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Stuart Haber and W. Scott Stornetta first outlined the concept of blockchain technology in 1991. Blockchain, as its name suggests, consists of a series of blocks that store information. It is a digital, decentralized, and unchangeable ledger that enables the recording and tracking of transactions and assets in a business network. These transactions are recorded in a network of servers called nodes. All transactions conducted within a business network are grouped into blocks and then added to the nodes. Each block is only added to a node after it is confirmed to be valid. Since it is a distributed ledger system, every person within the network has access to it, and no individual can theoretically hack the system.
The main advantages of blockchain technology are as follows:
It is a secure and reliable database as it lacks a central database, eliminating the possibility of hacking or fraud. Additionally, it operates as a peer-to-peer electronic transaction system without the involvement of any third party, thereby establishing its trustworthiness.
Although in private blockchains access may be restricted to specific individuals, transparency is generally ensured by blockchain technology as it allows all individuals in the network to access the distributed ledger. Additionally, no changes can be made to the transaction history without the agreement of all parties involved. The wide accessibility and requirement for consent from all parties contribute to the transparency provided by blockchain technology.
Traceability and accountability are ensured through the recording of all transactions, making it easy to verify the authenticity of the information.
Blockchain is a non-manual, self-operating system. Transactions can be made instantly and efficiently. Additionally, everyone must approve the transaction. Separating parties before grouping them into blocks ensures the accuracy of transaction history.
Hybrid Blockchain combines elements of both public and private blockchains. Public Blockchain is an open blockchain that allows participation from any member of the public. It is generally characterized by anonymity, facelessness, and the absence of centralized control. Examples of public blockchains include Bitcoin and Ethereum. These blockchains serve as the foundation for various crypto assets, operating without the need for a central authority.
For instance, Bitcoin is the worldâs first decentralized digital currency, enabling direct peer-to-peer transactions without intermediaries. A consortium or federated blockchain is similar to a hybrid blockchain, involving both public and private blockchains. However, in consortium blockchain, multiple organizations collaborate on a decentralized network. Private Blockchain, on the other hand, is a permissioned network that only allows specific individuals to join. Unlike public blockchains, there is no anonymity and centralized control is present.
Intellectual Property (âIPâ) is a form of property that encompasses intangible creations of human knowledge such as inventions, artistic and literary works, logos, commercial images, etc. The protection of IP allows creators to profit from their contributions. Intellectual Property Rights (âIPR/sâ) refers to the legal rights exclusively granted to creators for their mental creations for a specified period of time.
IPR includes rights arising or in connection to patents, copyrights, trademarks, design rights, plant variety rights, circuit design rights, semiconductor topography rights, trademarks, trade secrets, geographical indications, and more. Among these IPRs, patents, copyrights, and trademarks are the most widely recognized forms of IPRs. In todayâs digital age, protecting IP is more complex due to its intangible nature. Blockchain has the potential to clarify copyright ownership, reduce online piracy, and establish a fair market for digital property. It can also enable creators to receive compensation through crypto asset payments and smart contracts. If certain challenges are overcome, blockchain could revolutionize the IP and copyright industry.
With the advancement of technology, almost every aspect of human life has undergone change, some of it harsh, some of it gentle. Law, like other fields, has received its share of this change and transformation, and therefore has had to, or will have to, change. The lawâs close tracking of the technology sector, where new developments occur almost daily, and its adaptation to these developments play a critical role in the economic, social, intellectual, and technological advancement of societies. Since its emergence, humanity has survived and taken its place at the top of the food chain thanks to its more advanced and complex intelligence structures compared to other species. It has fathered many technological and intellectual products that have fundamentally shaken social life, with some empires rising through these products while others have fallen behind in these areas and thus found their place in the dusty pages of history.
The precious and indispensable role of technological and intellectual products in human life was eventually recognized, and they began to be protected and encouraged. In ancient times, intellectual leaders protected and supported scientists and literary figures, while today, under intellectual and industrial rights, the promised gains and efforts of these individuals are sought to be protected both in national legal systems and in international law. A beautiful example of this is the second paragraph of Article 27 of the Universal Declaration of Human Rights, adopted by the United Nations General Assembly on December 10, 1948, and later approved by the Grand National Assembly of Turkey: âEveryone has the right to the protection of the material and moral interests resulting from any scientific, literary, or artistic production of which he is the author.â
Humankind, driven by curiosity, needs, and the urge to surpass its rivals, has produced and will continue to produce countless works. To encourage people to create new works and to protect their efforts, lawmakers have granted certain rights and freedoms to these works and their owners. These are broadly categorized as copyright and industrial property rights.
Although it is essential to protect the intellectual products of humankind, not every intellectual product can or should be protected; because every protection granted to the work and its owner actually restricts the freedoms of third parties. This is precisely why regulations have been established to determine which intellectual products can be considered works and benefit from copyright protection or industrial property rights such as trade mark, patent, etc.
