactions, which is then verified through a peer-to-peer network. It helps to create a transparent and trustworthy record by allowing multiple parties in a transaction to verify what is to be entered in the ledger in advance without the involved parties having the right or the ability to change the ledger entries after the transaction has gone through. Each transaction is transmitted to all the network participants and must be verified by each participant through the solving of a complex mathematical problem. Once the transaction is verified by the participants, it is added to the ledger or the chain of information.
From the perspective of security of information, the real innovation behind the technology is that it ensures that the integrity of the ledger being maintained through a crowdsourcing model removes the need for a central authority. In simple words, the information is protected through the multiple computers that act as host to the blockchain. For this reason, this information is felt to be “near unhackable” as any change done to one entry would need to be replicated in all the ledger entries in all the host computers simultaneously. The traditional concept of blockchain envisions an open and anonymous network, but there are also possibilities of “private” blockchains where the administrators of the ledger need to be pre-screened.
Since this technology works at creating a secure, time-stamped and uneditable chain of information, it is finding applications beyond the finance arena and expanding to marketing and consumer engagement. It is now being used to track progress of goods through a supply chain, especially in case of luxury goods where the tracing of goods is important to avoid counterfeiting or sale of grey goods.
Blockchain has been found to be attractive to different industries for its potential advantages. Different types of data can be added to a blockchain from documents to photos and videos. This technology is continuing to develop even more.
There are various legal concerns still unanswered in relation to blockchain such as governing law and jurisdiction, and also data security and privacy concerns. Despite this, it has been felt that blockchain can help in IP protection and registration as well as evidence, at both the registry as well as the suit stage. It is also cost-effective and would also speed up the process. Potential uses include: a ledger containing evidence of creation, registration of IP rights, tracking the distribution of unregistered IP, digital rights management, even transmitting payment in real time to IP owners and so much more. It could also be used as an authentication tool for the detection and retrieval of counterfeit, stolen and parallelly-imported goods.
IP rights have been traditionally administered by the different Governments and their respective IP offices. These systems have their own physical limitation which sometimes hinder the protection of these IP rights itself. The issues such as piracy of copyrighted works are a serious concern due to the internet sharing and globalization of market. This has caused piracy to become much easier, especially if the work is published in one nation and then the pirated copies of it are created in another nation with lax copyright laws. Blockchain technology provides certain unthought-of advantages to prevent such actions:
Smart IP rights
The potential of using blockchain technology for IP rights management is unlimited. Recording IP rights through a distributed ledger technology rather than in a traditional database could effectively turn them into “smart IP rights”.
Another idea emerging is for IP offices to use the distributed ledger technology to create “smart IP registries” in lieu of a centralized solution that would create an immutable record of life events of a registered IP. It would be able to include when an IP was first applied for, registered, first used in trade, when those rights were assigned or licensed and so on. It would also resolve the need for collation, storing and collection of such evidence physically by the IP office.
This ability to track the entire life cycle of a right could have many benefits including easier IP audits. It would also simplify the due diligence exercises that need to be done for IP transaction, such as transfer of IP rights during a sale and whether the sale would have the goodwill attached or not. Confidentiality concerns could also be addressed by a written agreement.
Evidence of IP Rights
A ledger that shows who owns what IP, offers a potential reference point for the understanding of those rights and the extent to which those rights have been used in the market. This would be particularly helpful in jurisdictions where proof of first or genuine use is required to be proven. This could also be helpful in proceedings where recognition is necessary such as in cases involving well-known marks.
Evidence of creation
Blockchain technology could also assist with the unregistered IP rights by providing evidence of conception, use and status. Uploading an original design or work on a blockchain ledger will create a time-stamped evidence of the originality of the work. This has been seen as an interesting and manageable solution for management of IP which do not require registration such as copyright and digital rights management. This has even led to several blockchain startups to focus on this aspect of the technology.
Anti-Counterfeiting and Enforcement of IP Rights
A ledger which shows the genuine product, and the authorized licensee would enable everyone in the supply chain along with the consumers and the law enforcement authorities to distinguish the genuine product from the fake. A blockchain ledger will allow for provenance authentication which would show the origin of the products as well. These type of blockchain solutions are becoming very mainstream and are enabled to prevent counterfeiting of goods in the supply chain. Adding scannable blockchain tags and markers has also been another suggestion to prevent counterfeiting as the custom authorities will easily recognize the counterfeit good if its tag does not contain the information that the tag of a genuine article is expected to have.
Supply chain Management
Supply chain management is another aspect where blockchain is emerging as the most efficient solution. The ability to track goods through a blockchain ledger allows brand owners to enforce their contractual agreements regarding parallel importation or grey market activity. It could also be used to meet regulatory requirements.
As the popularity of the blockchain technology is increasing, the industry participants would have to develop norms and operability standards in collaboration with the concerned jurisdictions Many governmental agencies such as the European Union Intellectual Property office are actively looking into ways in which the blockchain technology can be exploited.
It therefore is the need of the hour to discuss the potential hurdles and address the legal dilemmas associated with the blockchain technology- such as questions of governing law and jurisdictions, data security and privacy concerns, etc.- and how these issues affect the IP arena in both theory and practice.
Title Image: Computer World
This article has been written by DivyakshiJain. Divyakashi is a final year B.B.A. LL.B. (IPR Hons.) student in National Law University Jodhpur.