Blockchain on Every Street Corner – Walmart and the Rise of Mainstream Blockchain Patents

Walmart’s American patents and reported patent-related activities over the last few months show just how common blockchain-based technology is going to become in the immediate future. Walmart currently holds such patents for a delivery management and locker reservation system, and for a system of managing individual medical records. They have reportedly filed patent applications for a customer resale marketplace, an energy management system, and a package tracking system, all of which use blockchain technology. They are also partnering with IBM, Nestlé, Dole, and other major corporations to make a blockchain system capable of monitoring the entire supply line for foods. At the same time, financial giants such as Goldman Sachs, Bank of America, and Visa are also pursuing a variety of blockchain patents for financial services.

So, what is a blockchain? A blockchain is a digital, append-only ledger which provides transactional security to disparate parties. It is a decentralized method of storing information on a ledger that can be added to in “blocks” of data, without the possibility of previous blocks in the chain being tampered with. Adding data to a blockchain requires a “consensus” of all computers in the block chain network. This makes a blockchain decentralized, in that one computer acting alone cannot control the information put into a block, which in turn acts to deter data tampering. This all adds up to create an instantaneous and easily reviewable ledger that is not based on a system of trust. Blockchain allows for digital transactions to take place even in a complete absence of trust between parties, as it displays to all other members of the blockchain if an asset or payment have been transferred in a transaction.

Putting their money where their mouths are, so to speak, spokespeople for Walmart are among the biggest proponents for replacing existing systems with blockchain technology. Blockchain’s ability to allow for a greater level of secure, cooperative record-keeping between separate organizations is one of its biggest draws for companies like Walmart, who are entering the digital age. As stated by Walmart’s Vice President of Food Safety, Frank Yiannas “What we hope to do with blockchain is bring all food safety system stakeholders and collaborate so that we do it one best way. We can do it very quickly and efficiently.”  The decentralized and instantaneous nature of a blockchain ledger means that the entire supply route of an item can be discovered in seconds, compared to the days or weeks required under the present system. At the same time, the innate security of blockchain systems and their resistance to hacking or tampering make them ideal for protecting confidential information.

The variety of patents held by Walmart alone shows that blockchain has applications far larger than just as a base for cryptocurrencies. Blockchain can and is being used for any number of data-management activities, and, like any other software, there is potentially a lot of value in patenting blockchain’s most useful applications and variations.  Just like the adoption of TCP/IP before it, once viable and efficient uses for blockchain technology find niches in the structures of major corporations, the foundation will be laid for widespread dispersion of blockchain technology into everyday life.

With over 400 blockchain patents filed worldwide in 2017, the filing rate of these patents is growing exponentially. Canadian jurisprudence on patenting software comes from a combination of statute and common law. Section 2 of the Patent Act describes a patentable invention as “any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter”. This definition was then interpreted by Sharlow J.A. in the 2011 Federal Court of Appeals case of Canada (Attorney General) v. Amazon.com, Inc. to state that a mathematical formula, like a computer algorithm alone, is unlikely to be a patentable invention. However, if the algorithm is “only one of a number of essential elements in a novel combination” of a valid patent claim, then a patent may be given to the algorithm. Therefore, if it is an essential part of a broader valid patent, then a blockchain-based system, such as Walmart’s food-tracking system, may be patented.

Luckily for late-to-the-game software developers, the core of blockchain technology has been considered to be part of the public domain, in both Canada and the United States, since the publication of the technology by the (probable pseudonym) author Satoshi Nakamoto in 2008. This gives programmers a large amount of leeway when working from the base code, as simply using the base code does not interfere with anyone’s intellectual property rights. Therefore, in Canada, patent rights can only possibly be granted for “new and inventive improvements or implementations” to blockchain, so long as the blockchain software “is not the whole invention but only one of a number of essential elements in a novel combination”.

Although blockchain is a very new technology, and software patents themselves are in a nascent stage, worldwide trends show that blockchain patents are on the horizon. With the size of the investments being made in blockchain technology and the nature of those investing corporations, Canadian patent law will have many opportunities to be developed and refined. While time will tell if these investments will bear fruit, or if we’re in the midst of a “blockchain bubble”, one thing is for certain, patented blockchain technology is coming to a store near you.

 

Keenan Fast is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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One Comment
  1. Keenan Fast has provided here a good overview of how standard industry is making use of blockchain and patent law to gain a competitive advantage in their respective markets. Walmart is the most visible company doing this, as it has realised that Amazon will continue to chip away at its market share unless it can become the ultimate retail source for goods, through both online and conventional retail shopping methods. A point that is not discussed in the article is the added value blockchain patents may present an organization. In-house counsel should be able to assess the pros and cons of a blockchain patent.
    One of the core features of a patent is that the claimed invention must be new. The invention must not have been directly disclosed before to the public to be considered a new invention, under s. 28.2(1) of the Patent Act. The problem with blockchain applications is that much of the core technology has been developed and released to the public through open source projects. A company that looks to acquire a blockchain patent must ensure that their invention has not already been disclosed by one of the thousand different cryptocurrency projects already on the market. The patent office may not catch some of the relevant prior art that is public available, so counsel must make sure there has been a thorough due diligence search, preferably by a patent agent who has specialized in blockchain technology. An already disclosed invention is of little value when patented.

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