The relationship between blockchain and IPRs is mutually beneficial. On one hand, IPRs safeguard blockchain, while on the other hand, blockchain can improve the effectiveness of the IPRs system.
The blockchain can improve the system of IPRs by serving as a technology-based registry. This would enable IP owners to store encoded electronic proof of their ownership and use the network to receive royalties from those who use their work.
The lengthy approval processes of patent and regulatory authorities can pose a risk to industries that need to protect their inventions and stay competitive. Decentralized registration platforms using blockchain technology can simplify the process of enrolling new IPs, making revisions, and exchanging ownership. This can help regulatory organizations achieve more with limited resources.
When copyrights exist automatically and do not require registration, creators often struggle to keep track of their own work and establish ownership. This can make it difficult for third parties to obtain the necessary licenses and for creators to monitor the usage of their work. Additionally, creators may face challenges in preventing infringements and effectively monetizing their creations. The complex process of approving and defining IP ownership across different countries further complicates the issue. Registering works on a blockchain can provide definitive proof of copyright ownership since the data entered into a blockchain cannot be lost or altered. This would allow anyone to access information about a workâs ownership history, including licenses and assignments.
In order to protect IPRs, the IP system needs to be very powerful. Transparency and verification are important for a strong IP policy. Third-party multifactor authentication is used in some jurisdictions to monitor these rights, with most of these verification systems being run by governmental or institutional organizations worldwide. However, the scattered nature of the data can lead to a lack of synchronization and accuracy. Using blockchain technology can greatly benefit global IP offices in keeping track of their IP registrations.
The important aspects of blockchain technology include resilience, trustworthiness, immutability, productivity, and safety. These attributes can be protected by IPRs at every stage, from filing to implementation. Moreover may be used to protect IPRs themselves.
Governments or agencies in charge of IPRs often fail to adequately protect individual rights due to limitations in their systems. The rise of online sharing tools has exacerbated copyright piracy, and as the market becomes more global, the problem will worsen and require more effective solutions. Blockchain technology offers potential solutions that were previously unthinkable.
Before diving into further detail, letâs see the IP applications and blockchain technology in general.
IPRs are currently regulated locally, by government agencies and ministries in relevant jurisdictions. However, with the rise of online media and digitalization, there are challenges such as lack of transparency, piracy threats, and difficulties in fair compensation for creators. Blockchain technology can address these issues by providing a simple way to prove the existence and originality of a product, making it easy for law enforcement to detect counterfeit goods.
IPR plays a crucial role in a world that is increasingly adopting blockchain technology. Nowadays, many organizations prefer to use blockchain as the foundation for securing patents. Blockchain technology facilitates various aspects of IP, including processing IP applications, licensing, smart contracts, maintaining IP records, and enforcing IPRs. To establish a reliable IP system, it is essential to have strong, verifiable, traceable, and accountable IP records, which can only be achieved through blockchain. Unlike manual methods, where data synchronization is prone to errors, blockchain ensures the accuracy and accountability of data, thereby reducing risks and improving efficiency. The remarkable features of blockchain technology, such as immutability, security, traceability, and accountability, have the potential to bring about a revolutionary change in the field of IP.
Blockchain technology has the potential to simplify and expedite the registration process for IPRs. Currently, IP protection mechanisms like trademarks, designs, and patents require registration, which can be time-consuming and costly.
In jurisdictions like the EU and the UK, it is necessary for trademark holders to demonstrate genuine use of their trademark after registration, which is a difficult and expensive task. Additionally, registration typically only grants protection within the country where it is registered, limiting the interests of right holders in todayâs global trade environment. However, blockchain technology could address these challenges by streamlining the registration procedure and reducing costs, thereby alleviating the burdens faced by IPR holders. Moreover, blockchains can help overcome technical barriers by analyzing the novelty and innovativeness of submitted works and determining their similarity to existing works through the use of external artificial intelligence software.
By consolidating national, regional, and international data into a single application, blockchain can also simplify operations for IP registration. Ultimately, blockchain has the potential to enhance IP protection by addressing the limitations and complexities associated with the current registration process. Another solution to overcome this challenge is smart contracts which can be utilized as proof of initial and subsequent use of the trademark. Additionally, these contracts can be presented in court as admissible evidence. We will be giving more details below on smart contracts.
The second use of blockchain for IP protection is managing IP contracts. Blockchain technology also has significant impacts on different aspects of IPR management. Currently, certain tasks related to managing IPRs, like licensing, identifying right holders, and investigating IP infringement, are typically done by third parties. By eliminating the need for these third parties and reducing the costs of managing IPRs, blockchain technology can once again be valuable in this area. Additionally, if the program detects that a user has used or requested to use the work, the owner can choose to sign a license agreement, which will be handled by the smart contract. The smart contract will execute the licensing agreements and collect payments for the work whenever it is used or displayed by a user, without any intervention. As a result, smart contracts can ensure that the rights of right holders are protected, their work is not used without permission, and they receive prompt and fair compensation for their efforts, all without requiring a middleman.
