Tuesday, 20 August 2019

Techniques for Patenting Blockchain in Europe, the United States, China and Japan

“The grant rate of Blockchain patents is quite similar to computer-implemented applications in general. In fact, the EPO considers these inventions as a type of computer-implemented invention.”

Patentability of Blockchain is a hot topic primarily because of the tremendous expectations around this emerging, disruptive and promising technology. On December 5, 2018, the European Patent Office (EPO) held an International Conference on Patenting Blockchain at The Hague to explore this topic in detail. The EPO published the conference presentations on its website, and corresponding videos on YouTube. This article provides a summary of the conference topics, an overview of exemplary cases, and some further thoughts.

Current State of Blockchain Patenting Around the World

According to figures provided by the EPO at the conference, around 4,100 patent families relating to blockchain technology have been filed to date, 2,200 are in the first publication year and 286 are in the first grant year, with an exponential growth since 2015. From the data presented, it appears that the worldwide grant rate is similar to that of other computer-implemented inventions.

40% and 20% of those patent families originated in China and the United States, respectively, with Europe and Korea ranking third and fourth globally. However, when focusing on where the related Patent Cooperation Treaty (PCT) applications originate, the U.S. is leading, followed by Europe and then China. This means that most of the first applications filed in China are only filed locally. Accordingly, to identify such publications, an extensive patent search among Chinese applications should be carried out.

Searching for Blockchain Prior Art

Bitcoin started with Satoshi Nakamoto’s whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008. The real identity of the author is still in dispute. Blockchain as a centralized digital ledger was proposed much earlier in 1991.

Although Bitcoin and Blockchain are not synonymous, Bitcoin is the first crypto asset ever invented and is decentralized. Therefore, Bitcoin constitutes the birth of Blockchain as the concept of a decentralized digital ledger.

This has an important consequence on prior art searches. In fact, searches focusing on “blockchain” as a keyword would exclude non-patent literature such as Satoshi Nakamoto’s paper, as well as many patent claims where alternative terms are often used.

The language commonly used is in fact blended with classical cryptography language, and this is consistent with the fact that cryptography is at the heart of Blockchain technology. This is also why the 95 examiners at the EPO assigned to cryptography are also in charge of examining blockchain patents.

The Cooperative Patent Classification (CPC) classes most commonly used by Examiners are H04L/00, G06Q20/00, H04L2209/00, G06F21/00, H04L63/00, G06F17/00, and H04L67/00. A patent practitioner should review all of these classes when performing a preliminary search on blockchain patents.

Searches using “bitcoin”, “crypto” and “currency” as alternatives (“OR” operator) with each other and with “blockchain” is recommended, together with classic keywords such as “ledger”, “distributed”, and “node”. Other keywords should be taken from general application fields such as:

- Finance
- Law (corporate and commercial)
- Accounting
- Systems (voting and governance)
- Insurance
- Contracts, certification and record keeping

Using translations of these words in at least another important (for patent searches) language is recommended when one needs to find prior art which can invalidate or narrow the scope of a patent or pending application.

Blockchain Patentability in Europe

As mentioned above, the grant rate of Blockchain patents is quite similar to computer-implemented applications in general. In fact, the EPO considers these inventions as a type of computer-implemented invention. Indeed, the current version of the Guidelines for Examination at the EPO (effective November 1, 2018) deals exhaustively with each aspect of the patentability of computer-implemented inventions, as we explained in a previous article on this website.

The EPO website includes a useful html index of the new Guidelines, including sections relating to computer-implemented inventions, which can be found in Parts F-IV and G-II of the Guidelines, specifically:

- Mathematical methods (G-II 3.3 and 3.6)
- Artificial Intelligence and Machine Learning (G-II 3.3.1)
- Simulation, design or modelling (G-II 3.3.2)
- Schemes, rules and methods for performing mental acts, playing games or doing business (G-II 3.5)
- Presentations of information and Graphical User Interfaces (G-II 3.7)
- Inventions realized in a distributed computing environment (F-IV 3.9.3)

The new Guidelines provide detailed information on well-established practice, which includes the so-called “two-hurdles” approach:

1. First Hurdle. The claimed subject-matter must have a technical character, but claims may contain both technical and non-technical features; and

2. Second Hurdle. All features contributing to the technical character are taken into account for assessment of inventive step, including mathematical method steps which contribute to the technical character of the invention. The inventive step is assessed by the well-established “Problem and Solution Approach for claims comprising technical and non-technical features” (G-VII 5,4).

