Blockchain and IPR: A Breakthrough Collaboration

Overview

Law and technology are complementary to each other in the sense that, when a new technology is developed the law ensures the protection of it as an Intellectual Property (“IP”) asset similarly, at the time the law needs to be adaptable to the technology to get supplementary leverage.

Intellectual Property Rights (“IPR”) have grown to prominence where people are more aware of their artistic rights. With the emergence of new technologies and rising threats to IP rights, the industry is witnessing the need for technology to devise proper protection of IP rights. These concerns are not limited only to the enforcement of the rights but also IP asset management is an equally challenging issue. The latest technologies need to be utilized to strengthen the whole IP regime and a fresh look at the current digital work is needed.

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With the growing popularity of Blockchain technology with cryptocurrency, the world is intrigued about the unexplored potential of the technology in various industries. Features like decentralized network, secure information, and transparency makes it more advantageous over other technologies.

This article will help in understanding various unexplored possibilities of Blockchain technologies in the field of IPR Laws.

Introduction

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Blockchain technology is a decentralized, peer-to-peer (P2P) network-based public digital ledger system. This digital ledger system is a type of Distributed Ledger Technology (DLT) that is maintained by the participants themselves and is immune to third-party intervention. The technology is immutable as the technology involves the storage of information in encrypted blocks made up of codes, which are independently time-stamped and contained individual transactional data. These blocks are linked using hash pointers to form a chain, i.e., a blockchain.

The ledger is maintained by the network participants, i.e., nodes in a decentralized manner. It makes it tamperproof where any change or any subsequent transaction is not possible without the consensus of these participants.

Functioning

Blockchain offers multi-dimensional utility as it can store any kind of data such as transactional information, multimedia data, design data, and so forth. The data, being most vulnerable to cyberattack, can be protected through the blockchain system which makes it virtually unalterable.

The transaction of information between the user and the recipient is generally secured through a principal algorithm:

1. The user or the originator and the recipient are assigned a pair of cryptographic keys.

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2. The user sends the encrypted information to the recipient.

3. The transaction between the user and the recipient is broadcast to a decentralized P2P network, i.e., nodes.

4. Miners in the network, i.e., who maintain and validate the record of the transaction through blockchain creates a new stamped block which will be a proof of work.

5. New blocks are added to the blockchain and a cryptographic signature is assigned to each block to ensure that no alteration of records can be done.

The information can be accessed by any participant of the network. The Blockchain network is mainly of two types – Public Blockchain and Private Blockchain.

A Public Blockchain is an open network that can be accessed by anybody for public broadcasting and transparency of the transaction whereas, on the other hand in a Private Blockchain, only those who have permission can access the information. The Private blockchain is preferred mostly by regulated entities which control the access to certain invited participants only.

Scope in IPR Laws

IP rights are generally administered by governments or their subordinate IP repository offices. These systems have their inherent physical limitations which often lack the capacity to protect those rights. The issues of piracy of copyrighted works are a serious concern amidst the advent of internet sharing techniques and as the market gets more concentrated and globalized, the issue will certainly become more vulnerable to treat and would require a more feasible and reliable alternative. In the same context, Blockchain technology offers some untouched possibilities:

IP Registration

Across the globe, IP registers are either maintained in papers or on computers. These records have evidentiary value in a court of law, it also contains subsequent transactions of these IP rights. The IP records are being registered at different IP repositories remotely, there is a high chance of the information not being in sync. In such a situation, constant revision of the information poses a big challenge.

The DLT-based technology offers these repositories to develop an all-inclusive register for all IP assets, right from the date of its registration. This will benefit especially the copyright authors to corroborate their original authorship. In trademark laws, the blockchain system will be extremely useful in the revocation claims for non-use. This will not only help in identifying the rightful proprietor or author but also in the execution of royalties on assignments or transfer of copyrights could be awarded in real and this will certainly minimize the number of litigations. Even in auditing, assignments and licensing, mergers and acquisitions, this system could be very useful.

Anti-Counterfeiting and Ledger Maintenance

In times of rapid technological advancement and the generation of E-Contracts or Smart Contracts, the onus subsequently increases on the authorities to conform with the technology and ensure the improved and traceable transaction. Chain of Supply or chain of custody is a process through the record of every transaction is carried but unfortunately, this process creates the opportunity for corruption. Through blockchain, these transactions via e-contracts can be recorded at each stage of the chain which would be useful for detecting counterfeit goods by customs authorities thereby preventing their entry into the domestic market.

Trade Secret

Increasing common business especially Small and Medium industry is a constant concern as to protect their inventions as trade secrets. These trade secrets are stored as proof on a private blockchain platform system where the information is encrypted which means the information will be shared and yet be secured from any third-party infringement.

World Intellectual Property Offices (WIPO)

WIPO was created to promote and protect intellectual property across the world by cooperating with countries as well as international organizations and to connect the IP Laws system through uniform standards and infrastructure throughout the world. Blockchain provides a framework to create a shared platform through an autonomous organization creating borderless online cooperation where various parties can report their compliance to the appropriate authority in an automatic manner eventually creating a uniform structure across the globe.