In addition, blockchain technology can offer various benefits to end-users. They can utilize the registration process to ensure that their use of digital resources does not violate any publicly available rights or to verify the authenticity of a product. The potential for blockchain to manage IPRs is immense. Using a distributed ledger instead of a traditional database to track IPRs can be highly advantageous. This approach would also address practical challenges in gathering, storing, and delivering evidence.
Another possibility is for IP offices to utilize distributed ledger technology to create centralized IP registries, which would be overseen by the IP office as a trustworthy authority. This would create an unchangeable record of events throughout the lifespan of registered IP rights. The ability to trace the complete life cycle of a right would offer numerous benefits, including simplified IPR audits. It could also facilitate due diligence for transactions such as mergers and acquisitions. Additionally, concerns about confidentiality for IP owners could be resolved through an optional participation scheme.
If blockchain is to be used for securing IPRs, it is necessary to establish a theoretical framework that can provide a thorough understanding of the technology, its potential applications, and the challenges it may present. A comprehensive understanding of the subject will assist in the creation of new legislation and innovative tools for the protection of IPRs. As blockchain technology becomes more widespread, industry participants and developers will need to collaborate in order to establish standards and interoperability protocols. Government organizations and IP registries, such as the European Union Intellectual Property Office (EUIPO), are actively exploring the capabilities of blockchain. It is only a matter of time before the legal system addresses the significant obstacles that may arise in the widespread implementation of the technology, such as governing laws and jurisdictions, concerns regarding data security and privacy, and the establishment of reliable rules and definitions for smart contracts within IP law and practice.
For more information please see our paper on Smart Contracts, namely In Blockchain We Trust: The Legal Paradigm of Smart Contracts Across Borders.
A smart contract is a computer program that automatically manages and carries out an event or action in accordance with a contract or agreement. In simpler terms, it is a contract that executes itself based on lines of code that define the terms agreed upon by the parties involved. These lines of code are then stored as a block in the blockchain network, making the transactions traceable and irreversible. Unlike traditional contracts, smart contracts generally are not controlled by consumers; they can submit their transactions on the smart contract. Smart contracts define rules similar to ordinary contracts, but the key difference is that smart contracts are executed automatically through code.
When it comes to IP, the process of purchasing a patent involves various steps such as inspecting the assignment and validity of the patent, negotiating a sale agreement, completing the transaction, and informing the patent offices about the transaction. These complex steps can be simplified by using smart contracts. As blockchain technology continues to advance, smart contracts can be widely integrated into the field of IPR as they promote trusted relationships with uncompromising security.
Smart contracts can help protect and manage matters like ideas and inventions related to IP. They can ensure that people who create IP get compensated for their work. Smart contracts can also keep track of who owns an IP and decide how it can be used and what rights can be attached to it.
Furthermore, smart contracts may be effectively used for keeping track of royalties. Royalties are kinds of payments that are made to the intellectual property rights holders by the user of such intellectual property. Although each royalty agreement may differ in nature, generally the owner of the IP grants permission to another party to use their work, often in exchange for a negotiated percentage of the revenue generated from that work. For example, a musician might receive a percentage of the sales from each copy of their song sold.
Last but not least, for consumers, it is essential to understand what rights have been granted under a smart contract. IP rights may not include copying, selling, or altering an IP, which means that consumers can be left with what they bought. This topic will be more clear in our following section under NFTs since smart contracts are generally used within the sale of an NFT.
Blockchain can be used as a confidential platform that verifies the genuineness of IP ownership. When it comes to patents, inventors can visit a patent office to apply for patent protection. However, for copyrights, the creator must bear the responsibility of proving ownership due to the lack of official documentation. In the internet era, anyone can freely download and utilize created content. Blockchain acts as a timestamping authentication tool, allowing IP owners to store a hashed digital certificate as proof and authentication of a specific digital asset at a specific time. These hashed certificates are secure and inaccessible to unauthorized parties. Furthermore, blockchain aids in differentiating between counterfeit and genuine products through its ledger, which uncovers the true owners of these products. In todayâs digitally advancing world, having a system like blockchain is crucial in providing evidence of IP ownership.
Enforcing IPRs is an important characteristic, and it is especially significant as it is the final step for IP to have legal value. For IPRs to have legal value, IPR holders must effectively work with customs officers to enforce their rights. However, counterfeiting poses a major issue for law enforcement agencies, resulting in substantial costs for the IP world. As per many encountered daily cases, unfortunately, customs officers lack the necessary resources and equipment to determine the authenticity of a product as in the manners of an IP. In this case, blockchain technology can be highly beneficial by serving as a trustworthy ledger.
