Before we begin with challenges regarding the patentability of blockchain technologies, let’s have a brief description about blockchain. Blockchain technology came into existence in 2008 which works on the concept of “Distributed Ledger” and is a publicly available digital accessible ledger in peer to peer network. It is a chain of multiple blocks i.e. whenever a transaction occurs a new block is added to the chain. Here each block can be described as a record of a transaction that happens between parties and is immutable in nature as it contains a cryptographic hash value of the previous block, Hash value of current block, a timestamp, and transaction data which makes the data in a block more secured. So, it becomes extremely difficult when someone tries to change even a minute information of a block then the hash value of that block changes and a consensus is required from all the nodes for such alteration/adding information.
Initially, Blockchain is developed for the single purpose of using cryptocurrency i.e. Bitcoin and its rise is further supported by the financial system meltdown in 2009 which motivated people to try an alternate system for financial management other than using government intermediaries financial services. With time Blockchain becomes more popular and many industries/corporate houses start investing in the Blockchain technology in multiple areas like financial domain, Healthcare, Digital voting, governance, supply chain monitoring, ecommerce, Real estate and many more. To quote few examples like Mastercard is using blockchain technology for its payment network; Deloitte came to fore by providing its services for implementation of blockchain technology in Commercial Real estate market etc. Among the major players in the field like Alibaba, Bank of America, IBM etc. small entities/ Start-ups are also becoming interested in various applications of Blockchain.
When coming to patenting an application based on Blockchain technology then China is leading in filing maximum Patent Applications (Nearly 62%) for the same technology as per Derwent source while US is leading in getting maximum patent granted in the respective field. The company that has maximum patents on Blockchain Technology is Alibaba (China). So, in nutshell we can say that US and China are leading Patent industry in Blockchain Technology. As this technology is gaining the popularity, the patent applications are rising in this field particularly in US, China, South Korea, UK and India but most of them face the challenges in getting Patented.
Most of the applications do not fulfil the criteria of patent filing in Blockchain Technology. Distributed ledger in peer to peer network is used for recording the transactions as proof of work which does not generate much confidence in getting the patent as it is like getting a patent for an algorithm/Computer Program and as per Indian Patent Act, 1970, Section 3(k) which states that “a mathematical or Business method or a computer program per se or Algorithms” are not patentable.
As per the ruling of Delhi High Court in the case of Ericson Vs Intex, the court stated that
Thus, it appears to me prima facie that any invention which has a technical contribution or has a technical effect and is not merely a computer program per se as alleged by the defendant and the same is patentable…..”.
So, if a Computer Related Invention provide technical solution to a technical problem by providing a practical application or an improved technical effect then the said invention deems to be patentable under Section 3(K). Since, Computer related inventions are granted by Indian Patent office and blockchain related inventions are analogous to a computer related inventions, so blockchain inventions are also eligible to be granted.
As per the CRI guidelines states that database is a computer Program per se and Blockchain store the transactions in a database only, so it is not eligible for patenting. But these are mere guidelines and can be overcome if an applicant can show that his invention provides technical solution to a technical problem and having a technical effect. Further, while drafting Specification and Claims focus must be on how the invention is tied with the hardware on which it will operate. Taking these steps will certainly increase the chance of a Blockchain invention of getting patented in a first go.
Although, as stated above there are still unseen challenges in front of the blockchain invention getting patented in order of proving novelty, inventive step among other challenges but it doesn’t mean that it’s not patentable. It is expected that Patent applications on Blockchain Technology will rise as there are still large areas where it can be implemented. So, it seems that the future is bright for Patentability of Blockchain Technologies in multiple areas.
Handling Patentability issues in Blockchain technologies and the future it holds.
Article by Ankit Rawat (1st published in Lexology).