Intellectual property

How Can We Make Intellectual Property Rights ‘Smarter’ With The Blockchain?

Did you know back in 2017, the U.S. Patent and Trademark Office (“USPTO”) received over 440,000 new trademark applications? There’s no question that individuals, SME’s and larger corporations are flooding the USPTO with applications. My proposed solution is to adapt the area of intellectual property law (IP) as a whole to a modernized, digital age. Starting with blockchain technology.

According to the World Intellectual Property Organization, or WIPO, intellectual property (“IP”) refers to “creations of the mind: inventions, literary and artistic works, and symbols, names and images used in commerce.” IP can be separated into three categories: trademarks, patents, and copyrights.

But, why does this area of law matter when we are talking about blockchain technology?

#1 –U.S. Constitution, “The IP Clause”

When it comes to protecting creation and innovation, our Founding Fathers would almost certainly point to the “IP Clause” of the U.S. Constitution, emphasizing that Congress has the power to:“…Promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

U.S. Constitution, Article I, Section 8, Clause 8

#2 –IP Has Been Distorted by Digitization

Twenty years ago, when we saw the birth of Napster and Grokster, the entertainment industry, was shocked, disrupted, and distorted. And it hasn’t been the same since. It went from making money selling vinyl’s and CD’s, to digital downloads and streaming. These platforms, including Kazaa, Limewire, and torrents changed everything. But why?

One major reason for this distortion can be widely attributed to bad players wishing to pirate and steal content. It’s true that the Recording Industry Association of America (“RIAA”) is hurting. But, it’s also true that artists and other creators are hurting. However, my theory is that these are merely symptoms which can be attributed to one reality—a fragmented industry. What if these previous behaviors weren’t intentional attacks on content and its creators? What if, these behaviors were simply the sparks that were ignited in response to how the industry treated its artists, authors, and creators?

#3 –Adopting and Adapting, Means Respecting and Securing

Whether you’re an author, artist, musician, actor/actress, or inventor, this technology is here to stay and it’s infiltrating every industry, making what we call ‘Industry 4.0’, a more sophisticated and advanced era than we thought possible.

For example, take blockchain-based video platform, TaTaTu, that raised $575 million last month and was created by Hollywood film producer, Andrea Iervolino. Iervolino’s platform recognizes that models like Amazon and Netflix provide for more exposure to works that may not make sense for release in cinema. With TaTaTu, it harmonizes the space by bringing the producer and audience closer together, allowing for direct feedback on content. The producer receives quality feedback concerning the content he or she produces, while the audience is able to communicate and even earn native digital currency for their willingness to participate in the ecosystem.

An ecosystem that provides a channel and avenue for original, unlicensed content to be uploaded, and in turn, royalties to be properly allocated and distributed, can only benefit the industry and all of its participants as a whole. All of which, can be done through an algorithm executed on the Blockchain–without the involvement of any record label or management company.

Another example, is “Our Music Festival” (“OMF”), the very first blockchain-powered music festival, coming to San Francisco this October. Created by DJ and music producer, 3LAU, aka Justin Blau, and blockchain entertainment studio, SingularDTV, OMF wants to change the “unfriendly” vibe that many live music events give off when it comes to appealing to fans. The idea is to connect fans directly to these live events with the hopes of minimizing exorbitant ticket prices, scalping, and fraud. By utilizing the Blockchain and OMF tokens, fans can purchase event tickets, VIP upgrades, merchandise, food and beverages. The strategic advisors and forces behind this event include CAA’s Hunter Williams and Paradigm partner Paul Morris, alongside Lee Anderson and Sam Hunt. To add to this entertainment-driven team, SingularDTV recently brought on former Marvel TV executive, Joseph White, as Vice-President of Production.

Developing ‘Smarter’ IP Rights

While there are technologies out there that have already begun to address managing IP rights, when it comes to blockchain technology, there is still plenty of room for exploration. In my opinion, I believe the industry is starting to recognize the need for expansion.

One up and coming project I came across was NPER Project. Earlier this month, ABC News Radio spoke with Daniel Nam, the general manager and operational planner of NPER about why they were entering into the space. “We thought one of the most important early sides of the industry we should innovate with blockchain technology was the intellectual property side,” Nam told ABC. Interestingly enough, the company is exploring the potential of using its native currency as a means in which an IP holder can transfer their ownership rights to another party. This is a project to keep your eyes peeled on.

#1 –Enforcing Licensing Agreements Through Smart Contracts

While thrown around frequently, smart contracts are often confused with legal contracts. But, these terms are not interchangeable. A “smart contract” is a computer code running on top of a Blockchain, containing a set of rules under which the parties to that smart contract agree to interact with each other. Upon the satisfaction of the pre-defined rules, the agreement is automatically enforced through the code—facilitating, verifying, and enforcing those terms.

#2 –Documenting IP Ownership and Chain of Custody

By utilizing distributed ledger technology (“DLT”), the Blockchain can help to minimize infringement as well as provide an electronic chain of custody for each and every piece of IP. This allows for the general public to be the judge as to the strength and value of any particular work—something far beyond what the USPTO is capable of doing through its traditional application process.

#3—Understanding Your ‘Bundle of Sticks’

I recently attended the Program In Law and Technology (“PILT”) conference at my alma mater, The University of Dayton School of Law (“UDSL”), and spoke with the host, Tracy Reilly, Professor of Property and Intellectual Property Law at UDSL and former partner at Kirkland & Ellis, LLP in Chicago, about how technology and IP law intersect when it comes to ensuring that property owner’s rights are protected.

“People who own both real property and IP rights are described as having a ‘bundle of sticks,’ or a number of separate legal entitlements, including, but not limited to exclusive ownership and use, as well as the sole right to determine how those assets are to be physically and/or economically exploited, sold, gifted, leased, and even devised after death,” explained Reilly.

But, according to the UDSL Professor, individuals do not necessarily obtain these rights automatically. Instead, they must jump through some legal “hoops” prescribed by the law.

“For example, in order for an artist of a new rock song to secure copyright protection for that song, he or she must metaphorically walk up to the front porch of the ‘copyright house’ with their new song and show that they have complied with all the ‘front door’ legal tests outlined in Sections 102 and 103of the Copyright Act.”

Once our artist is securely inside the ‘house’, they can then pick up their “sticks” associated with their work or song and enjoy all the rights afforded to them, including use, derivative creation, licenses, and/or other forms of distribution, including the right of refusal.

Reilly emphasized the excitement and new opportunities associated with the introduction of new technologies such as the Blockchain.

“While the digitization of copyrighted songs themselves is nothing new through platforms such as Grokster, Napster, and iTunes, what is new and very exciting for copyright owners is the vast potential by which blockchain technology may soon be able to create a workable digital footprint that would assist in better enforcement of unauthorized digital uses that continue to proliferate in the wild, wild west of the internet, particularly with respect to social media sites. The blockchain footprint would also be immensely helpful for other artists, filmmakers, producers, and anyone who wants to find information relevant for licensing—the name of the song, the artist who wrote the song, the year it was produced, and who currently owns the rights to the song.”

Without this new and emerging technology, it is nearly impossible for artists and/or their attorneys to easily access this information, even with today’s existing technology. By digitizing IP rights and moving them onto the Blockchain and a distributed ledger, we can effectively secure and protect creators’ rights, while making them publicly accessible, turning them them into “smart IP rights”.

 

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