Storing information about items on blockchains would enable interested parties to instantly and continuously verify their authenticity, benefiting not only customs officers but also users. By having a ledger that indicates ownership, authorized licenses, and other relevant details, the entire supply chain, including consumers, can certify the authenticity of a product or an IP and distinguish it from a counterfeit. Because blockchain ledgers can contain objectively verifiable information about the manufacturing process of a product, such as when and where such product is made, as well as details about the materials used, it is possible to authenticate the provenance.
The effectiveness of the IP mechanism in protecting the rights of consumers/inventors in case of infringement is crucial. Blockchain, just like the other challenges previously mentioned, can be used to enhance the enforcement of IPRs by addressing counterfeit items and content in an IP. Blockchain has the ability to store and share data related to a brand, product, or service, including its origin and history, with the owner, buyer, or customs officers or authorities responsible for combating counterfeit goods. In addition to being a database, as mentioned above, smart contracts can also serve as a supply-chain management tool, ensuring traceability even after the product is sold. By adopting these blockchain solutions, various stakeholders can effectively mitigate IPR infringements. These solutions have gained popularity as they allow consumers to verify the authenticity of a product and provide confidence to businesses, governments, users, and insurers.
Nodes in distributed ledger technology, such as blockchain technology, record and synchronize transactions in separate ledgers. By utilizing blockchain, inventors can publish their inventions as ledgers, creating an IP marketplace. Additionally, blockchain assists inventors in locating licensees for their inventions, serving as a means of transferring IP assets.
For many jurisdictions, a trademark may be sought to be registered with the relevant governmental authorities for acknowledgment. A registered trademark will give its owner every legal right that they have under such applicable law. Using blockchain technology can simplify the trademark registration process and reduce the burden of evidence and administration for IPR holders and offices as aforementioned. This would also be applicable for maintaining registered IPRs, particularly in jurisdictions where additional evidence of use is needed for maintenance, renewal, or incontestability of a right.
As per blockchain technology, gathering data about the use of a trademark on a blockchain ledger would allow the appropriate officers of the relevant intellectual property registry to be notified quickly when the trademark is used. This would provide reliable evidence and information about the actual use and frequency of the trademark, which could easily be shared and accessed on the official trademark register. In fact, using blockchain could potentially lead to shorter and more concise trademark specifications for goods and services.
If blockchain technology is deemed legally acceptable, it could simplify the process of providing evidence of trademark use. This technology could also create a smart trademark register that reflects the state of the market, which is important for assessing infringement risk. However, trademark owners may have concerns about the confidentiality of their data. The newest generation of blockchain technology can address these concerns by combining public and private elements, or by making data sharing optional. Implementing this system may require a significant upfront burden for trademark owners, which could reduce its adoption if it is voluntary. However, the benefit of having instant access to information could save time, resources, and money for trademark owners.
Blockchain technology has generated a lot of interest, leading to a significant number of patent applications. Initially, most of these applications were made by financial institutions, but now there is a growing trend of applications from various industries. China is leading in terms of the number of blockchain and distributed ledger technology patent applications filed, surpassing the US. Although few patents have been granted so far, it is expected that applicants will face challenges in proving the patentability of their inventions.
A product that falls under the patent laws, must obtain a patent registry, in order for acknowledgment. And this patent registry is considered and has to be made from jurisdiction to jurisdiction. E.g: as a rule, if you have obtained a patent registry in TĂźrkiye, you will need to apply for another registry in the U.S. However, there are patent registry applications that allow an IP owner to apply for a collective registry for patents in other jurisdictions. As we consider this, the patent registry is highly costly and challenging, due to jurisdictional applications of IP and IPR transfers since the requirements of a local law differentiate severely.
Blockchain technology has the potential to be utilized alongside certification marks to verify that products meet specific criteria or standards. This would help to quickly identify fake certificates, benefiting both trademark or patent owners and consumers. However, due to varying national requirements, it may be more suitable to use permissioned blockchains rather than open blockchain solutions for certification trademarks or patents, as the entity owning the trademark or patents may be âcompetent to certifyâ.
To obtain a patent for blockchain technology, applicants must show that it is unique and innovative. Patent applications for blockchains must be carefully worded to cover patentable subject matter and not violate restrictions on patenting business methods and computer programs. Ideas that are abstract or lack a technical effect may not be eligible for patent protection.
For example: in the case of Alice v CLS Bank, the US Supreme Court ruled that patents for computer-based escrow systems were too abstract to be considered valid as a patent. The court did acknowledge that certain additional elements could make an abstract idea eligible for a patent, but it did not provide clear guidance on what those elements might be. After this decision, US federal courts have ruled that numerous computer-related inventions are not eligible for protection because they are too abstract for patent protection. This makes it harder to obtain a patent and increases the likelihood of competitors challenging the validity of already granted patents.
