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This article is written by Anjali Baskar, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

What do “Bernstein IP”, “Artizyou” and “IPwe” have in common? (They are all Intellectual Property-management systems that take the help of Blockchain technology.) Blockchain technology has been used to vote digitally, share data, transfer car/land titles and transfer money, but what exactly does Blockchain mean? Blockchain is a decentralised security system, used to store information controlled by all users equally. Digital currencies like Bitcoin use this digital ledger technology to facilitate secure transactions between netizens. Blockchain does not require regular assistance, which is useful for lawyers when validating transactions. Some argue that it is easy to establish the integrity of the data just by just a piece of information, whether physically or online. Blockchain not only preserves the data but allows users to update the database in real-time, while millions of IP-based transactions are taking place simultaneously. One of the basic tenets of intellectual property rights is to protect ownership, and Blockchain technology can be used to verify who is the authentic owner, no matter how many times the rights have been transferred through various blocks of data. Artists use NFTs(Non-fungible Tokens, A blockchain-based technology) to protect their digital artistic work, and NFTs run on this Blockchain technology, even though they don’t act as copyright themselves. Blockchain is also known for its versatile uses, because many kinds of data can be added to it, like videos, photos, and contractual and design-related files. 

Merits of applying blockchain technology

Even though data privacy laws are tough to implement, Blockchain offers a path to protect, clear and store the evidence of creatorship at the time of registration of the particular intellectual property (like a trademark of a new fashion brand) or in a court dispute. Intellectual property lawyers can use the evidence stored on this safe mechanism to argue their case to the judge. Since it is a technology, it makes complex legal procedures like registration faster, thus saving costs. Let’s say Saregama, a renowned music label wants to issue a license for a particular song to be used in a film. Blockchain allows this licensing agreement to be authenticated through smart contracts because it tracks whether there was any distribution of unregistered copyright. In other words, it provides evidence of genuine and first use trade-in the requisite industry. Digital artists can receive their payments from their art if it is registered under copyright, whenever it is being used. Blockchain, here, is essentially used as tracking software, informing the user if any counterfeit goods are being sold. This comprehensive data system is useful for intellectual property registers or offices because they can find out when a patent was first filed, when it was used and licensed, thus maintaining a record of the cycle of the right attached to the original owner. When mergers and acquisitions are being carried out by corporate lawyers, there are a lot of audits and transactions related to intellectual property that needs to be sorted out, i.e. which company owns what; this can be sped up by looking at the cycle Blockchain has stored. Let’s say Varun created a work eligible for copyright protection but does not want to reveal his name. How will he generate revenue from his creation? Anonymous, orphan and pseudonymous authors can use intermediaries like Blockchain or other digital ledger technologies to enforce that copyright before the courts while keeping their identity verified, but nameless. Now that we’ve discussed the broad advantages of the real-life application of Blockchain technology to the dynamic IPR field, we can discuss it in more detail.

“Smart” contracts

IP-based transactions involve a lot of detailed steps. For example: When one party wants to buy a patent from another party, commercials need to be discussed, an assignment agreement should be signed and the patent office needs to be informed of the sale. All these usually take time, and counsels representing both parties usually go back and forth to alter certain clauses to the mutual satisfaction of both their clients. Blockchain technology can be used to make a computer program called “smart contracts”, which makes the process easier. These contracts are very useful in terms of copyright, for example: for sale of a sound recording. They jump-start the process of framing legal and binding contracts, executing these obligations seamlessly through software codes. For example: A wants to quickly acquire rights to a logo of a green lion made by or belonging to B. When A makes the payment, the rights in the work will be immediately transferred to B. The grant of rights here is a legal consequence triggered by the code after the condition is met, signified by the successful money transfer. Blockchain technology verifies all the elements involved and keeps a record of this transaction, so it can be looked at by someone in the future for information. At the same time, this data is stored in a transferable and nearly non-hackable ledger to make sure no one tampers with it. Standard procedures can include agreements with a binary option, like a true/false or if/then paradigm. Complex drafts could include compiling conditions of the parties, comparing their interests and defining terms like “prudent” and “rational” with the help of an actual person to adjudicate and resolve the dispute. The biggest advantage of smart contracts is that it self-execute without the need for a third party monitoring it. 

