More than 70 participants from corporations like Microsoft and IBM, financial institutions, technology companies, startups, academia and legal experts met recently with the Chamber of Digital Commerce to hash out a strategy going forward to deal with patent issues including the exponential growth in patent troll companies in the blockchain sector.
Chamber Founder and President Perianne Boring has acknowledged the urgency of dealing with patent trolls (companies that buy patents not to use them but to demand royalties and sue for damages) but also stresses the importance of creating an industry body that is organized and ready to deal with all intellectual property issues as they arise in the future and bringing the community together to foster collaboration and a healthy ecosystem.
Boring believes that the council must include a broad range of experts and organizations to be as effective as possible.
Boring told Bitcoin Magazine:
“We are welcoming financial institutions, technology companies, startups, academics, nonprofits and others committed to supporting blockchain adoption to participate in the Blockchain Intellectual Property Council. A multi-stakeholder approach will be essential to addressing intellectual property in the blockchain ecosystem.
“Since formally launching the Blockchain Intellectual Property Council on March 16, we have increased from 40 to more than 70 participants.”
Marc Kaufman, a patent lawyer with Rimon Law specializing in intellectual property issues, is one of three co-chairs of the council. Kaufman approached the Chamber after completing a study on patent trolls with Questel Inc. last year.
“I prepared a study last year of patents affecting the blockchain ecosystem and discovered that the rate of patent filings was growing in a substantially exponential manner,” said Kaufman in correspondence with Bitcoin Magazine. “History in other spaces, such as semiconductors, advertising and mobile devices, indicates that this sort of activity precedes high patent risk in the space from patent trolls and competitors. I approached Perianne Boring with this information and she agreed that the players should be attempting to manage the risk before it gets out of hand.”
PricewaterhouseCoopers tracks U.S. patent troll cases and reported in 2014 that “the annual number of patent actions filed once again establishes a new record high, with close to 6,500 cases filed in 2013. The number of cases has increased at an overall compound annual growth rate (CAGR) of 8% since 1991. However, since 2009, the CAGR of the number of patent cases filed has been 24 percent, or almost three times the growth over the entire period.”
RPX Corporation, a firm providing patent-litigation risk management, reports: “Current data shows that patent trolls are thriving — having added nearly twice as many new defendants to infringement lawsuit campaigns in the first half of 2015 than during the second half of last year — despite court decisions and reforms thought to be deterrents. The pace of added defendants in the first half of 2015 was greater than in any half-year period dating at least back through 2012.”
Members at the inaugural meeting set priorities and discussed possible strategies for best dealing with intellectual property issues on an ongoing, sustainable basis.
James Murdock, chief business officer and general counsel at Blockstream, and Patrick Murck, special counsel at Cooley and fellow at Berkman Klein Center at Harvard, have joined Marc Kaufman to co-chair the council, which is anchored by the Chamber of Digital Commerce.
“We were encouraged by the level of participation during the first meeting of the IP Council,” Murdock told Bitcoin Magazine. “It bodes well for the future outcomes from this important effort and we look forward to working with the broad range of participants from across the industry.”
Kaufman told the meeting that the risk of patent trolls disrupting innovation in the blockchain space is of primary concern and outlined some of the possible tools that could be used to manage this risk.
“The inaugural meeting of the BIPC on March 30, 2017, was largely introductory and informational,” Kaufman said after the meeting. “Participants indicated specific concerns regarding intellectual property (such as patent troll risk, and the need for interoperability) and the co-chairs outlined some of the tools that could be used by the players to manage this risk.”
He added that participants expressed a particular interest in establishing a repository of patent information specifically for the blockchain ecosystem.
“Developing an industry-led defensive patent strategy is paramount to help protect innovation and drive wide adoption of blockchain-enabled technologies,” Amber D. Scott, CEO of Outlier Canada, who works with companies on Anti-Money Laundering (AML) and compliance strategies, told Bitcoin Magazine.
“This has the potential to be a truly beautiful initiative, in particular where it can support innovation and collaboration. In so many cases, a refusal to license technology or a willingness to do so only at exorbitant rates has stifled innovation.
“While a collaborative and open-source mindset existed before Bitcoin, that was the point where many of these discussions became poignant and mainstream (or at least mainstream for techies). There is a real paradigm shift and it’s exciting to see a group coming together to support progress. We all benefit when we can focus on innovating rather than getting bogged down in petty squabbles.”
Joseph Weinberg, CEO of Paycase Financial and a blockchain advisor with the Ontario Securities Commission, also welcomes this initiative in light of the increasing questions about who owns blockchain applications.
“I think it’s important for the Chamber to bring together global regulators for more cross-jurisdictional alignment,” said Weinberg. “We have a great set of models people orchestrated in Canada, yet we cannot alone bring that to the doorsteps of other countries — that is what the Chamber is equipped to do, and is doing a fantastic job of: bringing global alignment to regulators so fluid interaction, production education as well as greater transparency [can happen] between industry and regulatory bodies.”
Boring said that the kickoff meeting “was met with enthusiastic support from more than 70 companies in participation. It’s clear that the formation of a dedicated initiative focused on mitigating IP issues while promoting technical innovation was long overdue.”
The BIPC will meet monthly and will establish smaller working groups for various issues that are of primary interest to the participants.
The BIPC’s executive committee includes Chain, Digital Asset, IBM, Microsoft, CoinDesk, Blockstream, Bloq, Civic, Cognizant, Deloitte, Digital Currency Group, Ernst & Young, Gem, Medici Ventures, T0.com, TMX and Wipfli.
The Chamber of Digital Commerce is a Washington, D.C.-based international trade association representing and promoting digital currencies and blockchain businesses to governments, regulatory agencies and other industries. In addition to the Blockchain Intellectual Property Council, the Chamber has created the Smart Contracts Alliance, the Blockchain Alliance, and the Global Blockchain Forum among other industry initiatives.