Blockchain and Intellectual Property Rights (Part 67)
Welcome to the 67th part of the 100-part series on Blockchain.
Intellectual property rights, abbreviated as IPRs, are the rights given by law to a person or a company to have exclusive rights to use their invention or creation without the worry of competition, at least for a specific period of time. Examples of intellectual property include music, literature, and other artistic works; discoveries and inventions; words, phrases, symbols, designs, etc. The intellectual property rights include copyrights, patents, trademarks, industrial design rights, and trade secrets. The reason for intellectual property is to encourage innovation without the fear that a competitor will steal the idea and/or take credit for it. This also gives economic incentives to the innovators for their creation because it allows people to profit from the information and intellectual goods they create. These economic incentives not only stimulate innovation but also contribute to the technological progress of countries.
Challenges to Intellectual property rights
(i) The intangible nature of intellectual property presents difficulties when compared with traditional property like land or goods. Unlike traditional property, intellectual property is indivisible, which means an unlimited number of people can consume an intellectual good without it being depleted. Thus, protecting intellectual rights is a challenge. Let’s understand it through an example a landowner can surround his land with a robust fence and hire armed guards to protect it, but a producer of information or an intellectual good can usually do very little to stop their first buyer from replicating it and selling it at a lower price. Intellectual rights are strong enough to encourage the creation of intellectual goods but not so strong that they can prevent the unethical use of intellectual property rights.
(ii) On the other hand, electronic distribution of intellectual property on the internet poses numerous risks for content creators since it becomes difficult to maintain control of such property or monitor who is using it and for what purpose. Ownership can be hard to prove, and authors may be unable to stop infringements or monetize their works effectively.
Now the question arises how can Blockchain protect Intellectual Property Rights?
Blockchain in patent and trademark protection
In today’s scenario, the only way to get patent rights is by filing an application with the Patent and Trademark Office and then having a patent issued in your name. That is the only way to get a legal monopoly. If you don’t patent your rights, it will be free for anyone to copy once it is out in public and you have exceeded the timetable to get a patent. The IP offices that grant intellectual property rights can use Blockchain technology-based repository to create “smart IP registries,” which would create an immutable record of events in the life of registered IPRs. It could include when a patent or a trademark was first applied for, registered, first used in trade; when a trademark or patent was licensed, assigned, and so on. The ability to track the entire life cycle of an intellectual property right would have many benefits, including smoother IPR audits.
Let’s understand it through an example, collecting information on the use of a trademark in trade or commerce on a Blockchain-based official trademark register would allow the relevant IP office to be notified immediately. This would result in reliable and time-stamped evidence of actual use of a trademark in trade, both of which are relevant in proving first use, genuine use, acquired distinctiveness, or goodwill in a trademark. Similarly, distributed ledger technology could be used for defensive publication documents as prior art to prevent others from obtaining patents over such technologies.
Blockchain in copyright protection
(i) Copyright protection is a bit different. Copyrights may be registered, or they may be unregistered. At the moment of creation, when the artwork is “fixed” in some tangible form, it becomes automatically protected by copyright. For instance, a photographer, when he clicks the photo, gains copyright to that photo at the same time. Registration is not necessary to receive copyright protection. An unregistered copyright entitles you to reproduce, sell, and perform the copyrighted work. Beyond this, your rights are limited if your copyright is not registered. You cannot bring a suit for copyright infringement without first registering your copyright. In such a scenario, Blockchain technology can play an important role within the context of unregistered IP rights such as copyright since it can provide evidence of their authorship, creation, originality, and use. Uploading an original design or work and details of its designer or creator to a Blockchain will create a time-stamped record and solid evidence to prove these matters. Blockchain technology can be used to track the path of any single copyright product through the stream of commerce. This can let companies know what path their products have traveled to get to a seller, and whether their products are being diverted to unauthorized markets, and therefore know whether products showing up for sale by third parties are, in fact, authentic or whether the goods might be unlawful copies. Without Blockchain, this type of investigation can be much more painstaking and sometimes virtually impossible. Thus using Blockchain technology to track the root of every single product that a company produces will provide the promise of knowing, with certainty, if a product is truly a copy or whether it is a genuine product that has been sold.
