Patent Eligibility of Blockchain Inventions

The Australian Patent Office recently handed down a decision clarifying the patent eligibility of blockchain inventions, at least so far as Australian law is concerned.

Blockchain is a kind of database, with information, called blocks, distributed over a peer-to-peer network of individual computers, known as nodes. The blocks are linked together sequentially to form a continuous chain. Each block contains three elements: data, a unique signature called a hash, and a hash of the previous block.

In the Australian case, an applicant sought patent protection for a recent innovation in blockchain methodology that determines a cryptographic abstract from the data, rather than the data itself, so there would be no privacy risk associated with any leak at the nodes.

An examiner initially rejected claims to that idea as unpatentable since, on the grounds that the invention was not technical in character and required only generic computer implementation. But upon review, the Delegate of the Commissioner of Patents found that the claimed method did, in fact, provide a practical and useful technical solution in preventing breaches of privacy data.

Accordingly, at least in Australia, blockchains are not inherently unpatentable.

Update on IPRs

An Inter Partes Review is a proceeding before the USPTO, which allows third parties to challenge the validity of the claims of an issued patent without going into federal court. This system replaced the prior inter partes reexamination proceeding in 2012.

The USPTO offers a great summary of interesting statistics on IPR’s and other proceedings before the PTAB (Patent Trial and Appeal Board). A few highlights: Institution rates have gone from about 87% in FY13 to about 56% in FY20. During that same time period, pre-institution settlements have remained about 9% to 12%, and post institution settlements have gone from 90% to only 20%. Of over twelve thousand petitions filed, only about thirty-four hundred have gone to final written decisions. Of the cases that were instituted but not settled, about 21% found all challenged claims unpatentable, and about 7% found all challenged claims patentable.

New FishFAQ Video: Opposing Patents

There is a new FishFAQ video up on our Fish IP Law YouTube channel. This one covers opposing patents and answers questions about keeping track of competitors patents, how to oppose competing patent apps, how to object to a patent after it issues and licensing.  

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Unitary Patent in Europe

Since the 70’s there have been various attempts to replace individual European country patents with a unified patent good throughout participating countries. As it currently stands, there is a partially unified process- meaning one application in one language, but that application for patent protection must still be sought in each individual country. By 2012, the European Council and European Parliament had reached agreement on EU regulations that would make a unitary patent possible, but there have been objections among various members of the EU. But this process is underway again.

A European Unitary Patent will need to be created which would be a single right covering all participating EU member states, and a Unified Patent Court that would have jurisdiction over all litigation of those patents in those participating member states.

Germany has recently passed legislation opening the door for them to ratify the Unitary Patent Court (UPC) Agreement, but will not ratify this before the main agreement- the Protocol on the Provisional Application of the UPCA is approved. That requires all 13 states approval, and 12 have ratified to date, and the remaining ratification is expected in autumn of this year.

Wikipedia has a map of the status of European countries participating in the UP project.

Patent rights obtained in individual European countries before the UPCA is in force will be restricted to their national borders. They will not automatically become European unitary patents.

Obviously, a unitary patent can be a much more streamlined way of getting broader protection, and the requirement of single renewal fees will be much cheaper for inventors.

Non-Fungible Tokens and Copyrights

What is a non-fungible token? Non-fungible tokens (NFTs) are unique pieces of data stored on a digital ledger- a blockchain. Non-fungible just means they are unique and can’t be exactly substituted by something else. A dollar can be replaced by any other dollar, making it fungible. But an NFT comes with certain unique properties. Blockchains play a pivotal role by using cryptography to link blocks into a chain of data.

Recently, digital assets have included art, memes, music, videos, digital 3D works, and more.

The unique identity and ownership of an NFT is verifiable through the blockchain ledger and is associated with a license to use the digital asset. But that ownership doesn’t necessarily carry over to the field of copyright. Buying a piece of digital art NFT would grant ownership over the specific art, but not grant proprietary rights over the usage of the art. Underlying copyrights can be negotiated and transferred as part of the price, but shouldn’t be assumed as part of the price.

Unfortunately, copyfraud, a false copyright claim with respect to content in the public domain, is common in the NFT space. Bad actors may attempt to mint an NFT for a work to which they don’t even own the copyrights. While copy fraud has been around for generations, block chains use anonymity features that make it difficult to verify the authenticity of particular digital artifacts, and to track the original owner of a particular digital artifact.

Trademark Registration Protection in the US and Canada

The Supreme Court of Canada (SCC) has determined that registration of a trademark is a complete defense against claims for infringement and passing off. Travelway, a Canadian luggage distributor, owns a registered trademark featuring a cross that looked similar to the Swiss flag. Wenger, the Swiss company behind the Swiss Army Knife, had brought Travelway to court the trademark seeking expungement of the trademark. This was originally dismissed but subsequently allowed, remanding the issues to the Federal Court. In 2019, the Federal Court granted expungement, but dismissed Wenger’s claim for damages.
Wenger appealed this, with the sole issue being their entitlement to compensation. The Court of Appeal held Travelway was not liable for damages, because it owned a trademark, and absent fraud, willful misrepresentation or bad faith, a registered trademark is presumed to be valid.

This is different than the US, where a mark becomes incontestable only after 5 years has passed.

New FishFAQ video: Valuing Patents

There is a new FishFAQ video up on our Fish IP Law YouTube channel. This one is on patent valuation and covers questions like what sort of due diligence is involved in valuation, the main valuation models, disparate valuations and whether you should use an outside valuation firm or not, that are found on our Patent FAQ page covering Patent Valuation.

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