The ENS feud with Unstoppable Domains, which took place last year, has highlighted the skepticism of many open-source software developers towards patents.
Although concerns about the misuse of patents is valid, organizations that are in the crypto-space may inadvertently reduce the benefits available to safeguard their innovations by abstaining from the system.
Unstoppable Domains, Inc. (UD) received a Patent on “Resolving Blockchain Domains” By the year 2023. The lead developer for its biggest competitor, ENS was irritated. In an open letter, ENS’s Nick Johnson argued that UD’s patent is “based entirely on innovations that ENS developed and contains no novel innovations of its own.” He criticized UD for pursuing patents, even after they stated support for open innovation. Johnson was aware that UD did then pledge its patents to the Web3 Domain Alliance. However, he doubted the legal binding nature of the pledge.
Companies pursue patents, however, for a variety of reasons that go beyond initiating lawsuits against infringers. Investors are able to recognize the company’s innovative products and processes by using patents. Patents can be used as a way to reward inventors.
Patents are also useful defensively. In the event that a competitor sues a business for patent infringement the company can use its existing patents to countersue the competitor. It can be a good strategy for negotiating a settlement.
Important to know is that software can be made open-source by a company under an open license, while the software itself remains patentable. Most often, those who comply with the license terms are protected from patent litigation. It gives the patent holders a new way to pursue people who don’t follow the rules of the license. So, companies that use crypto can remain open source and still file for patents while not using them as a way to hinder innovation.
Click here to read our latest opinion: Blockchains need not be used for all applications.
As an example, one company may wish to safeguard themselves against another who has modified open source software and wants to secure it. The competitor could sue the original developer of the code. These unfair tactics may affect a company that does not possess a valid patent or has other protections.
Moreover, open-source code developers may also encourage other organizations to use the code and make improvements. With a patent however, they can defend themselves from competitors that make similar products, but don’t use the code.
Litecoin, for example, was a branch of the Bitcoin source code. Satoshi Nakamoto would likely not be able to take on Litecoin if he patented a blockchain-based decentralized system for recording transactions. The open source license that is included with the Bitcoin code base prevents them from doing so. Nakamoto would have had the ability to stop a rival from developing a similar product without utilizing Bitcoin’s code.
Crypto community ethos does not oppose allowing others to modify and use the original code, while keeping competitors from making money off of their version of the concept. Combining open-source licenses with patent protection instead encourages innovation by allowing developers to use each other’s code. This prevents multiple versions of the same product from being released, and promotes a collaborative community.
Companies in the crypto-space should not be afraid to pursue patent protection, given these factors. If a company decides to patent its open source software, it should make it very clear that anyone who properly uses the software also has a license to the patent — it may be pursuing patent protection simply to raise funds and formally recognize inventors’ creations. If someone violates the terms of the licensing agreement or creates an identical product independently without using code from the company, the business can protect itself.
The coexistence of patents and open source in the cryptospace encourages an ecosystem that is healthy. Businesses can use both to foster a collaborative environment where developers are able to build on each other’s efforts without compromise.
This is not the first time that a crypto enthusiast has criticized a competitor’s patents. The crypto community will benefit from being open-minded to different strategies that encourage, pursue and protect innovation.
Cameron B. Pick is a partner and patent attorney at the Chicago-based intellectual property boutique law firm Marshall, Gerstein & Borun. He is a patent attorney for new technologies such as blockchain, crypto and other areas of innovation. Contact him via [email protected].
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