(ii) The age of the internet has presented many challenges for intellectual property law. Most notable is the fact that digital products and content can be copied with extreme ease and can instantly be shared across the entire world. By this, intellectual property owners can lose control of their creations virtually overnight. Software piracy is a perfect example of the loss of revenue that can result from unauthorized copying. In the current scenario, it is very hard to prove the ownership of a creation. It can also be difficult for authors to see who is using their work and equally difficult for third parties who want to use the author’s work to know who to seek a license from. Because of this opaqueness, authors are often unable to stop infringements or to make the most of monetizing their works.
(iii) Using Blockchain as an IP registry may help give clarity of the owners holding the copyright. By registering their works to a Blockchain, authors could end up with tamper-proof evidence of ownership. This is because a Blockchain transaction is immutable, so once a work has been registered to a Blockchain, that information can never be lost or changed. Thus the third parties who want to use an author’s work could use the Blockchain to see the complete chain of ownership of a work, including any licences, sub-licences and assignments. Currently, once an author uploads his or her work to the internet, it becomes extremely difficult to maintain control of that work, and to monitor who is using it for what purpose. With Blockchain platforms such as Blockai and ascribe, once a work is registered and verified, authors can know who is using their work, thereby making it easier to identify and stop infringements and put in place licenses for any use they wish to authorize. Thus through Blockchain, an artist can find out who is using his/her art or photos on the internet in seconds. By putting their work on Blockai, such as digital art or photos, they create a timestamp in the Blockchain and receive a copyright certificate as proof.
Blockchain in obtaining IP license
An intellectual property can also be sold or licensed to generate revenues for you or your business. With copyright, in particular, it is difficult for people wishing to use to know who is the author or owner, and how to get a license. Often, people will end up using the work illegally rather than seeking a license because of the difficulty or high price of doing so. Blockchain may offer possibilities for licensing works by creating a direct link between authors and users. One useful feature of blockchain is smart contracts, which could assist in establishing and enforcing IP agreements such as licensing agreements and allow the transmission of payments in real-time to IP owners. A licensing agreement is a partnership between an intellectual property rights owner, i.e., licensor, and another who is authorized to use such rights, i.e., a licensee in exchange for an agreed payment in the form of fee or royalty. Such types of licensing agreements are also important in other circumstances, such as during a merger or acquisition, or in the course of negotiating a joint venture. As an intellectual property owner and a licensor, you expand your business to the other horizons of your country and the world by issuing license to other authorities to manufacture, sell, import, export, distribute and market various goods or services which otherwise may be prevented from doing so because of your monopoly on them.
Blockchain for micropayments
Smart contracts can also be tied into micropayments for the use of content by enabling a potential user to make a small payment to the author in return for this use. As a result, the author can be remunerated without having to pay the high transaction costs of existing financial networks. Let’s take the example of tech business Ujo which has used Blockchain in its business model to rectify inefficiencies in the music industry. In one of its projects, Ujo worked with singer-songwriter Imogen Heap to release her song on Blockchain. Users were able to purchase licenses to download, remix and sync the songs via smart contracts, with each payment sent to Imogen Heap directly. Thus, artists can use Blockchain to better control and exploit their creative works, to improve collaboration, and achieve fair and efficient remuneration.
Layer 2 scaling solutions: Transaction fees on the Blockchain network is high. But by implementing the Layer 2 scaling solutions (channels, rollups, sidechains, and plasma), transaction fees would become significantly low, making micropayments feasible.
Scalability concerns
(i) Blockchain used will be permissioned Blockchain. Storing the entire data about the intellectual properties and their rights, IPR holders, etc., on Blockchain is very challenging as it is very costly and will significantly slow down the processing on Blockchain. Thus, distributed file storage IPFS can provide low-cost off-chain storage to store data, and the hash of the uploaded file is then stored on the Blockchain and accessed through the smart contract. Any modification in the uploaded file would change its hash. IPFS has been explained in detail in Part 18.
(ii) To make the Blockchain scalable, layer 1 (discussed in Part 15) and layer 2 (discussed in Part 16) scaling solutions will be required to be implemented.
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