Blockchain Patenting Strategies – Some Basic Ammunition

Bitcoin, Blockchain and the Law, Blockchain, Education | April 17, 2018 By:

Clients will sometimes ask whether they can patent recording real estate deeds (or some other general business action) on the blockchain. My answer to this question in the context of today’s environment is a straightforward “no”. We are in the midst of a patenting frenzy around blockchain technologies and many of the basic ideas around implementing various legal, medical, financial, or business processes using the blockchain have already been discussed at length.  

Books like Blockchain Revolution: How the Technology Behind bitcoin Is Changing Money, Business, and the World (2016) by Don Tapscott and Alex Tapscott, for example, describe many potential business applications for the blockchain. We consider such disclosures as prior art to any idea that merely amounts to implementing some known practice using the blockchain.

That is not to say that there isn’t ample room for innovation within the blockchain space. As a result, we have developed a general strategy for discussing blockchain innovations with clients. The strategy relates to navigating the Alice patent eligibility minefield, particularly as it pertains to business methods. The origins of the patent eligibility rules established in Alice lie in the Supreme Court’s Bilski decision in which a fundamental economic practice including the concept of hedging was found to be patent ineligible.  Following Bilski, the Court determined in Alice that intermediated settlements were similarly patent ineligible. In doing so, the Court cited a textbook from the 1800s as evidence that the intermediated settlement concept was a fundamental economic practice long prevalent in our system of commerce. Generally speaking, the Court in Alice did not view the idea of taking an existing business concept and simply generically applying it to the Internet to be patent eligible.

The distinction between a concept that represents a fundamental practice long prevalent in our system of commerce and something that is patent eligible was articulated in DDR Holdings.According to DDR Holdings, patent eligible claims exist when the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks. We believe that this framework can be applied to blockchain-related innovations to overcome the patent ineligibility issues raised by Alice.

Typically, a blockchain-based innovation can be articulated in some way to address a problem that specifically arises in the realm of computer networks. Accordingly, some of the strategy we have developed to address patent eligibility of blockchain-related innovations is founded in how the story of the invention is told in the patent application.  

The background section of the application, for example, should describe how the current process related to the invention occurs on the Internet or other computer network. In most cases, the website, bank, real estate company, or other similar system to be replaced or supplemented by the blockchain-based innovation will include some conventional computer network component or architecture. The patent application should clearly articulate the weaknesses in these conventional computing and network elements or otherwise discuss issues related to privacy, data storage, access, security, or similar areas that exist in systems implementing the conventional approach. A clear explanation of how the proposed solution is necessarily rooted in blockchain-based computer technology and solves the technical problem of the current practice should then be provided. The description of the innovation also needs to include as many technical details as possible with respect to how the invention is implemented and tied into the blockchain.

By following the preceding strategy, the story of the innovation can be told in the language of current case law with respect to patent eligibility. Of course, no strategy can guarantee that section 101 rejections will be avoided during prosecution. However, following this strategic framework with respect to blockchain-based applications can provide some basic ammunition from which to argue that the claimed invention is patent eligible under current case law because it is necessarily rooted in computer technology and overcomes a problem specifically arising in the realm of computer networks.

Thomas M. Isaacson is a shareholder at Am Law 100 firm Polsinelli. He focuses on patent and trademark prosecution and litigation, serving a range of clients, including Fortune 100 companies. Isaacson has technological experience in standard-based patent analysis, cloud computing, wireless technologies and protocols, speech processing and mechanical arts.