Written by: Ratko

Intellectual Property in the Age of Blockchain

Intellectual property includes all intangible creations of the human intellect. It involves patents, copyright, industrial design rights, trademarks, trade secrets, even plant varieties. Whether you create a piece of code, signature system, innovative process, practice, art, board game, write a book or a piece of music, you should be guaranteed your IP rights as an author — alas, this doesn’t really work properly in practice.

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For example, do you remember that old game — Tetris? It was enjoyed by 495 million people and yet its creator didn’t see a dime from it. There simply wasn’t a way for a Russian developer living behind the Iron Curtain to protect his intellectual property in the big white world. This doesn’t seem like a relevant example at first, but there is a clear parallel to be drawn to the contemporary age.

With the widespread adoption of internet-related technologies, everyone has the opportunity to become an entrepreneur in one way or the other and make a living from it, turn a hobby into some additional revenue, or even just have the recognition of their name being immutably tied to their creation for the whole world to know. Now, let us quickly discuss a practical example here: meet Hana. She lives in a smaller country in Europe and wants to make a board game. Or she wants to write a book. Whatever it is, she needs to protect her IP in order to be able to monetize it one way or the other if she desires to do so. Naturally, she can relatively easily solve that issue in her home country, but she wants to reach her target group at least across Europe, if not globally. She could go for some sort of international trademark or copyright, but that requires significant funding which is unavailable to her. Now, her country is probably a part of some sort of international IP agreement (such as WIPO), but enforcing it from Hana’s position abroad is extremely difficult, if not impossible.

The can of worms opens right here. The moment your work hits the internet, there is a high probability of it being copied or downloaded and redistributed, making it almost impossible to enforce proper attribution and potential earnings. Even if someone wants to pay you for the use, there is no guarantee that ownership and subsequent opportunities stemming from it will be tracked back to you.

Guaranteed by law, but difficult to enforce

Things get even more complicated if you are called to prove your authorship — differing regulations and defining standards, various expenses involved in obtaining proper proof and the legal process, and political and economic influences make this process a true minefield. Furthermore, evidence of creatorship is not the only aspect of IP. There is also the issue of managing property ownership. What if a group of authors comes up with new creation? How they handle joint use of intellectual property can often lead to misunderstandings and in some industries even lawsuits on a regular basis. Naturally, this depends on the type of agreement and/or contract they create among themselves, but enforcing it is currently a long and arduous process.

Furthermore, difficulties involving searching and discerning about who holds the rights can often be almost insurmountable. Often the way IP rights are registered and protected creates a so-called “patent thicket” — a dense web of overlapping IP rights that prevents invention or new tech to actually be used and commercialized without first resolving a really long list of overlapping IP or patent rights. Moreover, there are sizeable funds that lay around untapped, with entities such as industrial regulatory bodies often collecting a fee for IP use, but the sums never reach the original authors. Complex legal regulations and difficulty of proving and enforcing IP rights, especially for joint authorship pieces, simply block the proper flow of funding to be realized.

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Can blockchain help?

Protecting, managing and enforcing intellectual property rights is one of the areas where blockchain can really excel, supported by the proper widespread adoption framework. For now, let’s focus on the potential of the technology itself.

Blockchain, as a distributed decentralized ledger, provides the perfect solution to record the ownership of just about anything. This could solve a cloud of problems in one fell swoop — smart registries would provide an immutable record for comprehensive tracking of everything that is created, form the evidence of creatorship, first use, licensing and IP management rights, to the tracking of every use and appropriate monetization per case basis, which helps to establish and enforce fair and objective agreements.

Smarter registers of intellectual property

One of the largest issues when it comes to protecting intellectual property and patents is the difficulty of searching for existing databases. For starters, there is no global registry. While US Patent and Trademark Office usually serves as an unofficial global service when it comes to for example patents, if you want to do business worldwide, you need to register with each national agency, which further impairs the possibility of searching.

Blockchain technology could, with relative ease, fulfill the need for the global register, enabling easier search for IP rights, making sure that you are properly protected and don’t accidentally infringe on other people’s rights, as well as enabling you to enforce, defend and exploit your IP rights. A lot of ‘rights thickets’ would be much easier to navigate and overcome, especially in cases with multiple owners or when IP changes ownership for any reason.

On the other hand, some types of IP are not registrable, like copyrights. In court, it’s often very difficult to prove authorship. There has to be evidence of use, proof of originality, etc. Time-stamped immutable record, which is an integral part of a solution which is based on blockchain technology, would definitely solve this issue.

Basically, if it comes to court, artists today have to jump through hoops to prove that the first use of their intellectual property can be linked to their authorship. In the case of blockchain powered register, the moment the art is created as well as first use would easily be tracked and proved to any and all relevant parties.

Smart contracts could be the key

Another key property of blockchain is that it can facilitate smart contracts. A smart contract is a computer protocol intended to digitally facilitate, verify, and/or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.

In other words, a blockchain solution can automatically execute a license for IP use. If you are a photographer, you can use blockchain-based image rights with a smart contract embedded. What’s smart about it? Well, if a user of your photo is a citizen, the contract can trigger appropriate payment compared to the type and level of usage which is requested. If a newspaper, news portal or big corporation wants to use the picture, the contract can scale the payment accordingly. It’s not the same if your music is spun on a party or if the big studio uses it for their new blockbuster movie.

