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Blockchain and the Future of Intellectual Property

Pre-webinar

Blockchain is an incorruptible digital ledger of economic transactions that can be used to record data exchanges.

In actual fact, the concept behind the Blockchain was conceived as far back as 1979 by Raiph Merkel who used a peer to peer network to verify data structures but Blockchain was popularized in 2008 with the emergence of Bitcoin cryptocurrency.

Blockchain is not the same as cryptocurrency or Bitcoin. It only happens that few cryptocurrencies like Bitcoin and Ethereum make use of the blockchain system.

With the prospect of blockchain hitting industries like banking, insurance, entertainment, it may lead to legal issues in financial regulations, data privacy, security and intellectual property.

Speaker profile

Faith Obafemi is a digital lawyer whose practice area revolves around legaltech, cryptocurrency, blockchain, STO, ICO and smart contracts. As a Founding Partner at Lex Futurus, an international blockchain law firm, Faith helps her clients illuminate and navigate the crypto dark maze. She has spoken on the intersection of blockchain and law at events within and outside the country. When she’s not decoding the law for her clients, you can find her learning to become a Smarts Contracts programmer or watching Korean series. She is simply extra, a tripartite combination of a lawyer, writer and a geek.

Website: www.faithobafemi.com

LinkedIn: https://www.linkedin.com/in/faithobafemi/

Twitter: https://twitter.com/FaithObafemiEsq

Introduction

Be it in hype or substance, blockchain is a phenomenon everyone is learning to become familiar with as heralding the dawn of the fourth industrial revolution. Beyond the financial services industry, enthusiasts of the Distributed Ledger Technologies (DLT) are adopting blockchain for virtually one new use case daily, from agriculture to zebra-crossing Smart Cities. A survey by Deloitte showed that the future of blockchain is one filled with myriad opportunities for which individuals, companies and governments are trying to position themselves. Almost half of the executives surveyed said they would be investing at least $5 million in exploring blockchain this 2019. It can be expected that these investment in R&D (Research and Development) would result in innovations that need to be protected under Intellectual Property Rights (IPR).

Intellectual Property (IP) for something like a car or solar-powered fan is easier to manage than digitized IPs. If I paint you a landscape and sell to you, no one else would a copy of the landscape, except you. By the way, that’s a P2P (peer-to-peer) transaction, they are facilitated without a middle-man. Where the problem arises is when we go digital. Let’s assume I take a photograph of a beautiful sunset with my digital camera and sell to you. Since it’s a digital photograph, there is no guarantee I won’t sell the same sunset photograph to another, or even upload online for millions to download. Wouldn’t it be amazing to have a solution where, when I send you the digital sunset photograph, I will no longer have a copy, but you will. To solve this “double spending” problem for digital assets (including and especially money), the blockchain was born. From the above, we can connect the dots to a two-sided approach to blockchain and IP. On the one side of the coin, innovations involving blockchain-based solutions can be protected under IP. On the other side of the coin, IP can be better protected using the fundamental features of blockchain like time-stamping, transparency and immutability.

What is Blockchain?

First things first, bitcoin is not synonymous to blockchain. Blockchain is like electricity, bitcoin is like a bulb. Blockchain is to bitcoin what electricity is to a bulb. Without the blockchain, there would be no bitcoin. And, just like lightning bulbs is not the only thing electricity can be used for, so also, crypto is not the only thing a blockchain can be used for. There are a thousand and one use cases already developed or being developed worldwide.

In simple terms, blockchain is a digital record or a digital database which is replicated on several computers. Data, information and transactions are permanently recorded on the blockchain. It is distributed because the nodes (computers) that make up the blockchain network are scattered around the world. It is decentralized because it is not controlled by any single entity, rather decision s are reached via a consensus algorithm. It is immutable because once new data is entered, it cannot be changed, deleted or altered. It is unhackable, because hacking the blockchain will be an expensive and time-consuming task.

What is IP?