There is concern that the race to obtain patents for blockchain technology will result in patent wars. The Chinese Ministry of Information Technology and the European Commission are working on blockchain standards that may lead to the creation of standard essential patents, which must be licensed on fair and reasonable terms.
There are different opinions on whether filing patents is the best way to protect blockchain technology. Some developers choose not to apply for patents due to the cost and delay in bringing their technology to market. These companies may instead rely on trade secret protection. However, for companies seeking investment, obtaining a registered patent may be necessary. Others believe that developing blockchain technology on an open-source basis will support its success by allowing interoperability.Some developers take a hybrid approach by applying for patents and then licensing them under open-source licenses. Patent pools have also been established to enable cross-licensing of patents.
Blockchain technology is well-suited for protecting trade secrets because it can encrypt data and securely store and share information. Trade secret protection has become more important recently, thanks in part to new laws in the US and EU.
Blockchain technology has the potential to help protect and enforce trade secrets by providing a way to prove that the information has been kept confidential. Traditionally, creating an inventory of trade secrets and recording who has access to them has been seen as a reasonable step to maintain confidentiality. Using blockchain to record trade secrets could meet this requirement under the EU Trade Secrets Directive and similar laws.
The use of blockchain technology can help protect trade secrets by providing a secure and immutable way to prove their existence and keeping these trade secrets confidential.. It can also impact how trade secrets are enforced and shared with third parties. Confidentiality agreements and non-disclosure agreements (NDAs) are currently the primary defense against trade secret misappropriation, but blockchain technology can enhance their effectiveness. By linking a âsmart NDAâ to the blockchain, confidential information can be kept secret and only accessed through the blockchain, providing proof of access. Additionally, blockchain technology can verify the signing of an NDA and confirm the identity of the parties involved. Smart contract technology can also be used to document the transfer of trade secrets to another party.
The leading international authority on intellectual property law matters is the World Intellectual Property Organization (âWIPOâ) and its main objective is to establish and protect IPRs on a global scale. This is achieved through collaboration with nations and international organizations, aiming to create a consistent infrastructure and standards worldwide. WIPO manages 26 treaties that cover various IP concerns, including the Patent Prosecution Highway program, which requires cooperation with other IP authorities. WIPO applies to its signatories.
While some information about IP assets is publicly available, it can be challenging to gather and compile. However, blockchain technology simplifies this process by providing a unified platform where different parties can automatically submit their adherence to the appropriate authorities. This framework benefits offices such as the International Searching Authority, the International Preliminary Examination Authority, and the PCT Receiving Office, as it allows them to easily monitor registered patents, trademarks, and copyrights.
When it comes to software, specifically blockchain components, copyright laws apply. This is based on the Trade-Related Aspects of Intellectual Property Rights (âTRIPSâ) agreement and the WIPO Copyright Treaty (âWCTâ), which classify computer programs as âliterary worksâ under the Berne Convention. These regulations have had an impact on international software protection. In the EU, electronic programs are protected by copyright according to Directive 2009/24/EC.
Both Article 9(2) of the TRIPs agreement and Article 2 of the WCT state that copyright protection only applies to specific expressions and not general ideas, procedures, methods, or mathematical concepts. This exception is meant to prevent the monopolization of ideas and promote technological progress and industrial development. Directive 2009/24/EC protects computer programs and their design material that can be used to reproduce or create programs.
Computer programs are made up of source code and object code. Source code is the algorithm that guides the programâs operation and is written in a programming language. Object code is the compiled version of the source code in binary machine language, which can be executed by the computer hardware. The design work done by the programmer, such as structures or organizational charts, can be translated into source code and object code to create the program. However, elements like ideas, principles, logic, algorithms, programming languages, data file formats, graphic interfaces, and program functionality are not protected by copyright.
According to Directive 2009/24/EC, software can be protected by copyright if it is considered âoriginalâ and reflects the individuality of its creator. However, the threshold for originality is relatively low in the case of software. As long as a computer program is not a direct copy or extremely basic, it can generally be eligible for copyright protection.
Based on the information provided, it seems that all computer programs in the blockchain ecosystem can be protected by copyright, as long as they are not copies of existing software. This protection includes the programâs code before and after compilation, as well as any design material used in its creation. However, the copyright does not cover the programâs execution or the underlying concept. As a result, competitors can reproduce the programâs functionality by observing, studying, and testing it. As long as they use different codes, they will not be infringing on the copyright of the original program. This suggests that copyright offers limited protection for blockchain-related software, and other forms of intellectual property protection should be considered.
Copyright law in the US is established by the Copyright Clause of the Constitution and is further governed by the Copyright Act of 1976, which is outlined in Title 17 of the U.S. Code. Throughout history, governments have required creators to follow certain formalities in order to protect their works. However, unlike patents or trademarks, copyright protection in the United States is automatically granted once the original work is fixed in a tangible form. Mandatory registration would be illegal and go against international agreements such as the Berne Convention and TRIPS. These requirements would contradict the idea that copyright is granted at the moment of creation.
