One of the hottest technology trends today is cryptocurrency. This is also a new area in intellectual Property Law. We are still learning how to assess crypto patent applications and which strategies to use to protect our ideas. I write this article based on my experiences working with many fintech companies as well as IoT companies to protect their crypto IP assets. I provide a checklist to consider when filing for a crypto patent. Also, here are some tips to ensure your application is not rejected by the USPTO or another country’s patent offices.
Table of Contents
- Relationship between Cryptocurrency and Blockchain
- Crypto-Startup IP Considerations
- Cryptocurrency Prior Art
- Cryptocurrency and section 101 Patent Eligibility Questions
- Cryptocurrency and 102/103 Obviousness Rejections
- Cryptocurrency Patent Strategies
- Blockchain crypto Patent Examples
- Crypto Patent Filing Checklist
Relationship between Cryptocurrency and Blockchain
Cryptocurrency is a digital or virtual currency that uses cryptography (the practice of secure communication) for security. It operates independently of a central bank or government. Cryptocurrency is decentralized and based on blockchain technology, which is a digital ledger that records all transactions on a network.
The basis for crypto technology is a blockchain, which is an emerging technology used to create digital ledgers. Blockchain was introduced in 2009 as part of Bitcoin’s first Bitcoin project. It’s a public, distributed database or ledger of transactions–similar to how Google Docs or Microsoft Word work with documents. Each participant creates their own transaction and shares it with others on a peer-to-peer basis using blockchain. The copies are then compared to each other until they match. If they don’t match, there is something wrong with one copy and it can either be discarded or corrected. This ensures that no one person has sole control of any transaction. Instead, everyone has access to the same record that can be altered by anyone without proof from others. This platform is open-source and can be used to build applications. Interactions between users are permanently recorded in public databases called blockchains.
Blockchain is a distributed ledger tech. Blockchain is a distributed ledger technology that creates an append-only database of transactions by using a peer-to-peer network. Each transaction is subject to rules and restrictions. They can only be added if they meet certain conditions, such as being signed with a key private or approved by at least half the participants.
The most well-known cryptocurrency is Bitcoin, which was created in 2009. Since then, thousands of other cryptocurrencies have been created, including Ethereum, Litecoin, and Ripple.
Cryptocurrency transactions are verified and recorded on a public digital ledger called a blockchain. A network of computers around the world works together to validate and record these transactions. The technology makes it difficult for anyone to manipulate or corrupt the system, and it allows for fast and secure transactions without the need for intermediaries.
Cryptocurrency can be used to purchase goods and services, and it can also be traded on digital currency exchanges. It is a decentralized form of currency, meaning that it is not controlled by any government or financial institution. However, the value of cryptocurrency can be highly volatile and its legal status varies from country to country.
Blockchain doesn’t use traditional servers, or middlemen like banks, and governments. Instead, it relies on cryptographic proof to verify its validity. This means there’s no central authority controlling access or recording activities–everything happens transparently between peers without any one party having special privileges over another (e.g., miners do not control mining rewards).
Blockchain technology can be used in many industries and applications. Blockchain technology can be used in many new ways, such as:
- Supply Chain Management: Blockchain can create a transparent and tamper-proof record of all transactions in the supply chain. This can improve efficiency and decrease the risk of fraud.
- Digital Identity: The blockchain can be used to create a secure, decentralized digital identity that allows individuals control over their personal information and allow others to share it.
- Smart Contracts: Blockchain is a tool that can be used for creating smart contracts. These contracts are self-executing and the terms between the buyer and seller are directly written into code.
- Internet of Things (IoT), Blockchain: This technology can be used to create an IoT network that can securely exchange data with one another without the need for a central authority.
- Digital Currency: Blockchain is the technology that underpins digital currencies like Bitcoin, Ethereum, and many others.
- Gaming and NFTs – Blockchain can be used for creating and trading digital assets, such as non-fungible tokens or NFTs. These can be used in games and other digital experiences.
- Blockchain is a secure way to share medical records, track the supply chain of medical equipment, and make insurance claims.
