In this week’s article, we take a closer look at the emerging role blockchain technology can play in brand protection.
Before that, in our series, we addressed every level of trademark protection, from choosing your brand to options when you find a problem. You can find the beginning of our series HERE.
A short and very simplified summary of the blockchain for many of us who are not very familiar with how the technology works: It can best be described as a general ledger (or “chain”) that records information about transactions (or “blocks”) and is open, anonymous and decentralized. (Note, however, that some blockchains can be operated “privately” if authorization is required to participate.) Information about transactions is exchanged over a decentralized network, and each transaction is verified by several independent participants (or “nodes”) (or “degraded”).). Each block is sent to all nodes in a network and must be checked by each node. If checked, the block is entered into the chain and after that no single node can change the entry.
Because of its open and decentralized nature, the core value of the blockchain is simple yet profound: it creates trust. Blocks approved by decentralized players create a literal and immutable track record of ownership that is transparent to all participants and is not controlled by a central authority. This allows participants to have greater confidence in the integrity of the chain. This type of technology can alleviate many concerns that haunt any type of property including, and certainly not limited to: counterfeit or stolen property that a seller is not authorized to convey, multiple parties claiming ownership of the same property, reproduction of Property, and so on.
While most are familiar with blockchain as the technology that enables cryptocurrency like Bitcoin, the potential and multitude of uses are nowhere near realizable. Most companies rely on trust for one reason or another, and it is not surprising that the potential of blockchain technology has been studied in a variety of industries outside of finance, including infrastructure, healthcare, retail, agriculture, entertainment, and even that Legal industry.
Disruption of intellectual property management
Now, blockchain is also emerging as a practical and reliable tool for the business approach to managing its intellectual property. As you can see from the description above, blockchain technology is essentially a method of tracking property ownership: the “deed” of property is essentially built into the work itself. And it could be used to address some of the specific challenges raised in our trademark protection series in terms of creating and protecting intellectual property rights. Some possible uses include:
1. Create time-stamped evidence
Whether your brand is trying to protect copyrighted works or their trademarks, blockchain allows you to keep reliable records of creation or publication and first-time use. These types of services are currently offered. For example, an artist can upload an original drawing to a blockchain, which creates a time-stamped record of the exact work. A brand owner can similarly record their first transaction using a blockchain under a brand, thus proving the date of first use. Creating those solid lines in the sand can save a lot of time and money when it comes to litigation. If the other side doesn’t have solid evidence of previous creation or use, cases can be resolved faster and more efficiently, or largely avoided.
2. Digital rights management
Because a plant’s ownership attributes can be linked to the plant, blockchain can (and is currently used) enable systems in which an IP owner can manage and control digital assets and version layers in real time. These types of systems allow IP owners to share and review certain attributes of a work such as the date / time of creation and the details of the author. Some systems can also automatically check the generation of rights for a written work. These types of functions have been performed manually in the past, and a blockchain-based DRM system could make the process significantly more efficient.
Companies have been investing in these systems for a number of years. For example, Kodak has launched a blockchain-based platform for managing image rights. Spotify also acquired a blockchain startup that aims to facilitate payments to artists through cryptocurrency.
3. Facilitating IP licensing, distribution, or similar agreements
Similarly, blockchain can be used to monetize intellectual property by licensing a work to a third party while still controlling its use. “Smart contracts” can be used to create licenses that encode certain data into protected content, for example, which means that license fees are paid to the IP owner every time the content is viewed or played back.
4. Protection against counterfeit or stolen goods
Because a block contains information relevant to a transaction, including the person who created the property, who owns the property, and who is an authorized licensee, the ideal scenario is that a buyer making a transaction through a Blockchain-based system, can be convinced to buy If the subject of the transaction is genuine and has a clean track record and the details of a transaction are theoretically immutable, an authentic object can also be distinguished from a potential forgery. This can offer a guarantee that is similar to, for example, the provenance and indicates the provenance and purchase history of an artwork.
Blocks can also include digital identification of the parties for further security, as blockchain identity management systems are gaining in importance. In fact, in some settings (including credit unions, universities, hospital systems, and some local governments), digital ledger systems are already in use for identity management for individuals and institutions.
5. Record IP rights
Once information is recorded in a ledger, it cannot be deleted or damaged (without attempting to “hack” all of the computers on the network) and can easily be verified by a third party. Because of this functionality, blockchain technology can be used to record IP rights and complement (or even reduce) the role of government IP registries by recording IP rights separately on a decentralized blockchain. For example, while almost every country has a registration system for copyrights, almost no country requires registration for those rights to exist. By creating an alternative record system to the official registration systems, the role of state registers can be reduced. Of course, some countries offer other benefits with official registration (e.g. legal damages or the right to initiate legal disputes). Therefore, do not underestimate the ongoing value of the official registration.
The technology could eventually be used by a central agency itself (such as the U.S. Trademark Office). Such a ledger could even contain information about the entire lifecycle of a brand and help make many IP functions extraordinarily more efficient, from creating evidence to enforce IP rights to reviewing IP portfolios to facilitating smooth IP -Transfers in the event of a merger or acquisition.
The chain ahead:
While blockchain technology is still relatively young, today it can be used to manage and protect your brand, and its potential uses are limitless. While its description and potential to drive advances in e-commerce (and beyond) seem idyllic, we know that nothing is.
Blockchain is a human-developed technology and, like any other, not just roses and no thorns:
o One answer to this criticism is that blockchain networks can be access-controlled if necessary.
Since blockchain ledgers are often decentralized and “nodes” exist in multiple jurisdictions, whose laws apply to any disputes that may arise?
o This will remain an open issue until regulated by law or reviewed by the courts.
o “It depends” and it will depend on it for some time to come, even though some states like Illinois have legalized smart contracts for specific purposes through legislation (as I discussed with CoinDesk last year).
o The nature of the blockchain and the process of “mining” (independent “nodes” solving complex math problems) require an immense amount of processing power, which in turn has a negative impact on the environment. Sales of computer hardware continue to contribute to environmental damage.
o In order for this technology to be sustainable as a widespread and reliable solution for other use cases, ways must be found in the future to minimize the energy consumption of every transaction.
o As with the provenance practice, which used to be seen as the infallible way of verifying the authenticity of works of art, it has since become clear that it can be forged by those who are sufficiently familiar with the process. The same will likely apply to blockchain.
o IP violations by non-fungible tokens (NFTs) and related scams have also become a topical issue as some artists find their works stamped as NFTs and sold without their consent.
With many questions left unanswered, we will keep an eye on the blockchain as a potential tool in our belt and continue to be wary of any possible legal issues that could arise from this solution.
In our next article, we’ll continue delving into blockchain technology by focusing on an increasingly popular trend in the marketing (and arts) community: NFTs.
Originally published by InfoLawGroup LLP.