Reports came out during the holiday season last year of banks quietly stocking up on blockchain patents. Banks will compete with startups making the same moves. They will also compete for patents with trolls who suppress innovation.
The future of blockchain innovation depends on who exactly holds the keys to blockchain technology.
Bloomberg reported that Goldman Sachs, Bank of America, and Mastercard have all submitted requests for and hold patents for blockchain technologies.
The number of patent requests and establishments toward the end of 2016 were close to double the number at the beginning of last year, according to Bloomberg.
Patents and fintech expert Marc Kaufman told Bloomberg;
“We are seeing an increase in filings that’s exponential,” he said. “I predict that we’ll see in five years thousands of patents. It’s an emerging risk, no doubt about it.”
Fintech legal expert at Cooley LLP Patrick Murck told Bloomberg;
“Anybody who’s investing in the ecosystem, anybody who’s interested in the technology should be worried about this.”
If it is any predictor for future blockchain patent battles, previous patent wars over technological advances have raged on for decades.
“Patent wars over Linux — a popular, open-sourced software used in phones, computers and servers — have raged for more than a decade.”
Therefore, if or when they do come, blockchain patent battles most likely would drag out for just as long.
The Economist also noted;
“Heated fights over intellectual property are nothing new in promising technology markets. But given that the blockchain is expected to shake up everything from the way precious diamonds are safeguarded to the way shares are traded, the legal fights could be especially fierce.”
Perhaps there is hope though that not all players will pursue such legal battles over blockchain, if they follow the Open Invention Network model.
OIN is “a shared defensive patent pool with the mission to protect Linux” that includes members like Google, IBM, NEC, Philips, Red Hat, Sony, SUSE, and Toyota. The network was founded by those who believed in innovation rather than aggressive patent use.
“Our goal at Blockstream is to accelerate technological innovation in Bitcoin, building infrastructure and innovative tools to support its secure, trustless, decentralized nature. We believe that open innovation is necessary for the long-term success of Bitcoin, and because of this we intend for all of the technology developed at Blockstream to be freely available for the benefit of the Bitcoin community and the world. But we operate in an environment where good intentions are not enough, and must be backed by mechanisms that ensure those intentions are carried out.
Software patents have too often been used as a means for stifling innovation, rather than encouraging it. …
We believe, then, that the way to ensure that our technology remains most usable is to obtain patents ourselves and make binding promises for their use. …
Blockstream offers all of its patents and patent applications under the Defensive Patent License, version 1.1. That means the technology covered by Blockstream’s patents is freely available for use without having to pay a licensing fee or risk litigation. We encourage others to join us in adopting it and making their patents freely available to anyone else who commits to its goals.”
— TheRustyTwit (@rusty_twit) January 11, 2017
And what about the patent trolls and the “flood of stupid patents“? They add even more complexity to this startup vs. traditional bank fintech development ecosystem.
Moving between weaponizing pharmaceuticals to software patents, the trolls add to “quantifiable economic drag” and suppressed innovation.
Startups and traditional banks have one more reason to cooperate with one another rather than clash.