- Energy: Blockchain can be used for decentralized energy markets, which allow individuals to trade and buy energy with one another without the need for a central authority.
These are just some examples of blockchain technology being used. Many other innovative uses are still being explored.
crypto-Startup IP Considerations
Cryptocurrency technology raises many intellectual property (IP), including patenting, trademarking and copyrighting issues.
Patent protection: Blockchain technology and its applications (e.g. smart contracts, decentralized applications) may be eligible to receive patent protection. There is still debate over whether certain aspects, like the distributed ledger concept that underlies blockchain technology, should be patentable.
Trademarking: Blockchain technology companies may want to trademark their logos and brand names. However, there are challenges. Some blockchain platforms, for example, are decentralized, meaning that there is no central authority to control the brand’s use. This makes it difficult to enforce trademark rights.
Copyrighting: Blockchain technology is also a way to protect copyrightable works such as music, video, and text. There are however challenges to this area such as how to enforce copyright within a decentralized, anonymous environment.
While blockchain technology may have the potential to open up new IP opportunities for companies, it also poses new challenges that need to be overcome in order to enforce and protect IP rights.
Cryptocurrency Prior Art
Patent law includes the concept of prior art. This is the notion that your invention may be obsolete or invalidated by pre-existing technology. When you try to patent technology that has been previously patented, prior art is common. However, it can be found online or in scientific books and journals.
Precedent art is closely linked to anticipation. This means that a patent examiner might find an earlier reference that teaches all elements of your invention, and thus would block your attempts at getting a patent.
Cryptocurrency patents are not new. They have been around since 2008, when they were filed by Bank of America (r), MasterCard (r), and Wells Fargo (r) (among others). However, patents on blockchain are relatively new in certain areas. For example, those that relate to Bitcoin(tm), because the crypto/defi app has just recently become mainstream enough to allow people in tech finance circles to start thinking about how to best protect their innovations with intellectual property rights.
Cryptocurrency and section 101 Patent Eligibility Questions
You need to be aware that rejections can occur when applying for and obtaining a patent. These rejections include 101 and 102. If the PTO examiner believes your claim is too broad to include abstract ideas, a section 101 rejection may be issued.
One of the greatest challenges lawyers face when patenting crypto-based technology is its eligibility. Because blockchain systems are mathematically based, they can be included in the USPTO’s definition of Abstract ideas. Patent-eligible subject matter must be included in the claimed invention. The patent claim can’t be directed at a court exemption unless the claim contains additional limitations that significantly exceed the exception. These are known as “judicially recognized exceptions” or simply “exceptions”, which refer to subject matter that courts have deemed to be outside the four categories of invention. They can only be used to describe abstract ideas, laws of nature, natural phenomena, and products of nature. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216, 110 USPQ2d 1976, 1980 (2014) (citing Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589, 106 USPQ2d 1972, 1979 (2013).
The Alice/Mayo 2-part test should be used to determine eligibility. While the machine-or-transformation test is an important clue to eligibility, it should not be used as a separate test for eligibility. It should be included in the Alice/Mayo test for “integration” or “significantly higher” determination. Bilski, 561 U.S. 5, 605, 95 U.S.PQ2d 1001, 1007 (2010). See MPEP SS 2106.04(d) for more information about evaluating whether a claim reciting a judicial exception is integrated into a practical application and MPEP SS 2106.05(b) and MPEP SS 2106.05(c) for more information about how the machine-or-transformation test fits into the Alice/Mayo two-part framework.
It is not sufficient to determine eligibility based on whether a claim cites “useful concrete results.” State Street Bank, 149 F.3d 1308, 1374. 47 USPQ2d 1696. Cir. 1998) (quoting from re Alappat 33F.3d1526. 1544. 31 USPQ2d1545. 1557 (Fed. Cir. Cir. In re Bilski, 545 F.3d 943, 959-60, 88 USPQ2d 1385, 1394-95 (Fed. Cir. 2008) ( En banc), adjudicated Bilski 561 U.S.5,93, 95 U.S.PQ2d 1001 (2010). TLI Communications LLC v. AV Auto LLC 823F.3d 607 & 613 (Fed. Cir. Cir. 33 F.3d at 1506 31 USPQ2d on 1526. (Fed. Cir. Cir. Eon Corp. IP Holdings LLC versus AT&T Mobility LLC 616 and 623, (Fed. Cir. 2015. Cir. Cir. Cir. “[U]tility doesn’t test for patent-eligible materials.” Genetic Techs. Ltd. v. Merial LLC, 818 F.3d 1369, 1380, 118 USPQ2d 1541, 1548 (Fed. Cir. 2016).
