Blockchain patents may not take effect, and the "monopoly dream" of large companies has become a bubble

The race to gain control of key technologies has already begun among banks and other large industries.

At the center of this fight is blockchain, a public technology that has the potential to revolutionize information record-keeping in areas such as banking and agriculture. Even Chain and R3 have announced open-source versions of their blockchain software.

But there is a force trying to block the use of this technology. This force is patents. Large banks and other institutions are trying to monopolize the use of blockchain for the next 20 years by applying for patents.

The most typical example is the patent applied for by Goldman Sachs: "Using distributed ledgers to process financial transactions... so as to achieve the purpose of matching ledger records with asset information." In other words, Goldman Sachs uses blockchain tools to settle transactions.

Goldman Sachs’ patent application has received little media coverage, but it is not the only institution to file blockchain patent applications. In the past few years, large companies such as Bank of America, Accenture, and Morgan Stanley have filed hundreds of blockchain patents. Another controversial figure is Craig Wright. He has claimed to be the creator of Bitcoin (his claim is questioned by most people). In order to gain a certain degree of control, he has applied for hundreds of blockchain patents.

In fact, the U.S. Patent Office has not approved any of the above applications. However, once the patent office approves the above applications, the patent holders can charge other blockchain users millions of dollars in technology licensing fees, or simply shut down their businesses. Even more outrageous is that the holders can also start the "patent troll" mode and sue all individuals or companies using blockchain by establishing shell companies.

Don Tapscott, co-author of "Blockchain Revolution," said patent lawsuits could deal a fatal blow to the development of technology.

This behavior (patent litigation) is a blow to innovation. Openness and cooperation are the core of the new digital era. When traditional companies are challenged by emerging industries, they usually sacrifice their own interests and turn to research emerging industries. I regret this.

It’s too early to dismiss Goldman Sachs and Morgan Stanley’s patent applications, which are said to have caused consternation within blockchain consortium R3 (both banks left R3 last week), as overly aggressive.

An insider from Goldman Sachs revealed that the bank applied for patents mainly to prevent other technology companies or enterprises from taking the lead. He said that the patents applied by Goldman Sachs can be transferred to a certain alliance, which is mainly committed to promoting the application of blockchain in the financial field.

At the same time, some say patents are an inevitable aspect of the blockchain space, which is not a bad thing. Justin Hill, a patent attorney at a law firm called Olswang, recently said that the patent boom in the blockchain industry is similar to the telecommunications industry, where companies that want to obtain standard technology only need to pay intellectual property fees to patent holders.

Will blockchain patents ever take effect?

Are patenting the best way to develop blockchain technology? Or will U.S. law even allow for such patents? These questions remain unanswered.

Daniel Nazer, a lawyer at the Electronic Frontier Foundation (EFF), said that blockchain patents are applied for in the form of software, which is difficult to be approved by the Supreme Court. The Supreme Court ruled that most or almost all software patents are just abstract concepts and will not be protected by patents.

He added that the content of such patents is obvious and known to everyone. Moreover, these patents are not fundamental concepts like Bitcoin or blockchain. Moreover, Bitcoin's creator Satoshi Nakamoto had already made the relevant concepts public several years ago, and such concepts are no longer eligible for application.

But Nazer still worries that the patent office will rush to approve these blockchain patents.

By then, the market will be flooded with abstract and empty patents such as "using blockchain to...", and everyone will be busy avoiding legal minefields, and the pace of innovation will be slowed down.

However, the current situation of "patent trap" has not hindered the development of companies such as Chain. Chain develops blockchain protocols for enterprises such as Visa and Capital One. In October this year, they open-sourced their own blockchain software Chain Core.

Recently, Chain CEO Adam Ludwin told us:

Patents? We prefer to spread technology in an open source way, and patents are just for precaution. Will there be lawsuits in this regard in the future? Maybe.