Is Blockchain About to Become a Patent War Battleground?

Last week, news of at least three major players applying for blockchain-related patents emerged: Bank of America sought to legally protect its blockchain-based system allowing the external validation of data, Barclays filed two patent applications relating to the transfer of digital currency and blockchain data storage, while MasterCard's application mentioned a form of a public blockchain-based method for linking assets between blockchain and fiat accounts.

As blockchain technology continues to be one of the most discussed things in 2018 and a subject for mass adoption, the number of crypto-related patents is steadily growing - and with patent trolls joining the game, a legal war over blockchain might occur in the future.

A blockchain patent, like any other patent, is a set of exclusive rights issued by an official authority - a sovereign state or intergovernmental organization - that an inventor or assignee gets in exchange for revealing their invention to the public.

Although there are no "International patents," per se, according to the Patent Cooperation Treaty signed by 152 countries, by filing one international patent application under the PCT, applicants can simultaneously get protection for their inventions in many countries.

As Bloomberg explains, business-wise blockchain patents "Are an essential ingredient for companies looking to reshape the financial services industry or spawn profitable cryptocurrency-related businesses." Essentially, patents help companies attract investment, protect property rights and collect monopoly profits from other companies using their inventions.

2018 might turn out to be even more fruitful in terms of blockchain patent applications, as blockchain has been widely branded as the most discussed technology of the moment: Indeed, according to Fortune's sources, the overall number of blockchain-related patents and applications for the next year "Is expected to be around 1,245.".

Blockchain has become a brand new target for patent trolls.

As the Wall Street Journal writes, the patent office "Publishes applications up to 18 months after they are filed and can take years to examine an application to decide whether to grant patent protection." Bloomberg cites a similar timeframe and provides the example of Bank of America's application for a crypto exchange system to convert one virtual currency into another: It was submitted in 2014, published in 2015 and granted in 2017.

The outcome of a blockchain patent filing is often unclear.

The open-source model that was once crucial to blockchain's philosophy - and could prevent the potential patent war - is reportedly becoming less prominent in the industry: A 2017 collaborative research of the open-source blockchain efforts conducted by Deloitte and GitHub suggested that a majority of such experiments had failed.