The U.S. Patent and Trademark Office is currently dealing with blockchain-related patent applications. Over the past year, the Patent Trial and Appeal Board has issued many decisions regarding appeals from rejects by examiners for blockchain patents. The PTAB has not reversed any Section 101-based rejections. This does not necessarily indicate that no blockchain patents are being issued. It does mean that certain patent applications will not be accepted by the examiners. Given the updated PTO Section 101 guidance published in January 2019 and the inconsistent handling of Section 101 by courts, this is not surprising.
Ex parte McCann No. 2021-003397 (P.T.A.B. March 7, 2022, the PTAB reviewed claim 1 in the 824 application. It determined that claim 1 was directed at the abstract idea of “certain methods for organizing human activity as exemplified in the commercial and legal interaction management of commercial payment transactions by advising one process payments using an available payment instrument and post the payment into a ledger, sans significantly more.” Id. 20. The PTAB stated that claims are not eligible even though they contain a recital of cryptographic and Blockchain data. The PTAB stated that the recital of a Blockchain was a generic and traditional blockchain, and is essentially an accounting ledger.
The claims do not provide any information about the technical implementation. The claims mention only the idea of block-chain storage. The PTAB observed that the applicant didn’t claim to have invented blockchain technology and that the cryptographic data recital was also generic. It is a simple invocation of the concept of cryptography but doesn’t include any technical details. Id. 14-15. 14-15. The PTAB found that the claims do not include an inventive concept because they only refer to the abstract idea cited. Id. Id., 17-19. The PTAB found that claims can be analyzed separately or in an ordered combination to determine if the claims are “purely conventional” and/or ordinary. Id. Id., 17-19.
Section 101 scrutiny will not be satisfied if claims that “do this with blockchain technology” are made to an existing financial practice. Section 101 scrutiny is more likely to be satisfied if claimants can demonstrate how their claims will improve computer functionality and operation.
Cryptocurrency and 102/103 Obviousness Rejections
When applying for and obtaining a patent, it is important to know that there are 102/103 rejections. These rejections include:
- 102/103 apparentness rejections (most commonly for blockchain patents).
- 101 prior art rejections (can apply to blockchain/distributed ledger technology patents)
To be considered a 102 rejection, you must submit a single document that contains all elements of the claim. This can be difficult if your invention is properly claimed, as it requires the same invention in the prior art. An obvious rejection under Section 103 can be much more common if the examiner is able to piece together more than one document.
35 U.S.Code SS 103 – Conditions for patentability and unobvious subject matter – States that:
Patents for claimed inventions may not be granted, even if they are not identically disclosed in section 102. However, if the claims as a whole and prior art are so different that it would have been obvious to an ordinary person with ordinary skill in the art, the patent could not be obtained. The manner in which an invention was made does not affect its patentability
Cryptocurrency Patent Strategies
Cryptocurrency technology is an evolving field. Individuals and companies may have different strategies to protect their blockchain-related inventions through patents. These strategies include:
- Early filing for patents: Companies developing crypto-related technologies might want to file patent applications as soon as possible in order to protect their rights ahead of others.
- Broad patent filing: Companies might file broad patents to cover a broad range of possible uses for their crypto-related inventions. This will help to prevent other developers from creating similar technologies. It can also give companies a strong bargaining advantage when it comes to licensing or cross-licensing agreements.
- Filing for defensive patents: Companies may file for patents to protect their technology from being copied by others.
- Multiple jurisdictions for patent applications: Because crypto technology is so widespread, companies might want to file patent applications in multiple countries in order to protect their rights.