Reducing counterfeits

The world of fast fashion has resulted in a lot of knock-offs of luxury brands being sold in the market. This dilutes the value of the trademark, which has been registered and created by the hard work and toil of the owner. Imagine a situation where a design attorney has to comb through 16 hours-worth of documents to find out who is the first owner of a particular cloth pattern, in order to defend a client. Blockchain technology gives users (like the attorney) some comfort by telling them who is the owner or whether a particular product belongs to the authentic brand or not because high-end clientele don’t want to spend a lot of money on something which has no brand value. A Givenchy bag would receive a unique QR code, which can be used by a customer to access its digital certificate online. The certificate would possess the signature of the brand company’s directors and any others involved in the supply cycle, guaranteeing to the user that the product they bought is original and not a replica. This information can be easily accessed by the public as it is added to a blockchain, thus others can track the current owner in real-time. This does not mean the brand directly sells to its customers. Its products can be displayed in various retail outlets across malls and shopping centres. These retailers can make sure the goods given to them are not fake so that they can make payment promptly to the wholesaler using Blockchain. These hashed digital certificates also help when the creator of a song tracks unauthorised usage. Large music labels all over the world also have this software in place, which tells them when and who has used their songs without permission, violating their copyright protection, and giving them probable cause to sue.

Management markets

If a patent application was stored in a shared patent record database instead of the necessary patent office, the platform would be openly accessible to the public and reduce the burden on the office. There is also no scope for red-tape and other political influence here, as technology is tracking users and not humans, which ensures that only patents which satisfy quality checks are registered. Then, the human element required is only for the responsibility of the office. Once the first-stage prototype is accepted, the code attached to Blockchain can trigger more funds for the inventor. Electronic ledgers keep the records of such transactions or inventions or digital artistic expressions, then Blockchain records, shares and integrates them using several nodes or computers. Since this technology is not concentrated on one particular person, it will not be limited to any jurisdiction, allowing for a global patent system. Let’s say Xena has an idea in mind and wants to file for a patent after making it, but she is not sure whether something similar to her invention already exists anywhere in the world. To avoid legal liability in the future, she can quickly find information in the universal database, which makes the innovation process smoother. If she finds another similar invention registered in Pakistan, she will not have to waste time and money in creating the product and going through the registration process.

Version control

With the advancement of technology, it is easier for people to edit, rework upon or have multiple versions of a product during its lifetime or life-cycle, like the option to track the history of edits on a Google doc. Each non-duplicate version will be given a unique fingerprint on the indexed platform and the computer server can choose which content it hosts and link all these versions together. If two parties want to license each of their copyright to each other, they can use a kind of smart contract called “smart research and development agreements” in order to collaborate and create a new work. There is no confusion as to who is the owner of what after this transaction because of the Blockchain solution. This gives incentive for creators to better themselves, leading to innovation in society.

Evidence in trademark applications

Just because someone files for registration of a trademark, it doesn’t mean it will be granted; not until they can convince the requisite trademark office that they have proof of use along with how much and when they have used it and established distinctiveness. Let’s say Anand successfully registered his trademark on 4th January, 2013, but comes to know about a trademark deceptively similar to his in a Trademark Journal from 2021. When Anand files an objection to the other user’s application, he can easily pull up the data which proves that when and how much he has used it along with the date and time stamp using data stored on the digital ledger via Blockchain technology, thus increasing reliability and reducing confusion.

Conclusion

Blockchain technology thus helps users protect their digital data securely while making legal transactions and managing intellectual property rights. Individual users might be worried about how their data is being used. We looked at how it is easy for lawyers or the IP offices to track a particular owner, but there is in-built consent every time someone looks at that owner’s details or data. Blockchain technology also provides an opt-out scheme, for users not comfortable with their data or copies of their data being stored. Blockchain is not free from criticism, with its high environmental cost and high monetary cost because of its storage requirements. There is scope for Blockchain networks to come under the ambit of Section 65B of the Indian Evidence Act, 1872, which deals with electronic records being submitted as evidence. Even the Indian Government and PM Modi has encouraged the use of Blockchain in e-governance and other workplaces. While the internet allows users to access all kinds of content, it often compromises the privacy and recognition of the original creator. Blockchain ensures the protection of the rightful person’s digital intellectual assets (this even includes research publications!) while providing proof of ownership by using features like timestamping to validate and secure precious data. When it comes to the future of this technology, it will most likely be explicitly accepted as a form of evidence in most courts and used by most governments by respective domestic legislations, which will in turn harmonize the entire IP cycle. 

References  

  • Seda Fabian, Blockchain and Intellectual Property Rights, 25 INTELL. PROP. & TECH. L. J. 147 (2021).
  • Shlomit Yanisky-Ravid & Edward Kim, Patenting Blockchain/ Mitigating the Patent Infringement War, 83 ALB. L. REV. 603 (2019).
  • Tom W. Bell, Copyrights, Privacy, and the Blockchain, 42 OHIO N.U. L. REV. 439 (2016).

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