Examples of Claims/Patentability in Europe and the United States

As a complement to the conference’s discussion, an interesting example of a patented invention in blockchain technology is EP 3 125 489 B1, titled “Mitigating Blockchain Attack,” by British Telecomm, filed on July 31, 2015 and which was extended to the Unites States, where it was granted on October 31, 2017 as U.S. Patent No. US 9,807,106 B2.

Both the European patent (EP) and the U.S. patent contain 13 claims directed to “A computer implemented method for detecting malicious events occurring with respect to a blockchain data structure,” a computer system and a program product directed to the same end, with slight formal differences due to local eligibility requirements (for the program product).

The method provides for a specific code to be included in a blockchain, where the code establishes rules for generating transactions during the lifetime of the blockchain and includes the rules in the blockchain. By reading the blockchain and verifying compliance of incorporated transactions with the established rules, the validity of miners’ actions can be verified and, in the negative, mitigation strategies can be triggered.

The above example can be considered a classical patent on “core” blockchain technology, because it deals with the way blockchain itself works. Core technology is in general patentable; however, it is important to prevent claims from being considered as a prohibited “pure algorithm.”

Interesting aspects of the prosecution of this patent family include the following:

- The European patent application received no objections;
- The U.S. patent application received both 101 (eligibility) and 103 (obviousness) objections;
- The 101 objection was overcome quickly;
- The 103 objections needed more time via an After Final Consideration extension, but there were no substantial problems;
- The claims of the EP and U.S. patent are the same in number and language, except for the program product claim, which had to be “embodied in a non-transitory computer-readable storage medium” for it to be granted in the U.S.

This demonstrates that successful parallel prosecution is possible at the EPO and USPTO without making substantial changes to the claims. In general, to improve chances of success in Europe, it is advisable to add more specific explanation as to why the alleged technical effect is achieved (in the present case, why compliance of the programmed transactions is evidence of non-violation of the blockchain), or at least some comparative examples.

Another interesting case is EP 3 257 191 B1, titled “Registry and automated management method for blockchain-enforced smart contracts,” filed on February 16, 2017 based on a UK priority application, and extended also to Australia, Korea, and Canada, among others (no application in the U.S.), where it is still under examination.

The EP contains 18 claims directed in all cases to “A computer-implemented method of controlling the visibility and/or performance of a contract”, as well as to a computer system (no program product however). The claims recite methods for including a contract in a blockchain that is also a (real or fictitious) cryptocurrency. The method assigns a key to a contract and manages to include the hash of the contract, the physical location of it, and a new key based on a previous key into a script of a blockchain, to which an amount of currency is paid. In this way, a registry for contract history is created, and the original contract can always be accessed in a secure manner.

This is a classic patent on “applied” blockchain technology, because it is not related to the way blockchain itself works but how to implement its use for a specific purpose, i.e. accessibility of a contract’s history.

The prosecution history of the European application is straightforward, with only one amendment (a feature taken from the description) to overcome a clarity objection.

Blockchain Patentability in China and Japan

According to a Blockchain conference discussion, criteria for patentability in China are very close to those of Europe. Core and applied blockchain technology are in general patentable, while claims related to cryptocurrencies and miners as such are normally refused.

Importantly, claims related to virtual currencies are refused on the basis of Art. 5 of Chinese Patent Law, which stipulates that inventions detrimental to public interest are not to be allowed, and China has established that this is the case when it comes to virtual currencies. No amendment can be made to solve this problem. Miners are normally deemed to be pure algorithm and amendments may have some chance to succeed.

The situation is different in Japan, where eligibility requirements are easier to meet compared to the practice in Europe and China. Indeed, the overall allowance rate in business method applications recently exceeded 60% and is steadily increasing. This is due to the remarkable fact that, in assessing inventive step, not only technical differences but also non-technical differences between the claimed invention and the prior art may be considered.

A Leg Up on AI

As in the case for Artificial Intelligence (AI), Blockchain technology patent claims can be addressed in Europe, the United States, China and Japan within the framework of computer-implemented inventions, with no need for special guidelines at this time. The main differences among these jurisdictions concern the relative ease for overcoming eligibility and non-obviousness hurdles, with the notable exception of China with respect to its national interest in the specific case of virtual currency applications.

The overall situation, however, is even better compared to AI, because Blockchain does not present common problems associated with AI, such as redefinition of the skilled person, assessment of inventorship and ownership, and assessment of equivalents.

Practitioners who work on patent applications or clearance advice in this field should be careful in the choice of keywords for prior art searches and should be aware of what kind of patent they are seeking: core technology (with possible risks of a pure algorithm objection), applied technology, and virtual currency claim (which is excluded in China).


By Andrea Perronace 
source: ipwatchdog.com 
  
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