The document provides an overview of blockchain technology, including its concepts, use cases, and intellectual property (IP) considerations, particularly regarding patents and trademarks. It highlights the growth in blockchain-related patent filings and discusses the legal challenges, such as patentability and the implications of open-source software within the blockchain ecosystem. Best practices for implementing blockchain solutions are also suggested, focusing on data management, consensus mechanisms, and system integration.

1. IP Considerations for Blockchain Technology
Prepared for
Chicago Bar Association – IP Committee
Presented by
Nelson M. Rosario
September 26, 2017

2. Presentation Roadmap
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1. Introduction to blockchain technology concepts
2. Interesting statistics on blockchain patents
3. IP Issues related to Blockchain
4. Suggested best practices

3. Why should you care?
Source: CoinDesk, “State of Blockchain – Q2 2017”
Patents: 1,843 patents and patent
applications
Trademarks: 109 live trademarks
Copyrights: 58 registered copyrights
on artistic works
Source: UPSTO, and US Copyright Office
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4. Introduction to Blockchain Technology
Blockchains, cryptocurrencies, smart contracts, daos, and icos

5. Blockchain
What is a blockchain?
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6. Blockchain
• No agreed upon definition
• A blockchain is a tamper-evident append-only distributed ledger of peer-peer
transactions maintained by a decentralized network of participants
– Blockchains are cryptographically linked blocks of transactions
• Blockchains utilize public-key cryptography, and consensus mechanisms to
establish the veracity of information stored in the blockchains
• Fundamentally, blockchains are about two key concepts: trust and
consensus
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7. Who do you Trust? How is Consensus achieved?
• Middlemen?
• Individuals?
• Math?
• Blockchains are trustless
• How do you prove veracity of data?
• How do you get people to agree on
that proof?
• Blockchains allow for emergent
consensus
Blockchain
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8. Blockchain
• Blockchains are tamper-evident
• Saying blockchains are immutable is imprecise
• As time goes by, previously entered transactions trend towards being
immutable
– Always the possibility of a 50%+1 attack
• The use of Merkle tree’s and cryptography make changes very difficult
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9. Blockchain
• Blockchains are append-only
• You can’t go back and edit previous transactions
• Information communicated on a blockchain is not reversible
– Once information is sent out there is not getting it back
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10. Blockchain
• Blockchains utilize a distributed ledger of peer-peer transactions
• Every node in the network may have a copy of the “ledger,” or blockchain
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11. Blockchain
• Blockchains use peer-peer transactions
• These transactions are broadcast to the entire blockchain network
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12. Blockchain
• Blockchains are decentralized
• Robust blockchains are run by a plurality of nodes where no one party controls
over 50% of the computing power necessary to sustain the network
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13. Blockchain
• Consensus is achieved over time, accordingly, consensus on the information in
the network emerges as more and more nodes confirm the data
• Main two approaches to incentivize nodes to maintain the network
– Proof of work
• Nodes solve a cryptographic puzzle to prove they expended a certain amount of computational power during the
process of building a block of transactions to be added to the blockchain
• As a reward miners receive a token for the network, usually a cryptocurrency, when their block is accepted and
added to the blockchain
– Proof of stake
• Blocks are added to the blockchain in a deterministic fashion
• The chance that a block built by a node is added to the blockchain depends on the amount of cryptocurrency
“staked” by that node
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14. Blockchain Flavors
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15. Blockchain
What can we do with a
blockchain?

16. Blockchain Use Cases
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Technical Possibilities
1. Cryptocurrency
2. Smart contracts
3. Decentralized Autonomous Organizations (“DAOs”)
4. Initial Coin Offerings (“ICOs”)
Example Real-World Use Cases
1. Land transfers
2. Escrow accounts
3. Voter registration
4. Logistics
5. Supply Chain Management
6. Digital Identity

17. Cryptocurrency
• The first cryptocurrency was Bitcoin
• Bitcoin introduced the first blockchain protocol
• Solved the “double-spend” problem
• Addresses in the network keep track of unspent transaction outputs
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18. Smart Contracts
• Smart contracts were first introduced by Nick Szabo in 1994
• Scripts that automatically execute
• Essentially, they are distributed and decentralized public agreements
• Ethereum was the first public blockchain built specifically for smart contracts
– Two accounts in Ethereum
• One account that holds a balance of ether
• Contract account that has
– An ether balance
– Functions
– Data, which is the state of the Contract
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19. Decentralized Autonomous Organizations
• Extension of the idea of smart contracts
• Organizations that live solely in code on a blockchain
• Program in all of the functionality of your “organization” using smart contracts
• Most famous example is the “DAO”
• The DAO was hacked as a result of a bug in its smart contract
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20. Initial Coin Offerings
• Initial Coin Offerings, or ICOs, are overwhelmingly conducted on the Ethereum
blockchain
• Type of crowd funding, looks like an IPO without all the required disclosure
• Can be deemed a security by the SEC
• $1.3 billion has been raised through ICOs in the form of cryptocurrency
contributed to projects
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21. Blockchain Related Patents
Stats on published applications and issued patents