Whether you are reading this on a phone, tablet or PC, the fact is, these devices are all products of human imaginations. You can hold the physical devices, but you cannot hold the imaginations that resulted in their production. Intellectual Property is thus the ownership of human imaginations. To guarantee ownership, these imaginations need to be expressed, either in written words, drawings or artistic forms. It is the expressions that are protected. Thus, even if you have dozens of book ideas like me, you can’t claim copyright, until you actually write a book and publish it. IP is protected under different categories such as patent, trade secrets, copyrights and trademarks.

Decentralized Solutions

Here, we will look at how innovations involving blockchain-based solutions can be protected under IP.

Open Source

When you write a book, no one else can publish the same book in their own name or sell the book without your permission. This is because you own the copyright to your book. Similarly in the tech world, when a software programmer writes codes for an application or whatever, he or she owns the copyright to the code. This means, another cannot simply copy and paste the codes and sell or use it. However, it is possible for the owners of the books or code to make their work freely available for anyone to copy and use for whatever they like, or even to contribute to the work, by adding paragraphs to the book or more lines of code to the software. For books, this is called creative commons, while for software, this is called open source. Blockchain, at least the public/permissionless ones are usually open source. Meaning, anyone can download the software and begin using it, make reviews and suggestions, or even make changes to the software and release as their own work. Satoshi Nakamoto, an unknown entity known as bitcoin founder, made the Bitcoin blockchain codes open source.

Patent

Interestingly, even though the first popular DLT (Decentralized Ledger Technology: blockchain) is open source, individuals, corporate entities and governments have all been rushing to patent blockchain-based technologies, most of which are a spin-off from the open source. The financial services industry saw the first application of the blockchain technology. No surprise then that the first set of blockchain related patent filings were made by banks and other financial institutions. Some have been pushing for making all blockchain-related innovations open source. In the alternative, others have suggested creating a patent pool. All in a bid to kick against IP trolls who seem to have found a new vibrant territory. In fact, for this very purpose, the US Chamber of Digital Commerce set up the Blockchain Intellectual Property Council (BIPC) whose sole duty is guiding against blockchain patent trolls.

Patent Pool

A patent pool is a consortium formed by at least two industry players who each agree to grant license to other members under a cross-licensing agreement. Cross-licensing means for example, I have a patent for the seat belt, you have for the side mirror. I give you license to use my seat belt in exchange for using your side mirror in building our respective cars. To facilitate growth and development, instead of working in silos, blockchain industry players can create patent pools that allow for cross-licensing of blockchain patents to participants in the pool. Examples of such are the Blockchain Intellectual Property Council (BPIC) and the Open Invention Network (OIN). I will now take a short break before we proceed to analyze the other side of the coin: protecting IP with blockchain.

What informed your decision to study law as a young girl? Have those reasons in anyway changed or modified?

As a young girl, that sounds like eons ago. To be candid, I don’t even know why I read law. I simply picked it because it aligned with my interests then…being literature. On second thought, I also picked it to be rebellious, I always loved traversing the road less travelled. My mom teaches maths, my dad teaches STEM. All my siblings are in science careers. I’m the only odd sheep. Taking the road less traveled is also how I ventured into blockchain law practice.

In Maths we trust

Here, we will consider the ways in which IP can be better protected using the blockchain. This is based on the premise that math is a more reliable oracle. We are now in the digital age where other people’s work can be copied and disseminated to millions with just a click and without the owner’s permission or knowledge. Current Digital Rights Management (DRM) measures have been largely ineffective due to the internet providing the tools for unauthorized infinite reproduction of people’s intellectual property. Blockchain technology will enable creators to directly interact with their fans, track sales and conduct private auctions.

