Since the thinking behind blockchain was first conceptualized by Haber and Stornetta in 1991, its possibilities have been touted as the solution to problems in just about every industry. And for brands determined to protect their IP and their products from counterfeiting too, blockchain does offer some interesting possibilities. Currently, although the technology has been functional since its manifestation in cryptocurrencies in the late 2000s, its application in anti-counterfeiting strategies has still not been adopted across the board.
If blockchain does represent the globalizing system of hack-proof encryptions that its proponents suggest, this raises two questions. First, what could this mean for businesses who need to secure their intellectual property and supply chains from infiltration and duplication? Secondly, why has it not yet been totally adopted?
A Blockchain Primer
Initially conceived as a way of creating encrypted, tamper-proof blocks of information that could be joined in a timestamped sequence, blockchain is often thought of as a public, distributed ledger. The information within the blocks could be anything, from banking data to medical records, but each block contains some specific data that is publicly visible to everyone within a network that anyone may access.
The system’s integrity is ensured because each block holds a cryptographic key and an additional key which identifies the previous block in the chain. This two-fold system results in the inability of data to change within a block since if this were to happen, the key would change as well and the blockchain would no longer fit. New data can be added in the form of a new block, but the initial one cannot be changed.
On the surface, this means blockchain represents a secure, time & date-specific record of transactions that could mean a potential revolution in how intellectual property information is handled.
How Blockchain Can Be Used in Intellectual Property and Brand Protection
Broadly speaking, the possible interactions between Intellectual Property law and blockchain technology span three areas.
First, there’s the issue of how inventors and companies with significant new innovations protect their ideas. Currently, we have the patent system, which allows for the state-controlled acceptance of ideas. The blockchain system would be ideal for this purpose, as it is perfectly designed to show who produced certain kinds of information, and when. If you have an idea, you form a new block, if someone else then claims to have the same idea, there is a pre-existing, unalterable record that you got there first.
As the patent system is centrally administered by governments, however, a rival or replacement system that international courts would accept does not seem to be likely without seismic political change.
The potential protection of copyrighted material presents a second case. Artistic and creative works already suffer from their unfettered distribution across the internet, with the details of who originally produced the work often being lost, resulting in the creators being uncredited and unpaid.
Again, blockchain’s inbuilt time-stamped record can be used productively to establish a record of conception, proof of use, and originality. The best part is that a piece of work can be recorded onto a ledger in real-time. This is where blockchain demonstrates a significant benefit over the lengthy, costly processes of the current copyright procedure. Additionally, the technology can also help enforce on licensee agreements through smart contracts which are self-executing contracts with their terms being encoded.
This system has already been pioneered by brands including Kodak, whose KODAKOne cryptocurrency system offers photographers the chance to lock their information into each photograph and so be able to track exactly who is using their work and who should be paying them for the privilege. As this system of copyright protection is more likely to depend on commercial agreements than court-decided legal cases, it offers a great deal more promise globally. Similar projects to kodaks have been instituted by Ujo Music and Crea.
It’s trademarks and their application to goods, however, which provide the clearest endorsement for the use of blockchain in this industry. As blocks can identify and track the chain of custody for any product, parties from manufacturers to consumers could, theoretically, identify authenticity.
For example, under a blockchain system, Customs officials in any country would be able to stop shipments of goods and verify their provenance quickly, efficiently, and categorically. The encoded information could show not only what the goods are, and where they originated, but also the transit path, thus alerting them to any suspicious activity.
One of the biggest draws of this type of system lies in how far it differs from current databases run by Customs authorities. These standalone systems suffer from the threat of tampering and corruption, particularly from trusted parties who have access and maybe bribed by organized crime gangs into changing data. This would not be possible with blockchain as information there cannot be changed due to block verifications.
One frequent question is whether blockchain technology is superior to QR codes. What makes QR codes fragile from a security standpoint is that because they are the open-source they can be reproduced by counterfeiters. Blockchain entries, on the other hand, cannot be reproduced or altered and so the 2-key system represents a substantial improvement on previous tracking methods.
So Why Not?
Despite the great promise that blockchain holds for the field, issues with its application in anti-counterfeiting and brand protection strategies remain. Scalability is arguably the biggest issue here because if the blockchain itself becomes too big it may become inefficient to maintain, with transactions taking longer to make. For smaller companies who may have limited resources, but who still ship products across the world in large numbers, whether they will have the technological or financial resources to invest in the necessary scale for technologies which can map these lengthy blockchain sequences is unclear.
Ultimately, it’s a decision that will rest on what is costing the business more, losses to counterfeits or long-term investment in tech solutions. That’s a strategic gamble that many companies are unwilling or unable to make, yet for the IP-protection industry to reach its final destination and implement the benefits of blockchain, it’s a step that needs to be taken.