Clearing hurdles in the race for blockchain patents

As the many benefits of blockchain technology are increasingly recognised, efforts to protect new innovations and improvements to blockchain technology have led to a surge in patent filings. However, many of those patent filings may never be granted. When it comes to blockchain technology, successfully navigating the patent application process means understanding recent legal developments concerning patentable subject matter.

Earlier this year, the Economist reported that hundreds of blockchain-related patents are said to be in the pipeline, with financial firms among the most prolific filers. Some blockchain patent applications have already progressed to issued patents. However, a large number of blockchain patent applications may face a difficult and uncertain examination process in the years ahead, thanks to a recent trend in patent law.

Like many other computer-implemented inventions, patent applications for blockchain technology are vulnerable to being classed as non-patentable subject matter (ie, they are not the ‘right’ kind of invention to warrant a patent). For example, many computer-related inventions are often characterised as unpatentable abstract ideas during examination. Courts have consistently held that mere abstract ideas should not be patented, often reasoning that to allow such patents would improperly ‘tie up’ scientific and technological progress.

Over the years, courts have identified many different classes of abstract idea that do not progress to patent-eligible inventions. In the financial technology space, these abstract ideas include:

• fundamental economic practices such as hedging and creating contractual relationships;
• data manipulation, including obtaining and comparing data and using rules to identify options;
• methods of organising human activity; and
• mathematical relationships and formulas.

In some circumstances, blockchain-related inventions may fall into these or similar categories. To avoid such pitfalls, two things are needed at the patent application preparation stage:

• a thorough knowledge of the technology; and
• a clear understanding of the kinds of invention that are likely to be found patent eligible.  

The most recent word on patent-eligible subject matter in Canada comes from the Canadian Intellectual Property Office (CIPO) and, in particular, from CIPO examination guidelines drafted in response to the Federal Court of Appeal’s decision in Canada v Amazon.com, Inc. In that case, the court explained that software and business methods are not excluded from patentability and held that an invention will be patentable if it has physical existence or if there is something that manifests a discernible effect or change.

However, in practice the CIPO has imposed a far stricter test for patentable subject matter. The CIPO directs its patent examiners to look for the ‘problem solved’ by the claim and ask whether a computer is ‘essential’ to solving the problem. Examiners routinely find computers to be non-essential if there is even the slightest possibility that the invention could be carried out mentally or with pen and paper, in lieu of a computer.

In seeking to draft allowable claims before the CIPO, it can often be helpful to:

• emphasise that the problem can be solved only through use of a computer;
• emphasise that the inventor intended for the computer elements to be essential; and
• claim computer-related elements that bolster the essentiality of those elements (eg, “a method of providing, via a computer network, a service”).

The increasing prevalence and importance of blockchain technology suggest that it will have significant commercial value, and therefore so will the intellectual property that protects such technology. To build a valuable patent portfolio, it is critical to correctly identify inventions and draft patent applications that can withstand patentable subject matter challenges.