Blockchain in the Real World #4: Intellectual Property

We have a new system of recording transactions- the blockchain- that is shared by an international cohort and increasing number of devices, allowing us to track and verify the creation, ownership, and sale of digital media and intellectual property (IP). With IP now accounting for around 80% of a business's bottom line, it seems this new technology is a match made in heaven! So how exactly is this new system of reporting changing the way we create, protect, and interact with intellectual property?

What Is Intellectual Property?

Intellectual property, at its core, is a property that is intangible. Although this is not an exhaustive list, some of the most common types of IP include:

• All types of artistic work, including music, art, design, literature, photos. For example, writing a novel is an example of creating IP, which is owned and created by the author. The publisher then has rights to redistribute the IP.
• Inventions and scientific findings. These can be for both tangible and intangible assets and include designs, code, research, manufacturing processes, and new products/solutions.
• Trade secrets, sensitive or private information and data, business strategies.
• Other intangible assets such as logos and wordmarks.

How Is Intellectual Property Governed?

Although the creation of IP (regardless of its form) grants automatic protections under international laws, most forms can be registered with an authority to add further protection and proof of its creation and ownership. It is this point that will be particularly important as we dive into the impacts of distributed ledger technologies on IP regulation.

Currently, there are a number of common laws and regulations in place which dictate the rules and stipulations of intellectual property. These can vary across regions, and change depending on the type of property protected, however, IP generally falls under one or more of the following protections:

1. Copyright: the protection of your IP from unauthorised reproduction, where that IP is produced in a tangible medium, e.g. literature, music, and art. As the name would suggest, the granting of a copy-right offers permission to reproduce your IP, whether it is in copying, distributing, licensing or displaying said property.
   It is important to note here that IP that is produced in the course of employment automatically becomes the property of the employer. For example, if someone working for Volvo designs a new car part while under the course of ordinary employment, the design and manufacture of that part is now the intellectual property of Volvo. Whereas someone working as a contractor maintains the IP rights over their creation unless there is another agreement in place, or the rights are transferred.
2. Patents protect your rights over new and useful inventions, where manufacturing processes take place. These can include:
   -Utility patents for tangible assets such as machines, devices such as smartphones, materials and manufacturing processes
   -Design Patents e.g. designs for new inventions or improved designs for existing tangible items.
   -See more examples here.
3. Trademarks: the names, logos, colours, phrases, and symbols which differentiate your company/business from others. Although not strictly necessary, trademarks are typically registered with a national authority, such as the USTPO.
4. Trade secrets: the right over confidential business information, which gives you a distinct advantage over your competitors. As simple as it sounds, they are typically protected by keeping them a secret! However, other legal stipulations such as non-disclosure agreements, business policies and rights to information can also protect them. Examples of trade secrets include:
   -Formula’s and recipes e.g. KFC’s 11 secret herbs and spices, or WD-40’s world-renowned machine lubricant.
   -Manufacturing techniques and processes
   -Any other facet of business which grants an advantage over competitors, and is not readily available or attainable information.

Why Is Protecting Intellectual Property Important?

Protecting and verifying ownership over your IP is not only important as an individual/company, but it can also dramatically impact:

• The future of your business
• Rights over your creations
• Profits/income from their sale and distribution
• Your unique value propositions and competitive advantage.

Ensuring adequate IP protection is also a crucial part of building your brand and identity, protecting your business processes and controlling the use of your IP, and can impact upon public perception of your company and products.

Blockchain and Intellectual Property- Why a New Solution Is Needed

With all of these protections in place, you might be left wondering why we need a new solution at all. However, as I am sure you are already aware, the unauthorised reproduction of content has become incredibly prevalent, with far-reaching and often underestimated impacts.

Sure, streaming services like Netflix or Spotify may have changed the way we receive content, but it’s still unbelievably easy to access pirated movies, download music straight from YouTube etc… and it wasn’t too long ago that Napster and LimeWire allowed for huge databases of copyrighted material to be downloaded for free.

Now that we have a firm understanding of the types of intellectual property, and how they’re currently protected, I want to dive into some of these impacts to explain why the current protections are inadequate. Then we’ll cover some examples of how distributed ledger technology can solve these issues.

Social and Economic Impacts of IP Fraud

First and foremost, on an individual level, IP fraud can result in a loss of property or rights over your creations, as a result of not knowing that you had to protect your IP, or not knowing how to.

Similarly, unknowingly infringing on someone else's IP rights can be incredibly expensive. You may remember a few years ago the ‘Harlem Shake,’ a track released by Mad Decent records, which quickly went viral and saved the record label from closing its doors. Not long after, however, and two artists claimed the track's producer- Baauer- used their samples without permission, and were seeking remuneration in the form of a royalty payments for the infringement.

Honestly- I never thought I would see these clips again

In both cases, a settlement was reached and the samples cleared. However at the time of release, there was no way of knowing the single would become an instant phenomenon, and if it hadn’t, it is unlikely those IP infringements would have been remunerated.

On a more global scale, it is estimated that IP fraud costs the global economy around $200bn US per year, and it isn’t just limited to digital media. Earlier in this series we covered blockchain and counterfeit goods- a form of IP fraud which can cause thousands of deaths and illnesses each year due to fake medicines.

Of course, with the internet so readily at our fingertips, we infringe on IP on an almost daily basis. The only difference being it happens on such a small scale it is almost impossible to track and persecute.

However, with the potential for huge economic impacts on the individual, the measurable impact on the global economy, and the far-reaching social impacts that counterfeiting and IP fraud can cause, it’s easy to see that the current protections are not adequate.