When the United States joined the Berne Convention, it had to get rid of its own copyright formalities, such as requiring a copyright notice. This made it easier for creators to protect their work, but it also created the challenge of proving the date of creation without formal registration. Some solutions include a copyright notice on the work or mailing a copy of it to oneself and keeping the unsealed envelope. However, the U.S. Copyright Office does not recognize these methods as valid for establishing the date of creation. To file a copyright infringement lawsuit, the creator must register their right with the U.S. Copyright Office and receive a certificate of registration, which allows them to take legal action against those who copy or misuse their work.
Currently, in order to protect their work, people often have to provide evidence of copyright registration, even though it is not necessary for the creation of the right. Registration is sought after because it creates a legal presumption of ownership if done within five years of publication, which can be used as proof in a lawsuit. However, it is ironic that registering oneâs work is necessary to enforce rights, even though mandatory registration is illegal according to the Berne Convention. This issue may not be resolved by blockchain technology.
According to U.S. law, trade secrets do not require registration to be protected, but certain conditions must be met for them to be legally protected. These conditions include the information being kept secret, having commercial value and reasonable efforts being made to keep it confidential. Trade secrets can be protected indefinitely, similar to trademarks. The Uniform Trade Secrets Act is a law that is adopted by most states in the U.S. It provides protection against various actions such as theft, bribery, misrepresentation, breach of secrecy, and espionage. Additionally, trade secrets are also governed by the federal law called the Defend Trade Secrets Act of 2016.
For patents, the USPTO is currently responsible for examining and publishing inventions in the US, but they are overwhelmed by the workload and this may lead to a decrease in patent quality. As a result, several initiatives have been introduced to address the issue of low-quality patents, with artificial intelligence being considered as a potential solution to reduce the administrative burden on the USPTO.
A potential use of blockchain technology is to create a decentralized patent system. Instead of submitting patent applications to the USPTO, inventors would submit them to a shared patent record. This would reduce the administrative burden on the USPTO and speed up the application and examination processes. The shared record would eventually be made public, improving the quality of patents. This decentralization could also lead to an international patent database.
There are some innovations that could be used alongside the USPTO, such as blockchain technology. Blockchain could help the USPTO combat counterfeit patents and also be used as proof of the filing date for patent applications. This technology has the potential to reduce administrative tasks and simplify the patent system.
TĂźrkiye has implemented legal structures to safeguard IPRs, encompassing patents, trademarks, copyrights, industrial designs, etc. The legal framework in TĂźrkiye adheres to global norms, and the nation is affiliated with diverse international agreements and treaties concerning IP.
The Turkish Patent and Trademark Office, also known as TurkPatent, is the primary regulatory entity responsible for supervising IP issues within the nation. If you have a desire to apply for patents, trademarks, or any other industrial property rights in TĂźrkiye. While industrial property rights are subject to registry within TurkPatent, intellectual property rights arising from or in connection with works such as literature, cinematics, etc. do not require registry. Rights will commence from the moment the work is created without any need for a registry or application.
TĂźrkiye has yet to pass any specific laws directly related to blockchain technology which is related to IP. However, similar to numerous other nations, Turkish authorities have been closely observing advancements in the field of blockchain and crypto assets.
Generally speaking, the utilization of crypto assets and blockchain technology in Turkey is governed by the existing financial and regulatory frameworks. The Banking Regulation and Supervision Agency (BRSA) and the Capital Markets Board (CMB) are regulatory authorities responsible for overseeing financial operations within the nation.
For more information on NFTs, please see our paper Changing Paradigm of NFTs: littlefish Action NFT.
NFTs are perhaps the newest, but no less popular, of crypto-assets. Legally, there is no widely accepted definition. Given its characteristic structure, an NFT can be described as a unique cryptographic asset. NFT differs from other assets produced by blockchain cryptography in that it has no duplicate. While other cryptographic entities can be substituted for each other, NFTs are unique and singular. Therefore, one cannot replace the other. NFTs are produced in conjunction with or integrated into intellectual products such as games, paintings, photographs, etc.
NFTs are commonly perceived only in relation to intellectual property. However, any entity can be expressed in NFT form. Since uniqueness and originality are the characteristics most needed by intellectual and artistic works, producers of intellectual property products are much more interested in NFTs. This is expected to increase further. This is because NFTs ensure and protect the authenticity of a work with the blockchain. In this case, the work-as-creation character of the NFT itself and the effect of the NFT registration in proving authorship are other noteworthy legal effects.
Usually, an NFT and its associated digital asset are separate entities. The creator of an NFT project usually names the series and creates the digital assets that the NFT represents. These digital assets are likely protected by copyright law as they are considered creative works. The name of the NFT series may also be protected by copyright and/or trademark law, depending on certain criteria. When it comes to NFTs, owners can have different creative works and names available for sale. However, itâs important to note that NFTs themselves do not automatically grant IPRs. Owning an NFT is not the same as owning the actual IP assets that are associated with the NFT.