Smart IPRs and IP Registries

Currently, IPRs are recorded in traditional centralized registries, making it vulnerable to issues like tampering, manipulation and a fertile ground for IP trolls to operate. Registering IPRs on a decentralized ledger like the blockchain will instantaneously convert it into a smart IPR, facilitating easy transfer of ownership and licensing. Flowing from the above, such registry would be a smart IP registry. With smart IPRs embedded in smart contracts, the blockchain can be used to ensure real time payments to IP owners and the enforcement of IP agreements. Creators can now have direct access to their audience, without the middlemen labels that milk them dry.

Combination of smart IPRs and smart IP registries means issues regarding first to apply, first to register, first to use in trade and so on, would be things of the past. A transparent record that is time-stamped and immutable would make for easy proof, audit and tracing of the life cycle of an IPR. Time-stamping simply means stamping an entry with the time it was entered. Your messages on WhatsApp for instance are time-stamped.

Tokenizing IPR

Digitization of assets on the blockchain, in this case, intellectual property, by assigning a unique string of alphanumeric characters to it, is what tokenization is all about. Tokenizing IPRs would unlock their previously illiquid state, making transfer easy.

Proof of Authorship

As regards Copyright which isn’t necessarily registrable right in most jurisdictions; Blockchain would play a prominent role as evidence in proof of authorship as simply placing such work on the blockchain resolves any controversy before it even arises.

Proof of Originality

Counterfeiting, piracy and unauthorized use are some of the challenges IP owners battle with. This is especially rampant in industries that are IP-sensitive, like manufacturing, supply-chain, pharmaceutical and publishing. By adding elements of scanable RFID tags and storing the data of products on the blockchain, it is possible to verify the authenticity of goods, right from sourcing of raw materials until it gets into the hands of the consumer. This would be of great help to custom officers at the border, retailers and consumers.

Conclusion

With the blockchain, we can now have a digital footprint for IPRs. Technology is constantly advancing, blockchain as we know it today might be different in two, five or ten years time. However, one thing is sure, that as globalization continues to permeate every nook and cranny, we can expect blockchain’s fundamental features of transparency, traceability, time stamping and immutability to be the bedrock of whatever system wins tomorrow. Amidst all these, IPRs will be created and protected.

Question: With your experience in the field of legaltech, how would you advise a young lawyer to carve a niche in blockchain technology?

Follow these steps if you wish to build a career in blockchain;

  1. Learn. Take online courses on blockchain and crypto, there are free and not so expensive ones available.
  2. Build an online presence where you share with other what you’re learning. Inevitably gradually building a reputation as an expert.
  3. Attend and speak at blockchain, crypto and general tech events. Network with others and ask questions where you need clarifications.
  4. Find an opportunity to apply all you have learnt.
  5. Keep up to date by staying on top of the latest happenings.

While this is stated specifically for the blockchain practice area, it can be adopted for any other practice area.

The bottom line is “get known, increase your visibility.” Online and offline. Give value and be visible. I for example, come up first on the list after the ads for “blockchain lawyer Africa.”

Ways to get known;

  1. Endeavour to put out content that is relevant, omnipresent and interesting. Relevant means, if for instance, you have presented yourself to your audience as a real estate lawyer, 90% of content from you should be about real estate. And not Monday cybersecurity, Tuesday abortion laws, Wednesday election petition and so on. Your audience could get confused and have no idea what you should be known for.

That takes us to the omnipresent. Your content should be everywhere. Best way to achieve that is by being consistent. The most obvious benefit of being relevant and omnipresent is TOMA – Top Of Mind Awareness. You are the first person that comes to mind when people think of referrals in that practice area. I’m painfully aware that being consistent is really though, but it gets easy when you have a constant flow of content ideas. Here are ways to get a stream of content ideas;

  1. Google alerts
  2. Searching related hashtags on LinkedIn and Twitter
  3. Email subscriptions. I’m on the list of very good ones like Hustle, https://ambassadors.thehustle.co/?ref=a58185d473

Also, your content does not necessarily need to be in lengthy forms. Short twitter-like content would do, so far it is something that adds value to your audience. But of course, you should also devote time to long-form pieces.

