Blockchain Patent Filings Spike

The race for blockchain patents is on, with firms in China and the US making headlines.  We get some insight about the strategies from a patent lawyer.  And beyond legalities, recent data show VC investments are ramping up

At one time, blockchain meant bitcoin and bitcoin meant blockchain — no longer. Well-documented here and elsewhere, blockchain has become the rail across which innovators hope to innovate  to bring transparency to data, logistics and the movement of goods and services.

Depending on where one looks, there is both hope and hype in the space. PYMNTS’ own research revealed that of the more than 140 announcements about blockchain tech pilots in the last two years, only a small handful have made it far enough to provide updates beyond the initial hype. The investment landscape is changing too (more on that in a minute).

To that end, as blockchain becomes increasingly associated with use cases and headlines well beyond bitcoin, activity measured in terms of patent filings has been on the rise. After all, intellectual property is the launching pad of sorts into a real go-to-market effort.

The news in the past few weeks has been that China, with Alibaba as the marquee name from that region, has filed more than 10 percent of overall patent applications tied to blockchain. The Nikkei Asian Review wrote that the company represents a “sign of China’s ambitions to dominate the next-generation technology in uses beyond cryptocurrencies.”

The numbers show that China filed more patent applications than the U.S. in 2017, representing 56 percent of the 406 filings that came across the globe. The U.S. came in at 22 percent of filings. This is a year’s data, not cumulative data. Beyond Alibaba, the People’s Bank of China and a number of its units filed 68 patents, trailed by Bank of America at 33, noted the Nikkei Asian Review.

So far, the patent activity is dominated by China and the U.S. Also, Japan has five patents, the report said.

On a stage writ large, and from the U.S., some of these names are no doubt familiar. Visa has a patent filing that would leverage blockchain for payment services. UPS, as might be expected, sees potential in blockchain as a conduit to more efficient shipping.

In an interview with PYMNTS via email, Executive Partner Shamita Etienne-Cummings at White & Case said Chinese firms  in looking to file patents in the U.S., rather than in China — are not making, what she termed as, an “either/or decision. … More and more Chinese companies look to file patents in the U.S. as they enter the U.S. market. In addition, U.S. patents generally can be used as both a weapon and a shield when dealing with competitors in the U.S. market.”

Patents, she said, can be monetized in ways that extend to licensing or, of course, blocking competitors within certain markets. She also noted that patent trolls (companies that file several patents, which never produce goods or services, but tend to litigate in pursuit of profit) are likely to become more aggressive as more products use blockchain.

When asked how the competitive landscape might look, where China already has a “lead,” she noted that  due to the fact that China has seen relatively greater use of electronic financial transactions  the country would “have the incentive to lead in blockchain property rights, as well as other related areas ([i.e.] cryptocurrency).”

Other verticals that might see uptake moving forward especially in patent activity include the fashion industry. As Etienne-Cummings said, “Blockchain/IP can be used for record-keeping, registering and clearing IP rights, controlling and tracking distribution IP rights, evidence for first use in commerce/trade, establishing and enforcing IP contracts … and for authentication. Blockchain would be a perfect technology in this field because it is ‘unhackable.’ We expect that this would be gaining more traction in China, given the problems of counterfeit products.”

The Enterprising Blockchain?

Separately, among the spate of larger firms diving into blockchain, AT&T announced it is offering a suite of services to corporates in collaboration with Microsoft and IBM. The suite is geared toward digitizing business processes and targeting verticals as far-flung as retail, healthcare and manufacturing. The use cases involve authenticating products for quality and tracking them through supply chains.

Beyond individual company announcements, per CoinDesk, blockchain research firm Diar has estimated that blockchain- and cryptocurrency-focused firms have raised roughly $3.9 billion through venture capital (VC) investments, as measured through the first three quarters of the year. The tally is up more than 280 percent from the entirety of 2017. The investments come as initial coin offerings (ICOs) have waned or crashed, as has been widely reported.