Protecting and exploiting your IP rights with blockchain technologies
As we are all aware, blockchain technologies are not just relevant to cryptocurrencies: they can also be applied to other uses, including within the IP field. The reason for this lies mainly in the fact that, due to its design and structure, a blockchain is immutable.
To put it simply, a blockchain is a database “shared” amongst many devices (“nodes”) belonging to a network, meaning that each device has its own constantly updated copy of the database. Depending on what the purpose of the blockchain is, it can contain different sets of information: this might regard transactions, digital assets, status of physical goods, smart contracts. All nodes simultaneously and automatically record new information added to the database.
The information is stored within the database in so-called “blocks”, each of which has a certain storage capacity and can therefore contain a given amount of information. Once a block is filled with all the information it can contain, it is timestamped and it is given a so-called “hash”, i.e. a number that serves as a unique identifier. The hash is generated based on the information included in the block, meaning that, even if the smallest piece of information within one block was changed, the relevant hash would also change.
Every block includes the information recorded therein, a timestamp and a hash. In addition, it includes the hash of the previous block, which “chains” the blocks amongst them in chronological order.
Given this structure, it is virtually impossible to tamper with the information included in a block. In fact, if this was retroactively altered in one node of the network, the hash for this tampered block would no longer correspond to the hash recorded by the majority of the other nodes; hence the latter would refuse to record the alteration in the blockchain. The only way to tamper with the information in one block would be to alter both that block and all the following blocks, because they all include the original hash of the tampered one; and this would need to be done in all the copies of the blockchain held by at least 51% of the nodes, so that their tampered version of the blockchain would prevail. However, this would require immense resources and money, which would make tampering unfeasible. This is why the information included in the blockchain is immutable.
Here are some ways in which the above can be used to protect or exploit IP rights.
Proof of authorship
Original works enjoy copyright protection under Italian law as soon as they are created, with no need to register them. Nevertheless, in case of disputes, the author might need to prove that the work was created by him/herself at a certain date, which is much easier if the work was somehow registered and timestamped. Blockchain technologies can provide for this in a much faster and less expensive way than using traditional methods like depositing the work with a collecting society or a notary. In fact, placing on a blockchain a work – digitally signed by its author – generates immutable evidence that the author was in possession of that work at the date and time of the timestamp.
The same applies to trade secrets: they can be placed in a blockchain in order to obtain evidence of ownership at a certain point in time. Their confidentiality would not be compromised, as blockchains offering this service also provide for encryption of the relevant data.
Proof of use
Similar to the above, a blockchain can be used to record timestamped evidence of use of a certain IP right. This might be useful in a number of IP rights issues, e.g. to demonstrate first use or genuine use of a trademark or its acquired distinctiveness, or to demonstrate prior rights over an invention.
Anti-Counterfeiting
Blockchain technologies can help detect counterfeits because they provide the means to identify the provenance of given physical goods. The company will record on a blockchain the information about the original goods and their supply chain, and will include a smart tag attached to the specific goods, e.g. a QR code. By scanning the smart tag, supply chain partners, customers and authorities will be able to check the authenticity of the goods and its supply chain.
Even if the specific tag was counterfeit, i.e. it was duplicated starting from that of the original product, counterfeiting will still be detected. In fact, scanning the duplicated tag would reveal that the dealer does not belong to the supply chain for that product, meaning that the product and its tag are both counterfeit.
Transfer and Licenses
Transfer and licenses of IP rights can be made simpler through the use of a blockchain thanks to smart contracts residing therein. These are basically self-executing software that cause the automated execution of certain actions when certain conditions are met. IP right holders can use them, amongst others, to:
- sell their IP rights upon receipt of a certain payment: “if user X pays Y, then property over IP right Z shall be transferred to user X”;
- authorise use of certain copyright works upon receipt of a certain payment: “if user X pays Y, then user X can download a digital copy of the work Z”;
- collect royalties: “if work Z generates revenues on user X’s account, then Y% of these revenues shall be transferred from user X’s account to the rightsholder’s account”.
These are of course just a few examples. Needless to say, IP licence agreements are more complex than this and, for the time being, smart contracts appear unsuitable to include all of the relevant conditions. Nevertheless, as shown by the above examples, they can make the implementation of the agreement extremely efficient and predictable.