A cryptocurrency is a digital or virtual currency that is secured by cryptography and is based on blockchain technology that uses a network of computers to keep a public ledger of past transactions. There are many different cryptocurrency brands, and many new ones are continuously being created. Bitcoin, Ethereum and Stellar are popular cryptocurrency brands.

WHAT IS BLOCKCHAIN TECHNOLOGY?

A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participants' ledger. The decentralised database managed by multiple participants is known as Distributed Ledger Technology (DLT).

Blockchain is one of the most notable new technologies of our time. It has triggered a paradigm shift in the way in which the world conceives of financial transactions and digital identities1. Its rapid growth, and its speculated value, have made it attractive to investors and companies who see its infinite potential.

BLOCKCHAIN AND CRYPTOCURRENCY

Cryptocurrency is built on this foundational concept of blockchain, and grows by utilizing the methodology as a distributed-ledger based transaction system. This system enables the ownership of non-centralized accounts with real value, founded upon the idea of utilizing decentralized and encrypted currencies in monetary transactions. Bitcoin is entirely deterministic, as it is governed by mathematics, encryption, and the rules set forth by its users.2

CRYPTOCURRENCY + INNOVATION = PATENTS

Innovations in the world of blockchain-based currency focus on evolving original methodologies into simpler processes. This place where cryptocurrency overlaps with innovation is where patents play a central role.

The growth figures demonstrate that there are many large companies dedicated to investing in the future of cryptocurrency.

CHALLENGES IN PATENTING CRYPTOCURRENCY?

Under the Indian patent law the invention must be non-obvious, must be new, and should have industrial applicability.

Blockchain patents can be likened to software patents since they attempt to protect a combination of application software and cryptography. Blockchain services are primarily based on algorithms involving mathematical theory and/or computer programs. Algorithms and computer programs may not be considered as inventions within the meaning of the Indian Patents Act as per Section 3(k). Section 3(k) of the India Patents Act lists that 'computer programmes, per se' are not patentable subject matter. 

Although this is certainly a technology that can fit under the label of patents if only it did not deal in crypto. Cryptocurrencies are a judicial exception under patenting law, which implies that it is not eligible.

CRYPTOCURRENCY PATENT

A few examples of cryptocurrency patent applications are following:

  • Paypal filed a patent for a technology that allegedly can speed up cryptocurrency payments through the utilization of secondary wallets.
  • Mastercard obtained a patent for a method for "managing fractional reserves of blockchain currency". The method covers the storage of both fiat wealth and cryptocurrencies under one account.
  • Amazon has two patents with the USPTO:
    • The first patent covers "Signature Delegation" and describes cryptographic signatures in a Merkletree based data scheme.
    • The second covers "Extending Grids in Data Storage Systems" and describes a method for creating extendable shards in a database. This is useful for creating considerable flexible datasets, like those seen in a blockchain. The idea behind the patent is that layering the system structure will ensure the efficiency and portability of the system3 .

As evidenced by the complexity of each innovation, these applications include the inventive step. Each makes processes more efficient or solves an industry-wide problem.

CONCLUSION

There is a need of legal practitioners in this specialized area so that innovators are provided with quality legal advice as patentability of block chain technology involves complicated legal and technical issues. The advent in the digital space calls for an overhaul in the IPO guidelines and proper training of the Examiners and Legal Practitioners for both patents and trademarks so as to fully clinch the wonderful possibilities that Blockchain technology can open up and it will be interesting to see the future trend of grants of patents and trademarks for Blockchain related technologies.

Further, the innovators need to be made aware that patent protection can also be used as defence against infringement action filed by competitors. Therefore, the innovators in the field of block chain technology need to be proactive when it comes to filing patent applications for improved techniques and systems.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.