The 10 Patent Commandments: When & How to File a Blockchain Patent

6 min readJul 27, 2018

(This is not legal advice)

Blockchain Patent Background:

Centralized or decentralized arguments aside, a lot of blockchain companies have changed direction from github to the patent office. To date, 1853 blockchain-related patents have been filed worldwide and over 75% have been granted.[1] Among the top players in America, you will see Security First, with 64 patents, Microsoft with 40, IBM with 25, Qualcomm with 19, Toronto Dominion Bank with 19, Mastercard with 15.[2]

Security First claims it’s novelty to be, “The sliver of data respectively containing random distribution of respective subset of data set is generated at a location. The sliver of data is communicated over communication path separately from generation location to receiving location. The data set is restored from subset of sliver of data at receiving location.”[3]

Another big player in the blockchain patent world is Craig Wright, the Australian inventor who claims to be Satoshi and is currently being sued by the estate of Dave Kleiman.[4] His company, Nchain Holdings, has filed for over 85 patents with the British Patent Office, another 6 patents with the European Patent Office and 7 in Taiwan.[5]

Bitcoin itself can never be patented because its White Paper was published in 2008. Anything built on top of the Bitcoin Blockchain, however, is fair game if it has a use case beyond Bitcoin.

Why file for a patent?

A patent gives you a monopoly over the use of your invention for 20 years from the date of your patent application. As you can imagine, if used competitively, with a useful product, a patent can be quite lucrative.

Steps to Filing a Patent:

1. Keep Meticulous Records about your Invention:

This includes every step of the process, you should describe and diagram every aspect and modification as it comes up. Also include where you came up with the idea. A test/prototype is very helpful. Sign and date every entry in the book, and if you can, have two reliable witnesses sign as well.

2. Check to see if your Invention Qualifies for Patent Protection:

A patent must be Novel, Non-Obvious, and Useful

Novel: The invention must be new and different from anything in existence — which is called prior art. It can’t have been previously published or available for sale. It has to be working at the time you apply for the patent.

Nonobvious: To qualify as nonobvious, the invention has to be so unique that a skilled person in the particular field of the invention would view it as an unexpected or surprising development.

Useful: The invention must have a practical benefit or help people complete a real-world task.

3. Choose which kind of patent is right for your invention:

There are three different kinds of patents, utility, design, and plants.

Utility Patents: (the most common) — an invention must be:

· A process for producing a useful, concrete, and tangible result — ex: investment strategy, or process for e-commerce

· A machine with moving parts or circuitry — ex: a photocopier, a camera

· An article of manufacture — ex: an eraser, a tire

Design Patents: Novel, nonobvious, nonfunctional — ex: a new shape of something that already exists. Ex: Aerodynamic triathlon bike.

Plant Patents: (the least common) — Must be novel and nonobvious. Ex: An asexually reproduced new variety of plant in an uncultivated state.[6]

4. Make sure your invention is not unpatentable:

Things you can’t patent: math formulas, laws of nature, newly discovered substances that occur naturally, theoretical phenomena (like superconductivity).[7] Also, processes done by human movement, like choreographed dance, or sports moves cannot be patented. Most methods of performing surgery, unsafe new drugs, inventions for illegal activities, and creative content are all unpatentable as well. You can patent computer software because it’s considered different from a math formula since it has a specific application.

5. Assess the Commercial Potential of Your Invention

Getting a patent is not cheap; you often need to hire an attorney and a professional drawer. There are also filing fees of approximately $1,500 to file with the USPTO.

6. Do a Thorough Patent Search

This search involves both the U.S. and foreign patents that have been filed and anything published in journals that are related to your invention. One of the best places to start searching is www.uspto.gov. This search goes includes all patents issued in America since 1976, and all patents applied for since 2001. Another great resource is www.google.com/patents, which goes back to 1790 for text-searchable patents. Some paid search sites include:

· Delphion Intellectual Property Network: www.delphion.com,

· Thomson-Reuters PatentWeb: http://scientific.thomsonreuters.com/products/patentweb

· LexPat: www.lexis-nexis.com

· QPAT: www.qpat.com

· PatBase: www.patbase.com

· PatentMax: www.patentmax.com

7. Prepare & File your Patent Application with USPTO

There are two types, either a regular patent application (“RPA”), or a provisional patent application (“PPA”). The PPA just allows you to say you’ve got a patent pending, and it is a fraction of the work and cost of a regular patent application.

8. Decide whether you are a micro, small or large company:

The fee to file the PPA ranges from $65 to $260 depending on whether you are a micro, small, or large company.

Micro Entity:

Qualify as a USPTO-defined small entity;
Not be named on more than four previously filed patent applications;
Not have a gross income more than three times the median household income in the previous year from when the fee(s) is paid. (For 2011, the median income was $50,054);
Not be under an obligation to assign, grant, or convey a license.[8]

Small Entity:

· An individual

· A small business concern having no more than 500 employees (or affiliates)

· A university, or

· A 501(c)(3) nonprofit organization.

Large Entity:

· Anything that doesn’t qualify as a micro or small entity.

9. Be the first to file:

Within a year of getting the PPA, you have to file for the RPA, or you lose the “patent pending” status. There’s an incentive to file a PPA quickly because under the U.S.’s “first-to-file” system, which came into effect in 2013, if someone else files a PPA before you, even if they haven’t invented the actual product/process, they will be able to block you from applying.

To file for the PPA, you need ownership rights to the invention.

10. Draft the Specifications:

The PPA application requires a 5–10 page document (“specifications”) comprised of text and drawings that describe the invention. Once this is done, you can use the phrase “patent pending” on your invention for the next 12 months.

Conclusion:

Patents on blockchain technology seems counterintuitive to me. It’s a totally different mentality than what I got into Bitcoin for. Owning a patent means the technology is not only centralized, but also monopolized. Bitcoin is meant to be censorship resistant and to create a way for everyone to transact in a pseudo anonymous, and nearly free fashion. Its code is public. While people are encouraged to try and improve on the technology, so far it seems the most exciting improvement has been the lightning network channels, which are also open source to my knowledge.

The enterprise blockchain technology, which has been often criticized as using blockchain in name only, is where the patent action is, and it seems like a misguided attempt for the banks and others to get their foothold in this emerging technology sector.

A case in point is JP Morgan’s CEO who called Bitcoin a fraud, then bought a large block, then said it should be banned by the government, then called Bitcoin investors stupid. Then he filed a patent for peer-to-peer payment networks based on distributed ledger technology.[9] It will be interesting to watch the patent wars over the coming decades, but in the end, nothing can stop Bitcoin, it doesn’t need permission.