In this note, we discuss the Web3 and blockchain environment, and the challenges of protecting inventions which are developed for this ecosystem.
What is Web3?
Web3 is a term used to describe the concept of a decentralised internet, which is built on distributed ledger (e.g. blockchain) technology being used to immutably and securely store, record and manage the value in tokens which represent assets in digital form. Those assets can represent many things, including access rights, files and legal contracts.
The innovation in the blockchain and web3 ecosystem may be schematically illustrated as three layers, which are illustrated below:
| Blockchain |
| Token generation, management etc |
| Web3 |
The blockchain layer references a ledger where token activity can
be recorded and managed. The token layer refers to the creation and
processing of tokens. The Web3 layer is where tokens represent
real-world value, e.g. access to a piece of content or data.
Challenges of patenting distributed Web3 and Blockchain technologies – why claim wording is critical
One of the challenges of protecting innovation in this environment is its naturally distributed nature, where a blockchain, for instance, may comprise a large number of nodes which are located over multiple territories. This does not naturally fit in with a patent system which protects inventions within a single territory. This can be made more complicated when entities innovating in the Web3 are interacting with a blockchain, either indirectly or directly.
For this reason, it is important to ensure you are careful in trying to confine the protection of your patents to a single territory. This may be, for instance, by protecting the configuration of a single node or the activities of a single entity. To achieve this, the wording that defines your protection (i.e. your claims) needs to be selected carefully to reference the necessary entities but without dependency on more than one of those entities to fall within the scope of the claim. This generally involves defining the protection by reference to the single node or entity relative to the other entities, rather than involving those entities, e.g. using phraseology such as "receiving from", "providing to", "obtaining from".
It may not always be possible to meet the requirements of patentability, and the activities of other entities may need to be explicitly included in the claims, but this should be considered against the risk that the claims may only be indirectly infringed, which requires a higher burden of proof to procure damages from the indirect infringer.
Is it blockchain or platform agnostic? Is that important to the innovation?
Another challenge of protecting innovation in this environment is the variety of blockchain environments that exist. For example, there are blockchains based on the output-based model. These blockchains underpin cryptocurrencies such as Bitcoin or ADA. However, there are also blockchains which are based on an account-based model. This includes those which underpin cryptocurrencies such as Ethereum or Solana.
It is therefore important, prior to filing a patent application to protect an invention, to properly consider whether it can be used in a blockchain agnostic manner, i.e. independent of whether the invention is used with an output or account-based environment. If an invention can only be used with a specific blockchain environment, then it is better to ensure this is clearly recited in the application. Whilst it is always preferable to have a broader scope of protection, going too broad in trying to cover embodiments which cannot work will potentially undermine patentability by drawing in a broader than necessary search and also potentially undermine the sufficiency of the disclosure.
The technical advantage conundrum in different jurisdictions
Last but certainly not least, there is a challenge in demonstrating the patentability of these inventions. Patenting inventions generally requires demonstrating that the invention satisfies the requirement of inventive step. Whilst the specific requirements of inventive step vary across the world, this inevitably requires the applicant to show they are providing some form of technical advantage. This does not necessarily mean the blockchain architecture needs to be developed further by your invention, but it does require demonstration that the blockchain architecture being used is providing some improvement to a technical environment. This may be, for instance, improving security in a technical process or making a technical environment more efficient.
Different jurisdictions have different attitudes to assessing patentability and technical advantages, so what may be challenging to protect in one country may not be so in many others. Therefore, filing strategies and alternative claim language are important to consider at the very outset.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