22. Blockchain Patents Summary
• Around a 200% year over year growth in the number of filings we know about
• Results are based on searching anywhere in a patent document for “bitcoin,”
“blockchain,” “distributed ledgers,” “Ethereum,” or “smart contracts”
• 1842 total filings
• 1592 published patent applications
• 250 issued patents

23. Blockchain Patents
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9 27
85
257
548
692
224
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014 2015 2016 2017
Patents and Applications by Filing Year

24. Blockchain Patents
9 27 85 257
786
2164
6617
0
1000
2000
3000
4000
5000
6000
7000
2011 2012 2013 2014 2015 2016 2017
Projected Patents & Applications by Filing Year

25. Blockchain Patents
3
16
26
77 78
43
7
0
10
20
30
40
50
60
70
80
90
2011 2012 2013 2014 2015 2016 2017
Issued Patents by Filing Year

26. Blockchain Patents
6 11
59
180
470
649
217
0
100
200
300
400
500
600
700
2011 2012 2013 2014 2015 2016 2017
Published Applications by Filing Year

27. Blockchain Patents
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705
60%1
12%
713
6%
726
4%
463
4%
709
3%
707
2%
700
1%
Misc
8%
Patent Filings by Subject Matter Class

28. Blockchain Patents
• Overwhelming majority of filings are from the 700 family of classes
• Deal with financial innovations
• Makes sense since the initial use cases are financial
• Small group of filings in class 463 that relate to gaming machines, e.g. slot
machines
• Major corporations appear in the filings: Facebook, Apple, IBM, Qualcomm,
PayPal, Bank of America, JP Morgan Chase, Visa, MasterCard, GE, Morgan
Stanley, Dell
• Expect to see filings related to: insurance, shipping, logistics, autonomous
vehicles, internet of things, and supply chains
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29. IP Issues Related to Blockchain
Patent protection, open source software, and trade secrets

30. Legal Issues Generally
• Very little legal guidance to date
• Most case law has been related to criminal law
• No patent infringement lawsuits related to blockchain patents have been filed
yet

31. Patent Issues
• Same patent issues that face all software-related inventions
• The basic functioning of a blockchain is well-known in the community and
would be considered in the public domain
• 35 USC §101: Aren’t these all just abstract ideas?
• Yes, and
• No
• Technical solutions to technical problems
• “Real-world hook”
• Where is the innovation focused? If it is simply “using a blockchain where we
used to use a database,” that is probably not patentable
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32. Open Source Software
• No different than legal issues that come up with other open source software
projects
• Many blockchain projects are licensed as Open Source Software
• For example, Bitcoin is licensed under the MIT License
• Similarly, Ethereum is licensed under a variety of licenses: MIT, GNU GPL,
or LGPL, depending on the parts being used
• Developers in this space are very keen on open source projects
• Need to be mindful of any obligations created by using preexisting code from
a blockchain project
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33. Suggested Best Practices
Patent claim strategies

34. Suggested Best Practices
Do you really need a
blockchain?

35. Suggested Best Practices
• What is the data that you hope to store in a blockchain?
• Is it mission critical?
• Is access to it time-sensitive?
• Are there privacy restrictions on the data?
• How will the data be entered into the system?
• Is the data going in solely under human direction?
• Is there a type of machine-machine communication?
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36. Suggested Best Practices
• How are transactions on the network verified?
• Are there additional steps taken as part of the verification process?
• How is consensus handled?
• Is an existing consensus mechanism used?
• Is some new consensus mechanism proposed?
– If so, is it properly tested?
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37. Suggested Best Practices
• How is the blockchain system interfacing into the existing system?
• Is the blockchain system set to replace an existing system?
• Is the blockchain system set to interact with legacy systems?
• How is the blockchain system going to interact with internal systems v.
external systems?
• Is the blockchain system involved in B2B interactions? B2C?
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38. Suggested Best Practices
• Who all is allowed to participate in the proposed blockchain system?
• Is the invention built on top of an existing public blockchain (e.g. Bitcoin or
Ethereum)?
– If so, have you considered any privacy requirements and how they might be met?
• Is this a completely open system where anyone can join?
• Are there any checks performed on participation?
• Is there a validation process?
• Are entities automatically entered as participants?
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39. Suggested Resources
Technical
• “Mastering Bitcoin” – by Andreas
Antonopoulos
• “Bitcoin and Cryptocurrency
Technologies” – by Narayanan et al.
• The Bitcoin Whitepaper
• The Ethereum Whitepaper
News/Legal
• CoinDesk – News site covering all
things blockchain
• CoinCenter – Leading non-profit
research and advocacy center
focused on the public policy issues
facing cryptocurrency and
decentralized computing
technologies
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40. Thank you
Nelson M. Rosario, Associate
nrosario@marshallip.com
312-474-9577
© 2017 Marshall, Gerstein & Borun LLP. All rights reserved.
This presentation is intended to be informative and should not be construed as legal advice for any specific fact situation.
Readers/viewers should not act upon the information presented without consulting professional legal counsel.