Currently, with 193 signatories, WIPO administers 26 treaties that deal with various IP issues under which certain protectionary provisions such as Patent Prosecution Highway (“PPH”) Scheme which require cooperation with other IP offices during the prosecution process. Though the information of certain IP assets is in the public domain yet the mining and compilation of such information is oftentimes difficult. Nevertheless, the blockchain technology makes it a much easier process by giving a singular platform for broadcasting especially the departments such as International Searching Authority, International Preliminary Examining Authority, or Receiving Office would be more benefitted to track already registered patents, trademarks, or copyright.

Legal Developments & Implications

Worldwide

The enforcement agencies like police, custom and excise or societies through the unique feature of virtually unalterable, the information can be used to settle several IP disputes. France became the first country to regulate the recording and securities transactions on a blockchain system. In April 2016, the French government ordered legislate rules regarding “mini-bonds”. The Order, for the first time, defined Blockchain as“a shared electronic storage device” or “a shared electronic recording system allowing for authentication”. In 2018, a Court in Hangzhou (China) recognized Blockchain-based evidence for the first time, and immediately after this decision in 2019, the Apex Court of China affirmed the use of evidence stored and verified on blockchain platforms.

India

In India, although there is no dedicated law or guideline that could govern the use and operation of the blockchain. Over time, as the technology use is increasing the government has a positive approach towards its implementation.

The Indian IT Act, 2000 provides legal recognition and protection for transactions through electronic communication and contains provisions for the prevention of unauthorized and unlawful use of computer systems. And since the amendment of the Indian Evidence Act, through Section 65A the legal significance of e-contracts or smart contracts has attained more prominence making it admissible as evidence in the court of law.

Mr. Arun Jaitley in his Union Budget Speech of 2018 said that India will explore the use of blockchain technology proactively to help promote the digital economy. In pursuance of this objective, NITI Aayog, the Indian think tank has recently come up with some proactive suggestions and innovations including an indigenous blockchain initiative IndiaChain. A discussion paper was even published by the NITI Aayog to strategize the implementation of a decentralized data marketplace which will be based on blockchain technology.

Apart from all Governmental proactive steps towards the development of Blockchain technology, a few other organizations are also working for the advancement and growth of the technology. NASSCOM, FICCI are some examples of such associations.

Potential Hurdles

The major hurdle, inter alia, is the high cost of the whole system. The widespread use of blockchain requires high energy consumption and with the continuous operation the efficiency of the hardware tends to get low so this requires regular up-gradation of the network which becomes extensively costly. Another significant challenge with blockchain technology would be recognized in the books of law, although there are constant developments are going on in the world for the adoption of blockchain in different legislations. Some other challenges are namely compatibility and standards, privacy concerns and public confidence in technology and participants, and so forth.

Real Life Developments

Non-Fungible Token

Non-Fungible Token (“NFT”) was first used by CryptoKitties, a digital instrument containing unique characteristics. These tokens can be compared with an Aeroplane ticket, although superficially, all tickets look the same each ticket contains some unique information that helps to differentiate one particular ticket from another. Similarly, each NFT has a unique digital identity that can be used to represent unique property on a blockchain.

Ethereum

Ethereum is a decentralized blockchain platform that provides various blockchain services including smart contract functions. It even provides other applications with the blockchain system for storage on the wide network.

Open Repository

Open Repository is a web-based repository system through which the users can upload files and metadata, create author profiles or browse through the searches that would help the owners to identify already patented creations.

OpenLaw.io

It is a digital contracting platform for lawyers, based on blockchain technology and it helps in creating and executing legal agreements. Through OpenLaw, any agreement can be secured digitally through digital signature and all transactional work will be recorded automatically leveraging the scope of smart contracts in the legal scenario.

E-Print Archive (by IIS)

E-Print Archive initiative is an online digital repository for research papers, technical reports, unpublished findings, etc. [email protected] is now part of the worldwide institutional e-print archive. It is integrated with Greenstone Digital Library software, which enables the full-text search of the e-prints.

Discogs

Discogs is a website and a DRT-based database for information about music recordings. The creator can upload key, tempo, and other musical metadata on this platform. It provides a platform for the users to buy and sell music in the marketplace and ensure a DLT-based transaction of rights and royalty.

Conclusion

A sound IP system requires strong, traceable, immutable, and verifiable records of IP rights. In the present world of globalization where the world is coming closer through the internet, the need to strengthen the IP regime increases subsequently. Blockchain is one such revolutionizing technology that would be useful in delivering better protection to intellectual property. From the above study, it becomes evident that blockchain has immense potential to cater to the contemporary needs of IP offices across the globe. Ensuring faster search results, tamper-proof record management the technology would aid in proper prosecution, enforcement of IP rights, and minimizing IP disputes.

Despite the enormous potential of Blockchain technology, certain limitations demotivate the implementation of the technology in the regular working system. It has been debated that these shortcomings can be rectified over time with new technological development but that should not hinder the applicability of such revolutionary technology. These challenges need to be addressed effectively to avail unreckoned benefits of blockchain technology.


This article is authored by Sakshi Shairwal and Saransh Awasthi of Sakshar Law Associates.

Adv. Sakshi Shairwal, Head, Sakshar Law Associates


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