- Filing patent applications in crypto-specific jurisdictions. Some jurisdictions are experts in crypto-related patenting, so it might be worth looking into patenting in those areas.
- Licenses and open-sourcing: A few companies might choose to open-source crypto-related technologies and make them freely available to the public under a permissive license. This is a great way to encourage innovation and collaboration within the blockchain community. It also allows the company to retain some control of the technology through licensing agreements.
These are just a few of the possible patent strategies companies might consider when using
Blockchain crypto Patent Examples
Blockchain is a hot topic in programming and many companies are filing patents on it. However, only a few patents have been granted by the Patent Office for blockchain technologies. As cryptocurrency is an offshoot of blockchain, the same allowance reasons will apply.
You must explain in detail how your invention works when you apply for a patent. This will allow others to copy it if they wish. This is hard with blockchain technology because there are so many ways to implement it (e.g. permissioned or permissionless). When applying for blockchain-related patents, 101 rejections (patent subject matter abstraction rejection), and 102/103 rejections are common. This is an example of the US Patent 11207584 that was granted with the following coverage.
1. A device, comprising:
a device body;
An accelerometer that is coupled to the body
A camera is used to capture images
A module that manages a chain of custody for a user. One or more images of a person are taken and immutably added to the location. The identity of the person associated with the image is also added as metadata.
A wireless transceiver and a processor attached to the body that is associated with a Blockchain address for a secure transaction or identity management.
Another patent 11139081 focuses on the use of blockchain to protect patient data.
1. Method to process blockchain data on a device that includes a body, an accelerometer attached to the body to detect acceleration, and a sensor. The method also includes:
Receive sensor data related to medical, fitness, or health; coupling sensor data with a blockchain
Blockchain is used to share patient data and comply with confidentiality requirements.
Analyzing or forecasting treatment response to a therapeutic procedure;
A compilation of genetic, environmental, and treatment information from a patient population.
Machine learning is used to predict disease risk based on aggregated genetic information, treatment data, and treatment response from a patient group;
Based on aggregated population data, recommending lifestyle modifications to the patient to reduce the severity of a disease.
Crypto Patent Filing Checklist
Make sure you have all the paperwork in order before things get complicated. This is because it takes a lot of time and effort to prepare everything upfront.
Companies and individuals can use a blockchain patent checklist to ensure they have taken all steps necessary to protect their innovations using patents. These are some of the items that could be added to a blockchain patent checklist:
- Perform a prior art search. Before you file a patent application, it’s important to search all published patents to see if the invention is known or not. Patenting technology requires that you ensure that it is not already known and is completely new. Patentability requires that an invention be new, useful, and not obvious. Your invention that falls within one of these categories will be considered invalid because another person has already invented it.
- Identify the invention
- A concise and clear specification should be prepared: The patent application must include a description of the invention that includes how it is implemented, and how it differs from other technologies.
- Draw flowcharts and drawings: These can help to illustrate the invention and make it easier for the patent office to understand.
- Identify the best places to file a patent application: Based on your company’s business strategy, and the scope of the invention, determine which jurisdictions are most suitable for you to file a patent.
- Open-sourcing and licensing: You might consider open-sourcing your invention and making it freely available to the public under a permissive license. This can encourage innovation and collaboration within the crypto community.
- You should file the patent application as soon as possible. It is not your intention for anyone else to come up with a product that is similar or identical to yours. They will only be able to do so because they first heard about it. This is because we are now in the first-to-file regime, not the old first-to-invent.
- Monitor and maintain the Patent: After the patent has been granted, it is crucial to keep an eye on the patent landscape. You should also take all necessary steps to ensure that the patent is protected against infringers.
It is important to remember that patent applications can be complicated. To help you navigate the process and make sure that every step has been taken, it might be a good idea to speak with a licensed patent agent or attorney.
Cryptocurrency technology is becoming more popular and is being used more often by companies. It is important to keep in mind that patenting your crypto-based invention can be difficult. Although it can be difficult and there are many obstacles along the way, if you have an experienced patent attorney by your side, you will not have to give up on your dream.