It is no secret, today’s audience have a very short attention span, to keep them engaged, you have to be interesting. And no, you are not obligated to crack jokes. Passing across your message in simple terms, using every day, familiar analogies is sure to be found interesting. Remember ROI and you will surely see a ROI. By the way, your content could be text, image, audio or video, whichever works for you. You also do not need your own website before you can start putting out content. You can use LinkedIn, Pulse or Medium.

  1. On speaking at events. They do not have to be events solely devoted to your practice area. For instance, in July 2018, I spoke about cybersecurity at the African Women in Tech Conference which held in Nairobi. At the end of the day, there were discussions on cryptography and securing one’s private keys. So, you see, we still came around to my practice area.

Here’s a tip to getting speaking opportunities. I recently gave a colleague this tip and he has reported success trying it out. Search for events that catch your interest online (Eventbrite, Meetup) and offline. Contact the organizers and ask for the opportunity to speak on related legal aspects. Usually, they don’t have such topics on the agenda. And most times, you will get a favourable response. Also, be on the lookout for calls for speakers’ application.

One more thing I would like to mention; learn to program smart contracts. My fascination with smart contracts was how I got involved with blockchain. This led me down the path of taking a programming course (android and java) and other more blockchain-programming-specific courses. A lawyer who can code smart contracts will be indispensable in the nearest future. In fact, for lawyers in the tech niche, we owe our clients the duty to be bilingual, fluent in law and fluent in tech. https://www.law.com/legaltechnews/2018/12/05/mediators-need-to-become-bilingual-to-resolve-smart-contracts/. Even before landing on the smart contracts moon. Once can begin wetting their feet by automating legal documents. My best platform so far is OpenLaw. Please, check them out and play with resources on the site. I recently automated a simple hire purchase agremement.

The big secret of succeeding in blockchain: you have to learn before you can earn.

For those interested in learning, here is a free 13 weeks MOOC offered by University of Nicosia, Cyprus, register here: https://digitalcurrency.unic.ac.cy/free-introductory-mooc/

There are usually two cohorts every year, in February and September. At your successful completion of the course, you will be issued a certificate which will be recorded on the blockchain and verifiable anywhere.

As my last words in this lecture, I would like to address a question many of you might have, most especially young lawyers. Whenever I give this kind of lecture, I get asked in various ways, but same question, usually privately. It goes; “how safe is it to have a career in blockchain?” Here’s my answer: yes, things are uncertain at the moment concerning blockchain and cryptocurrency. However, one thing that is certain is change.

There is no such thing as a safe career for life. It’s all about developing marketable skills that give you a competitive edge. Develop skills that are manifold. Skills that make you valuable in multiple industries, multiple countries and multiple careers. Moreover, I have listed over ten blockchain pairs. You can never go wrong with any of them. So, rather than asking, “is a blockchain career safe?” You should be asking, “how do I future-proof my career?”

Question: Your practice in blockchain technology law seems to be hitch-free because of some flair for science and maths. Is it possible for a lawyer that is poor at this to succeed in the practice?

Let me tell you a secret, I hate maths! But of course, one can learn anything they put out their mind to. What’s important is being determined. Whenever I chat with people, they say Faith, you’re so techy. I laugh. I have spent countless hour watching online courses on different tech related topics, from cyber security, to introduction to computer science, etc. Most times, I understand almost nothing, but in future, I keep seeing references to something I once watched and never understood, and suddenly, I get an epiphany and clarity. So, what I will say is, you can do anything, whether you know maths before or not. Just be determined.

Question: Could you give some materials for further reading on smart contracts and technology licensing?

Sure, I have a google doc of curated links on smart contracts.

https://docs.google.com/document/d/1dhrNQa8M6qJE8kdeQnNWwzkKAy2vmzujc2pUiRmx8cU/edit?usp=drivesdk

Closing remarks: Wishing you all a bright career in law. Exciting things ahead, please position yourself properly!

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