When someone buys an NFT that references art, they are usually getting legal ownership of the NFT and a license to use the digital asset associated with it. These rights are usually agreed upon through a clickwrap or browsewrap agreement in the form of a smart contract designated on the creatorâs website where the NFT is bought.
NFTs are units on the blockchain that are not controlled by third parties and can be recreated and sent multiple times. NFTs do not provide ownership benefits like IPRs by themselves. They are meant to protect the originality and ownership of a work. Owning copies of a work does not grant IPRs, creating a dilemma for NFT purchasers.
NFT purchasers must obtain a license from the original creator or owner of the rights to replicate and share the original work of such NFT. An example of this is the NBAâs NFT of a slam-dunk video by Lebron James, which can be bought and sold on the âTop Shotâ market platform. However, the NBA still retains the copyrights and sets certain conditions for the license, such as not being able to change the content or captions of the video without consent. Violations of these terms can result in account suspension or removal of the NFT. The original owners of NFTs have more freedom to reproduce their work without licensing restrictions.
The main issue with NFTs is determining whether the purchaser of an NFT has copyright ownership of the original asset or just the digital copy. This depends on the terms of the smart contract between the creator and the NFT purchasers. Copyright is legally separate from the object or file that contains the protected work. This distinction is important because copyright includes various rights that can be exercised or sold separately. Additionally, it is important to understand that the product containing the work can be sold separately from the copyright itself.
It is widely accepted that a physical or digital copy of a work can be sold without selling the copyright. Copyright law assumes that the buyer of the copy does not automatically own the copyright unless it is intentionally licensed or transferred. This is done to protect the rights of copyright holders and make sure their creative works are adequately protected.
In most cases, the copyright for a piece of artwork remains with the original creator, but the purchaser of the NFT is given limited rights to use, reproduce, and display the artwork for non-commercial purposes. The terms of the smart contract will determine whether the NFT operates as a license agreement or an agreement for assignment. In an assignment agreement, the owner of the IP transfers all rights to the assignee, while in a license agreement, the owner authorizes the licensee to use the rights associated with the IP in specific circumstances. However, regardless of the type of agreement, the original creator still retains their moral rights, which cannot be transferred.
NFTs are not to be considered artworks, as they serve the purpose of recording the creation and ownership of an asset that may, in fact, be an artwork. Rather, NFTs are a tool of cryptography, governed by a smart contract. Utilizing blockchain technology, this contract verifies the documents the existence and ownership of both digital and three-dimensional assets.
As an NFT buyer, you gain full control over the smart contract that governs the functions of the NFT. This contract registers your ownership on the blockchain, providing indisputable evidence of your possession of the asset associated with the NFT, whether itâs a stunning artwork or a valuable piece of property. It is important to note that owning an NFT doesnât grant you copyright or control over the artwork automatically.
Copyright safeguards âthe work,â but it is not synonymous with the creation or expression conceived by the author. This distinction is vital in understanding why NFTs do not inherently confer copyright. It is worth noting that the copyright is an autonomous property distinct from the work it protects.
It is widely accepted by the United States and the world at large that, from a legal standpoint, copyright is a distinct form of property from the object or file that contains the protected work. This is because copyright entails several individual rights that can be exercised or even sold separately. It is crucial to note that the object containing the work can be sold independently of all the copyright rights.
When purchasing digital art, it is important to note that unless the copyright is transferred to the buyer, they cannot make copies or derivative works of the original. Additionally, they cannot prevent others from making copies, whether authorized or not. However, owning an NFT linked to the artwork still designates the buyer as the registered owner of the original copy. Obtaining the copyright to the artwork can provide the buyer with several attractive rights, such as the right to copy, sell, and distribute the work. This is especially important if the art is to be used in future projects or activities that require copies to be made. By owning the copyright, the buyer can have a say in preventing unauthorized copying of both digital and physical art.
As a result, when someone purchases an NFT, they do not automatically obtain the copyright of the underlying asset linked to the NFT. NFT and its underlying asset are two separate distinct things. In order to obtain copyrights of the underlying asset there has to be explicit written transfer between the copyright owner and the obtainer. Thus, purchasing an NFT does not mean that you obtain the copyright.
NFTs represent a groundbreaking technological advancement, particularly in the art communities, as they provide a means for artists to receive resale royalties. By incorporating a royalty payment system directly into the NFTâs underlying âsmart contract,â artists can rest assured that they will receive a ten-to-twenty percent cut of any future resales. This automated process eliminates the need for purchasers to comply with individual royalty agreements and ensures that payments are promptly delivered to the artistâs digital wallet. Overall, NFTs offer an elegant and persuasive solution for promoting fair compensation within the art industry.