How Can Blockchain Be Used to Protect IP

Just as a little refresher, the blockchain, or distributed ledger technologies (DLT) are a record of transactions. The first iteration tracked the movement of value (cryptocurrencies) however the technology can be used to trace and verify just about anything else, in an immutable and unchangeable record. For example, DLT can be used in supply chain solutions to trace garments from manufacture to sale.

Moreover, owing to the immutable nature of the ledger, there are obvious advantages of DLT, such as registration of IP, the time/date of original creation, as well as being able to trace the movement of this information and data between parties.

“Most important stakeholders in IP consider Blockchain technology a potential game changer for the industry due to its notary-like character that affords proof in form of timestamps.” — Mary Jeuten, Forbes contributor

Although this is not an exhaustive list, there are also a number of other advantages when it comes to IP protections:

1. Registration of patents and trademarks. According to Rossow, there were more than 440,000 new trademark applications in 2017 in the US alone. This resource heavy process can be simplified using a distributed ledger, which would create new entries and timestamp them, in order to prove original ownership and settle disputes. It would also alert the relevant authorities of the new creation, allowing them to be recorded and verified in a more timely and cost-effective manner.
2. Tracking the creation and distribution of unregistered IP. This adds a new layer of provenance to IP creation, as current protections do not actually require you to register your property. ECOMI Vault is one such application being built for this purpose.
   For example, let’s say you create a new song, and want to share it with a record label. You would first upload it to your Vault account (creating a record of it on the blockchain), and then you could share access to the song with the parties you choose to. This access would also be recorded, as well as the movement/any edits of your digital files, forming an immutable record from its creation, and verifying you as the original owner.
3. Provides evidence for the first time an idea, product or design was created and used.
4. Management of royalties and digital media, including micro-payments through smart contracts for music, movies and digital media.
5. Contract stipulations and automatic enforcement of agreements through use of smart-contracts, which can be built into the digital asset/intellectual property itself.
6. Authentication of counterfeit goods, reducing global economic, social and health-related impacts.
7. Allows for a new distribution method and validation of licensed content and products.

In a nutshell, DLT returns intellectual property rights to content creators, particularly where digital media is concerned. It not only allows us to trace and verify ownership but can simplify the registration process, allow for the automation of contractual obligations and payments (be they large or small), and enforce licensing agreements and contract stipulations, without the need for 3rd party enforcement, ambiguous proof or circumstantial interpretation.

We have also seen the establishment of the Chamber of Digital Commerce’s Blockchain alliance, touted as the “world’s leading trade association representing the digital asset and blockchain industry.” The establishment of this committee not only adds credence to the industry but also monitors and establishes guidelines for the new world of digital IP management, through initiatives such as the Blockchain Intellectual Property Council.

Real World IP Solutions Using Blockchain

Now that we know how blockchain can be used to enforce IP rights, let’s take a look at some real-world examples.

1. ECOMI

Thanks to the blockchain, it is now possible to own a digital file. This has opened up an entirely new world of content creation, management and distribution, as well as allowing for new licensing agreements and solutions. ECOMI is using DLT to create and distribute digital collectibles, by acquiring licenses from some of the world's biggest brands and making them available for purchase, trade and sale on the VE-VE digital collectibles platform.

Using DLT, we are able to verify the origin and sale of digital files, in this case, non-fungible tokens which are linked to the digital collectibles. For the first time, this makes it possible to digitise physical collectible items, whilst maintaining the inherent characteristics of collecting- scarcity, rarity, and value appreciation.

2. Vaultitude

Although not a live company yet, Vaultitude is an example of a blockchain-based company trying to merge existing IP legislation with increased security protections. By creating browser-based software, the company is building a platform for content creators to create proof of authorship, particularly where legal proceedings are concerned. It also ensures the safe exchange of confidential information and agreements.

3. Bernstein

Similar to Vaultitude, Bernstein is a web-based application that allows companies to create a digital trail of their IP, and is aimed at innovation processes such as inventions and designs. The platform provides an IP certificate, and groups all work done on a certain project together by using cryptographic protections.

Of course, these are just a few examples of real-world applications of blockchain technology. We also covered a few in previous articles, which you can access here:

• Blockchain in the Real World #1: Solving Counterfeit Goods
• Blockchain in the Real World #2: Ticket Scalping
• Blockchain in the Real World #3: Redistributing Energy

Although there are IP solutions being built, we are still awaiting streamlined and uniform processes to register IP using blockchain technology. Moreover, these platforms can only help to protect and enforce IP law if they are known, adopted and used. But with the continuing education surrounding DLT, we can all do our part to spread awareness and support these communities, to ensure a safe future for our intellectual properties.

As always, thank you for joining us. If you enjoyed this article please hold down the clap button and share it on socials! If you have any other use cases you’d like to see covered leave me a comment!

About ECOMI

ECOMI is a technology company based in Singapore and is leading the way in the emerging digital collectibles space. ECOMI offers a one-stop-shop for digital collectibles through the ECOMI Collect app bringing pop culture and entertainment into the 21st century.

The Collect app allows users to experience true ownership of premium digital collectibles. Through the app marketplace, users can obtain common, rare, or one-of-a-kind digital collectibles, share these across the social network service, and exchange them with the Collect community, all from the palm of their hand.

ECOMI sees digital collectibles as a new asset class that offers intellectual property owners the opportunity for new revenue streams in the digital landscape. Digital streaming, gaming, and in-app purchasing have become a multibillion-dollar market and the next to join this digital trend is the pop culture and collectibles industry.

For more information please see the ECOMI Collect Whitepaper or join the community on Telegram, Twitter and Facebook.