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Patents: Their Role in Blockchain Innovation

blockchain patents

Patents play a significant role in the landscape surrounding blockchain innovation. For companies operating in industries driven by technological movements, the emergence of blockchain technology appears to be an increasingly difficult phenomenon to ignore. Now, the number of blockchain patents and patents on adjacent technologies is growing, begging the question whether patents take away from the core decentralized ethos of blockchain or if they help the new technology thrive and find new applications. 

With companies across various industries looking to employ technological solutions based loosely – or entirely – on blockchain technology, blockchain-related patents are continually filed, raising questions as to how the influx could affect the landscape moving forward.

Blockchain patents filed by major Canadian institutions

Blockchain-related patents in Canada illustrate the role that patents play in blockchain innovation across the country. In March 2018, for instance, a Royal Bank of Canada (RBC)-filed patent was published for a credit score platform using blockchain and adjacent technology.

The patent was released on March 15th, 2018, and was originally filed on September 14th, 2017 with the U.S Patent and Trademark Office (USPTO). It describes a blockchain used to track identification data and store predictive information about borrowers and their credit histories.

The move marks yet another example of major institutions filing patents as gateways into the world of blockchain innovation. Previously, TD Bank filed a patent released in April 2018, for a blockchain-based system designed to facilitate real-time transactions made with digital currencies.

The patent, which was filed on September 28th, 2016, makes use of a central system to verify blockchain transactions, trading decentralization for transaction speed. Overall, not much is known about the intent of the patent, but TD Bank is rumoured to be one of the largest U.S. blockchain patent owners, according to findings from Envison IP in January 2018.

Patents as a gateway for blockchain innovation

For businesses looking to explore new avenues of innovation, patents provide a sense of freedom which allows companies to benefit from a first-mover advantage, without having to rush to market. Here, companies benefit from filing patents in a bid to earn assurance that their competitors won’t be able to deliver their invention before they can.  

This is especially beneficial in industries that are crowded or otherwise hyper-competitive. With blockchain technology continuing to gain traction in recent years due to its plethora of potential real-world applications, companies may view blockchain as an unsafe investment.

This is where the relationship between patents and blockchain technology becomes clear. For institutions like TD Bank and RBC to invest resources in blockchain and adjacent technologies, they typically want some form of guarantee that their investment will be protected.

Through patents, these companies can garner confidence that their blockchain pursuits aren’t redundant or obsolete by the time they come to fruition.

Patents and the decentralization movement

Ensuring profits by staving off competition, however, could be seen as antithetical to the decentralization movement evangelized by the blockchain community.

While blockchain has since escaped its original intent to serve only as the foundation for digital currencies, many of its current applications in the world today exist to circumvent intermediaries and central authorities. The notion of a patent securing a mini-monopoly for a central authority may not be something the community wants to deal with.

In an increasingly trustless world, the idea of systems that use blockchain to facilitate decentralized transactions and information storage is extremely attractive to startups and individuals.

In fact, projects like Bitcoin are the result of community-driven initiatives. No individual owns Bitcoin and it is instead an open source project, with the “main” version chosen through public consensus. Despite arguments over brand identity, Bitcoin and similar blockchain projects exist with the principle that anyone can create their own version at any given time.

This is of course, not the case for all projects, but is a key value of many proponents within the industry. However, the factors that make blockchain an attractive form of new technology for proponents are largely the same reasons that businesses await patents before entering the technological movement.

Building business without killing innovation

To-date, it is hard to find evidence that patents have encroached on innovation within the industry, or stepped on the toes of the decentralization movement. Largely, this is because patent offices are selective in which applications they approve; companies cannot patent any given idea or the concept of blockchain as a whole.

However, there is still reasonable discourse as to how patents play into a movement that promotes the absence of central authority and the freedom for anyone to create their own projects. In the future, this relationship could be called into question if startups are discouraged from entering the blockchain landscape due to risks of potential patent lawsuits.

For now, however, it appears that companies continuing to file patents that allow for a less-competitive approach to the blockchain industry is a potential gateway for innovation, provided the system is not abused.


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