Companies want blockchain-related patents so they can show investors they can make money off their innovative efforts.
The number of new patents filed for technology related to blockchain has tripled to a record high of 406 in 2017, up from 134 in 2016.
There has been a surge in investment in the technology following the rise of Bitcoin and the interest shown by financial institutions in reducing their back-office costs by adopting blockchain. The number of patents filed worldwide related to Bitcoin and other cryptocurrencies has increased 16 percent to 602 in 2017, up from 521 in 2016.
Blockchains are real-time electronic ledgers. They create an unalterable record, since each entry is time-stamped, given an identification code and then linked to the previous entry. Its incorruptibility means the technology is ideally suited for settling transactions.
China leading with the most blockchain patent applications
Fifty-six percent (226) of blockchain patent applications last year came from China; 22 percent (91) from the United States, highlighting the ongoing “land grab” for intellectual property (IP) rights. The number of patent applications from China quadrupled last year. The U.S. saw a similar increase.
Why are patents important?
In this fast-growing arena, patents are considered critical for attracting investors, who want assurance a business’ intellectual property assets are protected and innovations can be monetized.
“Blockchain is seen as the next frontier of financial services technology architecture – an area that swallows up vast amounts of capital expenditure every year,” said Alex Batteson, an editor in the IP & IT practice area at Thomson Reuters Practical Law. “Companies are keen to stake out their territory as the technology rapidly advances.”
For example, last year nChain Holdings, which filed the second-highest number of patents by any single entity (18), was bought by high-tech private equity fund SICAV. nChain is a research and development (R&D) company that specializes in blockchain technology.
The rise in blockchain technology patent applications comes as both established companies and start-ups look to protect future revenue streams. Patents are needed to help prevent a company’s blockchain R&D being copied by competitors and to ensure they can properly license their new technology to other enterprises.
The increase in patents filed also reflects the growing interest in the use of blockchain technology – beyond cryptocurrencies – by a variety of industry sectors.
Recent applicants for blockchain technology patents:
- Accenture: Patent for a system that rewrites blockchains using a secret key
- Bank of America: Patent to facilitate “person-to-person” alias-based payments
- BT Group: Patent for a computer method which can detect attacks against a blockchain
- Cisco Technology: Patent for a system which authorizes group updates on a blockchain and tracks membership history
- IBM: Patent for the creation of a way in which to store encrypted data on a blockchain
- Mastercard International: Patent for a method of tracking payments and uploading data onto a blockchain at point of sale
The top filer of blockchain patents through World Intellectual Property Organization (WIPO) is Mastercard, the global payment services provider. The second largest filer is nChain Holdings, as outlined above, and the third most significant filer is Coin Plug, a cryptocurrencies exchange which also invests in the development of blockchain technology.
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