Keir Finlow-Bates: The Space is Crowded, There Will Be Crossover and Theft of Ideas
Blockchain technology has been the domain of hundreds of startups that believe they have the answer to the world’s problems wrapped up in blockchain solutions. However, none of these companies can really be considered industry leaders, yet. By patenting ideas, not only can blockchain continue to keep moving forward, it can protect startups from corporations who would slow the entire operation down with their red tape and bureaucracy. PatentVue identified 1,045 US patents and published, pending applications specifically related to blockchain and distributed ledger technologies.
To this end, major corporations are starting to wade in and use their resources to become early adopters in the blockchain space. Microsoft has come in with not only Azure, but also COCO, and now its latest operation is to create a decentralized identity system. There is a need for more resources and money to be thrown at the blockchain space, which has predominantly been populated by startups with promising solutions, but less convincing abilities to execute. Some are looking towards patents in order to protect their blockchain projects until development is complete.
“It is a complicated ecosystem with a lot of major companies entering the waters, such as Microsoft. There are also a lot of innovative and less constrained startups that can come up with the more radical uses for Blockchain.”
Keir Finlow-Bates, the CEO of Chainfrog, recently managed to obtain his second patent concerning blockchain technology. This is part of their intellectual property strategy and is based on a “peer-to-peer geolocation system”. The real importance of patenting blockchain technology, as Finlow-Bates explains, is that the space is crowded at the moment, and there will be crossover and theft of ideas and innovations, so these are securities to advance specific aspects of a project without fear of being ripped off.
“In regards to our patent based on geolocation, there will be a lot of applications on the Blockchain that needs this, especially when it comes to logistics and supply chain, they will want an aspect of geolocation incorporated,” Finlow-Bates explained. “Things have changed. Blockchain began as a totally open sourced platform, but the world has changed since those days. It was an open repository and made sense in the early days when it was more of a hobby. The world has woken up and there are major players trying to stake out different areas in this ecosystem. This is why it is good for startups to have these patents to protect their intellectual property.”
Picture 1. Public Patent Application via USPTO
Sharks and Cleaner Fish
Patents, as a way to protect intellectual property, are nothing new, but the combination of patents and blockchain is still emerging. However, some of the technology giants, who have long been employing patents, are using this strategy on their entry into blockchain technology. According to Derwent Innovation, there are 631 patent families (1853 patents) in existence worldwide, of which roughly 75 percent (465 patent families) have been granted. Patents are no simple feat to achieve, with different methods for the US and the EU. In general, only a single independent claim in each category (product, process, apparatus or use) is allowed in a European patent (EP) application, but multiple dependent claims are possible. In US applications, the applicant may have a multiplicity of independent claims, for example, due to a very specific prior art reference, precluding consolidation of some independent claims into a more generic independent claim.
Picture 2. Blockchain Patent Filings Dominated By Financial Services Industry (Source: PatentVue)
Recently, there has been tangible evidence of these major players putting their stake in. Microsoft announced this month that it would be working on a decentralized identity system based on either Bitcoin, Litecoin or Ethereum's Blockchain. Essentially, those involved in Blockchain identity, including Vinny Lingham and Civic, are now in competition with Microsoft, and will find it hard to compete. Lingham at least has some sway in the technology space and could hold his own, but for smaller startup like Finlow-Bates’ ChainFrog, had it been in direct competition, additional aid would be required.
“It is a very complicated ecosystem with a lot of major companies entering the waters, such as Microsoft,” he explained. “But, there are also a lot of innovative and less constrained startups that can come up with the more radical uses for Blockchain and turn them around quicker without the usual red tape in these corporations.”
Tech giants are starting to corner the patent market for blockchain, with research showing that Microsoft has already filed 40 patents. IBM are also making their mark on blockchain, and to that end have 25 patents filed. Microsoft are grabbing the headlines as they venture into the power of the blockchain, but IBM have already started offering their own blockchain solutions. From Hyperledger, their open-source collaborative effort created to advance cross-industry blockchain technologies, to use cases, including food safety with WalMart, trusted identity with SecureKey, and private equity with Northern Trust, there is little doubt that IBM is not a player encroaching on the startup way of blockchain domination.
Essentially, both of these creators, looking to utilize blockchain technology, need to find a balance, a way to coexist in order for the best to occur for blockchain. “Sharks and cleaner fish,” Finlow-Bates said. “We need an ecosystem where both big and small can get along. Filing patents can help that as it also shows that we are serious as a startup and not simply wasting space or innovation.”
Open Source vs. Patented Solutions
Blockchain patents are relatively unheard of, although ChainFrog have acquired two and applied for eight more, but they are an interesting avenue to go down in regards to the protection of intellectual property in an ecosystem that has always been open-source. Finlow-Bates’ assertion that the ecosystem is changing is true. People are in blockchain as a business now, they are here to advance the technology, but also to be competitive and make money. Open-source can lead to competition and growth, but it can also quash innovation and execution if that competition is unfairly weighted.
Patents offer just one foot hold in gaining protection for intellectual property, but, as it can be seen, it is a space that will soon be taken up further by the likes of Microsoft and IBM. Startups have a pretty free reign in terms of cornering ideas, but those ideas are free to be copied, or poorly ripped off by other startups. What becomes problematic is when resource-heavy and powerful corporations start buying into those same ideas and patenting them before the startups can. It really does become a little fish in a big pond scenario.
Microsoft and other corporations can bring a lot to the technology with their resources and money, but blockchain is now what computing was when Microsoft was operating out of a Albuquerque garage in 1975 by a bunch of free-thinkers. Blockchain needs free thinkers and startups to push the envelope on a technology that is aimed at disruption and changing the world, but it also needs resources and money in equal balance.
Anton Corbin, editor-in-chief at the Bitcoin Patent Report, argues the industry should be preparing for a patent war: “The surge in price of Bitcoin, has brought a lot of attention to the underlying Blockchain and Distributed Ledger technology. With more than 2000 patents and patent applications regarding Bitcoin and Blockchain Technology, a patent war is coming, likely to be led by some of the major banks and other corporations, as well as patent trolls that see a great opportunity to make a play for Blockchain Intellectual Property (IP).”
Battle preparations are already in place, with the establishment of the Blockchain Defensive Patent License (BDPL), a new initiative that builds upon the idea of the Defensive Patent License (DPL), whereby signatories to the license promise to share all their patents with other license holders, on condition that those companies share their patents as well. Importantly, the license enables any member who incurs attorneys fees in a lawsuit against a non-compliant member to recover those attorneys fees from the non-compliant member. This preserves some of the open-source nature of the technology, while still allowing startups to arm themselves against the arrival of big business. The response from the likes of Microsoft and IBM is yet to be seen.
Picture taken from dilbert.com
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]