What is the Blockchain Defensive Patent License?

Why Blockchain Defensive Patent License?

Why do we need a Blockchain Defensive Patent License and why not simply use pre-existing defensive patent licenses available on the Internet now?

There are several important reasons why we and the blockchain industry should consider using the Blockchain Defensive Patent License. Most importantly, it addresses a problem unique in the blockchain industry: our Blockchain Defensive Patent License helps prevent the dreaded majority attack on any distributed ledger network, including the Bitcoin network.

Urgent Need to Avoid an Attack on the Bitcoin Network

As you know, Bitcoin is a trustless protocol. Verifying, clearing and agreeing on the set of transactions on its blockchain are done in a decentralized manner. But this network is vulnerable to an attack on the consensus mechanism. Such an attack occurs when a group of miners collectively accumulates and builds control over a significant proportion of the Bitcoin networks’ computing or hashing power and then decide to collude or otherwise act in concert. Such a majority attack could allow the attacking group of miners to double spend their own transactions by removing previously validated blocks from the blockchain or to censor transactions by banning them from the blockchain.

Although often phrased in terms of a “majority” attack, a group of miners acting in concert may still be able to undercut the consensus mechanism of the Bitcoin blockchain. The more hashing power a group of miners possess, the greater the number of past blocks they can change or the greater the number of future blocks they can control.

How Patents on Blockchain Technology may Facilitate Majority Blockchain Attack

Patents allow the owner to enjoy a competitive limited duration monopoly over a particular field of technology. Currently there is a race amongst various miners to obtain “killer” patents that would essentially allow them to perform Bitcoin, cryptocurrency or any blockchain related mining faster and/or with more efficiency. Such killer patents could give such miners a dangerous monopolistic advantage in the Bitcoin blockchain industry because they could be allowed to undercut their competition. These patent monopoly holders, by virtue of their patent(s) covering the relevant mining technology or invention, would enjoy a pole position to accumulate a very high amount of or even a majority (51%) of the Bitcoin network’s computing or hashing power.

Therefore the Bitcoin mining and broader blockchain ecosystems need to prevent the rise of a dominant Bitcoin, cryptocurrency or other blockchain mining consortium to prevent majority (or near majority) attacks on the Bitcoin blockchain consensus mechanism.

How Do We Help Prevent the Rise of a Dominant Blockchain Mining Consortium?

One of the best ways to do so is to encourage mining individuals or entities to grant their respective mining patents under a mutually defensive patent license that is tailored to address the unique needs of the Bitcoin or other blockchain protocol(s) and prevent any one mining consortium from obtaining the dreaded ability to launch majority (or near majority) attacks.

This is why we have created the Blockchain Defensive Patent License based on publicly available licenses freely available on the Internet. We believe that the wordings of existing defensive patent licenses needed to be tightened to prevent abuse and circumvention by unscrupulous miners gaming both the current wordings and loopholes in the law and practice of patent law.

For these reasons we created a new Blockchain Defensive Patent License system better suited to the unique needs of miners of Bitcoin or other blockchain protocol(s).

How Is the Blockchain Defensive Patent License Better?

Our Blockchain Defensive Patent License (“BDPL”) addresses the unique demands of the blockchain industry. We set forth below the ways in which our Blockchain Defensive Patent License offers improved protection and blocks potential circumvention.

• The BDPL penalizes any licensee from attacking the patents licensed to other BDPL users indirectly through and/or collusively with third party patent deterrence firms. This is done to foreclose a glaring avenue for the unscrupulous to circumvent the intent, spirit and practice of the BDPL regime while obtaining the fruits of such regime for themselves and not other BDPL parties.

• The BDPL aims to preclude a party from transferring its crown jewels patent to a related third party or affiliate before such party’s agreement to be bound by the BDPL so as to avoid its grant obligation to other BDPL users.

• We have an expanded definition of “Affiliates” to include related persons, family members or corporate affiliates so as to prevent fraudulent transfers of patents or technology to avoid the license grant obligation.

• The termination of the BDPL is automatic upon the happening of the specified termination events without any further action by the licensor given the unique decentralized nature of the Bitcoin and cryptocurrency mining community. It would be impracticable to keep track of the need to exercise the right to terminate the license in a decentralized environment.

• The BDPL also prevents the situation of a licensee receiving the right to use a patent from a related person (which is not granted to any of the other BDPL users) and such related person asserts such patent or technology against other BDPL users.

• The BDPL also requires the sharing of any attempts to improve or modify upon the licensed patent. This is to prevent the problem of “submarine patents” that apply to or relates to the licensed patent but remain hidden — unpublished or unasserted — during the development of that patent. This also prevents a licensee from encouraging the standardization of its technology without telling anyone about its patents.

• The BDPL requires the disclosure of any purchase or acquisition of any patents relevant to those licensed under the BDPL so as to give other parties a heads up warning as to the intentions of the licensee and is an additional safeguard to prevent gamesmanship or surprises.

• The BDPL ensures that the BDPL terms apply to licensee’s successors-in-interest and prevents any “trolls” from acquiring licensee patent and continue to enjoy a grant of license from the other BDPL users.

• The BDPL includes a catchall category to keep the terminating conditions sufficiently flexible to prevent new exploits or gamesmanship created by emerging technologies or regulatory developments.

• The BDPL penalizes the offending licensee by ensuring that all licenses granted before the occurrence of the above terminating conditions remain valid.

• The BDPL prevents a licensee from attacking the other BDPL users by filing a trade secret misappropriation proceeding so as to prohibit attacks against BDPL Users while enjoying the fruits (licensed patents) of the BDPL regime.

• The BDPL requires the parties to implement certain cybersecurity safeguards to ensure due notice of offering & discontinuing any license grants.

• The BDPL awards attorney’s fees to provide “teeth” to the license. Given the decentralized nature of the Bitcoin and cryptocurrency mining community, it would be difficult to coordinate or finance lawsuits or administrative proceedings against any infringers or collusive partners of the license. the license. Providing the award of attorney’s fees help keep potential infringers in check.