Unexplored potential: Pirating communities

So far, there has been no effective way to stop piracy. Customers don’t like invasive DRM solutions and there is simply no protection strong enough to prevent pirates from cracking and stealing various products from industries such as games and music, e-books, art, movies, and apps. With blockchain technology and implemented smart contracts that keep track of IP use, pirates could be incentivized to essentially become legal distributors of various types of content, where they would be responsible for validation of distribution and payments, and in return be rewarded with a percentage of each transaction that goes through their node. Naturally, an undertaking such as this would need to be validated and overseen by some form of international authority (new or existing), but with less or no intermediaries, making the widespread use of content cheaper than it is now could create a more balanced playing field primarily for content creators, where they would get the percentage they actually deserve, the users of content would be prepared to pay realistic prices instead of resorting to illegal ways of obtaining and using content, as well as creating prosperity and fair distribution of rewards for everyone involved in the process.

The future is here — but it largely depends on adoption rates

There are already many initiatives all over the world trying to tackle these kinds of issues, and early-adopter companies and startups who deal with protecting and handling intellectual property through blockchain technology are starting to sprawl up more and more.

MUSE is a ‘third generation’ blockchain-based service, a self-paying royalty distribution platform which teamed up with multiple streaming and retail platforms. Artists can embed all the data in the registry (e.g. not only the property and licensing data, but also traditional metadata such as who is performing, bitrate and ID3v2x data that is commonly contained in, for example, MP3 or other lossy or lossless formats).

LOCI is providing LOCIcoin utility tokens which are used exclusively within the LOCI suite of products for the purposes of searching, analyzing, staking and exchanging IP rights. They have fantastic free Venn Diagram IP search tool which helps new inventors assess the novelty and demand of their ideas.

Bernstein Technologies offers individual creatives and businesses a range of tools for creating and enforcing IP law. Trade secrets are protected by advanced cryptography and would be suitable for IT and coding development as well.

Binded is focused on individual creatives and small teams to help them find out who is using their IP online. They also issue a blockchain based copyright certificate as proof of ownership.

Kodak is developing KODAKOne platform to help photographers assert control over their work. Using the Ethereum platform and ERC-20 token to license each image with embedded IP data. Crawler bots scour the internet detecting images that weren’t properly licensed, and after the stolen image has been detected, a smart contract can enable quick payment to be made and license obtained, through Kodak’s own crypto — KodakCoin.

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Scriptarnica is the very First Blockchain Based E-Book Platform. It envisions a simplified publishing process, which helps all stakeholders in the process — writers, publishing agencies and readers. This approach gives writers the option to select who they need out of all the middlemen in the publishing process, enables fast and cheap microtransactions that allow you to pay as you read and only for the content you need, and rewards all platform contributors. Its decentralized platform is designed to give deserved credit back to content creators instead of middlemen. Writers will be able to create content on the platform free of charge and choose to publish it part by part (chapter by chapter) or as a whole book for a small fee. They will be able to receive instant payments as somebody buys parts of or the whole book. Publishing content to the network is done by forming a smart contract with the following information: book info, book price, single character price (serves to calculate a price per each paragraph/page element and price for “work-in-progress”. Scriptarnica will also enable writers to get complete and actionable book analytics — with this kind of valuable feedback, authors will be able to improve their content significantly and build their reputations and communities around it.

When a book is published on the platform, everyone can see its description, author info, reviews, ranking, and pricing method. If a reader chooses to buy the whole book, smart contract will be triggered and tokens will be transferred from the reader to the writer. The reader will have full access to the book, which will be stored on IPFS and will be accessible in offline mode. However, if the reader prefers reading chapter by chapter or page by page, he will be able to scroll through a table of contents to find the desired chapter or page and jump right into it. Every time an event is triggered, the reader will get a notification to confirm the transaction, or he can select the autopilot reading feature for seamless reading without interruptions. In both cases, readers will have a visual check-up of how much they are spending.

The reviewer role can be taken either by another writer or a book reader. The newly published books need to be reviewed and are going directly to the “Coming Soon / Publishing” queue, so first readers can provide their feedback and list a book as visible on the platform if they find it satisfying. Also, the writer can ask specific writers or other network participants to review the book he wrote before publishing. However, reviewing is not the only way in which you can help the network to operate. There is also a place for translators, designers, and marketers to contribute. Besides this, as Scriptarnica is going to be built using IPFS, a distributed file system that seeks to connect all computing devices with the same system of files, one can also become a book holder and earn tokens from basically being a content provider.

What’s the catch?

There is no catch — except adoption. Blockchain is indeed everything that creatives and inventors can dream of technology-wise. Right now it is being adopted very slowly and cautiously by official regulatory bodies internationally, but that’s also the beauty of blockchain based solutions. They can be so efficient in tracking, managing, protecting, enforcing and handling of IP and it’s monetization, that third parties and official bodies will simply have to fold under the potential impact and change that it can bring across industries.

Blockchain is a tool that will help innovators and creators profit from their work by facilitating the implementation of new platforms and solutions for a fairer distribution of earnings across verticals. It doesn’t only provide a more fairly distributed income, but it generates prosperity for everyone involved, and even brings new elements into play, as is the case with reviewers and contributors in the case of Scriptarnica. With blockchain based solutions, be it IP protection databases or smart contract powered streaming, options are starting to open up for creatives of all types. Blockchain could, in the near future, truly usher the world into a true information-based economy.

Would you consider using blockchain technology to protect your intellectual property? Share what you think in the comments.

This article is part of our blockchain awareness posts where we try to help newcomers and people interested in blockchain use cases enter the space more easily. Follow us and subscribe for more upcoming articles such as this one, and feel free to join the conversation on Twitter and LinkedIn.

For free business consultation about how blockchain can impact and change your business model, or anything else related to the technology — get in touch with us.

Intellectual Property in the Age of Blockchain was originally published in MVP Workshop on Medium, where people are continuing the conversation by highlighting and responding to this story.

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