IPR PROTECTION TO CRYPTOCURRENCY_ A DISTANT REALITY_

Introduction:

As cryptocurrencies have become popular these days and the world is slowly tilting on its axis towards an alternate and a digital form of currency, an important question has also emerged as to whether the dynamic growth of technology will ever be tainted, hindered or affected by attempts to copyright, patent, or trademark specific cryptocurrency or the blockchain technologies associated with them or not? Intellectual Property (IP) protection is essentially critical for new developers who have developed new software or computer-based methodology to innovate within the blockchain, or emerging bitcoin companies seeking to invite investors. It is obvious that masterminds and entrepreneurs of these startups that deal in cryptocurrency or specific blockchain technologies may seek legal protection amidst the pre-existing laws and conventions if they develop a particular method, process, or code exclusively integral to their business. But, before digging the answer as to whether there exist protections for these blockchains and cryptocurrencies, it is pertinent to understand what these terms actually mean.

What is Cryptocurrency?

Cryptocurrency is a virtual currency that uses cryptography for security and a decentralised ledger (a collection of data) for keeping a record of these transactions. Rather than comprising itself of notes and coins, like a governmental currency, cryptocurrency is completely digital in nature. Since it is used and operated by means of a computer-based code, a cryptocurrency can be programmed to fulfil a variety of different rights and obligations and perform manifold functions beyond acting as a mere means of exchange. For instance, some cryptocurrencies provide digital access to goods, an application, or a service, while others represent interests in real-world assets and liabilities. With decentralised cryptocurrencies, there is no central authority that performs these functions. Rather, a network of computers that maintains a digital record of transactions performs computational work and is rewarded with newly created cryptocurrency. Some of the most commonly known and influential, besides Bitcoin, are Ethereum, Litecoin, Ripple, Zcash, Dash, and Monero. Each of these cryptocurrencies has its own logo, such as Bitcoin and Ethereum. 

What is Blockchain?

Blockchain technology, on the other hand, is the technology that powers and operates all the cryptocurrencies. At its core, it is an open ledger of information that can be used to record and track transactions, and which is exchanged and verified on a peer-to-peer network. Blockchain and other distributed ledger technologies create a trustworthy and transparent record by allowing multiple parties to a transaction to verify what will be entered onto a ledger in advance without any single party having the ability to change any ledger entries later on. Each transaction or “block” is transmitted to all the participants in the network and must be verified by each participant “node” solving a complex mathematical puzzle. Once the block is verified, it is added to the ledger or chain. From the perspective of information, the real innovation of distributed ledger technology is that it ensures the integrity of the ledger by crowdsourcing oversight and removes the need for a central authority. In other words, transactions are verified and validated by the multiple computers that host the blockchain. For this reason, it is seen as “near unhackable,” because to change any of the information on it, a cyber-attack would have to strike (nearly) all copies of the ledger simultaneously. While the traditional concept of blockchain is an open and anonymous network, there are also “private” blockchains which pre-screen who is allowed to administer the ledger.

Problems Associated With Patenting Blockchain and Cryptocurrency:

There are two distinct patent category types- blockchain-specific and cryptocurrency-specific. While patents are considered the most crucial aspect of any successful Intellectual Property strategy, the growth of the blockchain system has revealed a number of complexities in the process of patenting these assets. Three of the most notable complexities revolve around the newness and instability of the industries, ethical concerns, and difficulty demonstrating patent eligibility. Inherently, there is controversy in patenting crypto. After 2008, the world experienced a deep lack of trust in money being owned by one central party. Cryptocurrency arose in part to eliminate this need for monetary centralisation. The original blockchain software was intentionally made to be free and open-source. Many would argue that patenting directly contradicts the ethos of the blockchain. Next, cryptocurrency patents often see scrutiny in courts such as in the US, UK and Australia, due to subject-matter eligibility concerns. Blockchain currencies and software are financial transactions. US courts hold that mere financial transactions are not patentable. In order to patent cryptocurrency, inventors must demonstrate that the functionality of the crypto software makes a process more efficient or effective, provides new data or exceeds that which can be done by humans alone. As it is observed among various scholars and lawyers, there has always been considerable tension between innovation and the role of legal protection provided by intellectual property law.  The most famous cryptocurrency and example of blockchain technology, Bitcoin, is not patented.  It is precisely this lack of intellectual property protection, experts argue, that allows for Bitcoin and similar cryptocurrencies to improve, grow, and innovate in terms of speed, block time, and use. As one of the first cryptocurrencies, Bitcoin was released in 2009 and currently has a block time of approximately ten minutes.  Without patent protection, coders have been allowed to copy Bitcoin’s code, improve on it, and since then, newer cryptocurrencies that have spawned can now boast turnaround times in the seconds. Moreover, critics of intellectual property law protection for blockchain technology argue that blockchain technology and cryptocurrency already have their own self-policing mechanisms. By this, they mean that if users become dissatisfied with a cryptocurrency, they can simply code a completely new one by copying existing blockchain data and changing them enough to create competing ones.  As such, many argue that blockchain technology must thus remain open-source to flourish.

Can the Names of Cryptocurrencies Function as Brands/ Tradenames?

A brand, or trademark, is a word, name, symbol, design, or phrase used to identify and distinguish a product or service and to indicate the source of the product or service. The key questions which arise while determining as to whether distinctive cryptocurrency names can function as brands are- a) Is cryptocurrency a type of product or service? & b) Does the name of a cryptocurrency act as a source identifier, even if the source is unknown? If the relevant cryptocurrency is simply a store of value or medium of exchange, such as a traditional currency, it is arguably not a “product or service.” However, a cryptocurrency that is used for a particular purpose beyond that of a traditional currency may function as a “product or service”. Assuming cryptocurrency is a “product,” the name or symbol of a cryptocurrency must signify that the cryptocurrency emanates from a single source to function as a brand. If the name of a cryptocurrency does not identify a single source (even if unknown), it does not function as a trademark. For example, a decentralised cryptocurrency, like Bitcoin, which is used as an open-source by developers, does not emanate from or identify a single source and therefore cannot function as a trademark for digital currency. However, the name of a centralised cryptocurrency that originates with and is distributed by a single source may indicate that source. Another consideration for determining whether a cryptocurrency name acts as a source identifier is whether the primary significance of the name in the mind of the consuming public is the producer, rather than the product. If the name merely identifies the good or service, it is a generic term that is not capable of trademark protection. For example, if the name of the cryptocurrency is understood in the minds of the consuming public as the only type of cryptocurrency that can be used to buy real estate in Fiji (a fictional “FijiCoin”), then instead of identifying the source of the company distributing the “FijiCoin,” it may be at risk of being deemed the generic name of that type of digital currency. This booming market full of competitors may somewhat insulate a cryptocurrency brand from this type of genericness, as it is difficult to be the “only” cryptocurrency for a particular purpose. However, given the risk of losing rights in a mark if a consumer associates the mark with the product or service, rather than the owner, a cryptocurrency brand should not be used in a generic manner. A trademark should be used as an adjective that modifies a noun to prevent the brand from simply functioning as the name of a product or service. The brand name should be used consistently with an appropriate generic descriptor. If there are only common law rights in the brand, use the trademark symbol TM. Once the trademark is registered, the registration symbol ® may be used to put others on notice of the registration. Additionally, when referring to the trademark in written materials, the trademark should be in bold or all caps, or otherwise set apart from other wording, to demonstrate trademark use.

Conclusion: 

Overall, blockchain and IP can exist in a parallel space despite the underlying complications. But, with the constant developments in the legal regimes as well as the global scenarios on intellectual property rights, only time will tell whether or not traditional intellectual property protection such as patents, copyrights, and trademarks will become heavily utilised in the cryptocurrency and blockchain technology world. Most likely, as blockchain technology continues to gain acceptance and use outside of the financial sector, there will be more traditional attempts to use intellectual property law to apply some sort of ownership on specific processes, brands, companies, or uses of cryptocurrency and its associated blockchain technology.

– Kulin Dave and Pritthish Roy