Trademark law is applicable to the use of a mark in business to identify the source of goods and/or services and differentiate them from those of other sellers. The NBA, as a right holder, has filed a trademark application for âNBA Top Shot,â which includes downloadable virtual goods related to digital collectibles using blockchain technology and smart contracts. These collectibles feature players, games, records, statistics, information, photos, images, game footage, and highlight reels.
The sale of an NFT does not include the sale of the rights associated with it. This raises the question of whether reselling an NFT with a prominently displayed trademark would be considered infringement. To determine if infringement has occurred, the elements of direct infringement need to be examined, including whether the alleged infringer used the trademark without authorization in connection with the sale of goods and if this use is likely to cause confusion in the marketplace. However, identifying the infringer can be difficult due to the nature of blockchain transactions and the anonymous ownership of NFTs. This makes it challenging to pursue trademark infringement cases.
NFT sellers have the option to sell the intellectual property rights of the asset associated with the NFT to the buyers. However, this transfer of rights needs to be explicitly stated in the smart contract or any other agreement.
In rare cases, the original owners of NFTs can sell both the NFT and the underlying asset together. The buyer of the NFT can then use it as proof of ownership for the underlying asset. However, in these situations, it is important for the buyer to consider who truly owns and possesses the underlying asset, especially when it is a digital file.
The person who owns the rights to IP can give permission for others to use that IP through licenses. This applies to NFTs and the assets they represent. The owner can set specific terms and conditions for the use of the intellectual property, and they have the freedom to create those conditions as they see fit.
There are two main types of licenses: exclusive and nonexclusive. An exclusive license gives the licensee complete access and use of the licensed rights, with no chance for the copyright owner to give those same rights to someone else. A written agreement is necessary to transfer exclusive rights that have economic value. On the other hand, a nonexclusive license allows the licensee to use the rights, but the copyright owner can give those same rights to other people.
There are different ways to communicate license terms for copyrighted artwork, and we have ranked them based on their likely legal validity. This refers to an agreement that is made between a buyer and seller before a purchase is made, and it is reached through mutual negotiation.
The option of a mutual agreement allows the seller and buyer to communicate effectively and come to an agreement on the terms of the sale. They can then formalize their agreement by signing a written document, which can be done electronically. This creates a contractual agreement that gives the buyer the rights to the artwork.
Including the terms of a license directly into the smart contract of an NFT is a reliable way to ensure legal compliance. This is done by incorporating the license terms into the code of the smart contract, which can be accessed and controlled by the NFT owner. It is a common practice to include license terms within smart contracts, and this can be achieved by including the terms or a link to them in the metadata of the smart contract. This ensures that each owner of the NFT is aware of and bound by the license terms.
License terms are displayed in a pop-up window when making a purchase. This option is advantageous because it requires a clear and active acceptance, like clicking a button to agree to the terms of use when buying something. This type of license, known as âclickwrap,â is generally preferred by the law compared to âbrowsewrapâ licenses, which assume consent. Although implied consent is still considered, actively clicking to agree is a stronger indication of agreement, similar to signing a contract. However, itâs important to understand that both types of licenses only apply to the original buyer of the NFT.
The NFT sales platform provides details about the licensing terms in the listing and item description. When selling an NFT on a sales platform as a creator, you have the ability to create a captivating and informative description of your artwork in the listing. You can also include the license terms or a link to it, which allows the buyer to have all the necessary information before making a purchase. This demonstrates transparency and helps the buyer understand the terms and conditions of their purchase.
The website of the NFT creator shows the terms and conditions of their license. The creatorâs website is a popular way to share license terms for NFTs, allowing for easy adjustments as the project evolves. However, there is no official agreement from the buyer, making it difficult to enforce the terms. Despite this, it is still preferable to have no disclosed terms.
When creating a license agreement, it is important to consider certain rights in order to design appropriate terms for the agreement. The summary of these points is that the person has the right to display, copy for specific purposes, create derivative works, and commercially exploit their artwork. They also have the option to share everything using Creative Commons licenses and the possibility of selling everything by transferring the copyright to someone else.
By carefully considering these rights, the person drafting the agreement can create a well-crafted and convincing license agreement that satisfies the requirements of all parties involved.
NFTs are a significant technological advancement, especially for artists, as they allow them to receive royalties from resales. By integrating a payment system into the NFTâs smart contract, artists can be confident that they will receive a percentage of future sales. This automated process eliminates the need for buyers to negotiate separate royalty agreements and ensures timely payments to the artist. In summary, NFTs provide a fair and efficient way to compensate artists in the art industry.
Artists have the right to receive a royalty from the resale of their NFTs, known as âDroit De Suite.â Smart contracts make it easier for artists to manage this right without relying on collecting societies, giving them more control and power. Itâs important to note that if the creator of the NFT is also the initial owner, they can benefit from the resale royalty.
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