Today we are pleased to present a guest contribution by Alessandro Rebucci, of the Johns Hopkins Carey Business School. This post is based on “Blockchain Technology and Government Applications: A Proposal for a Global Patent Office” (with E. Di Nicola Carena and P. La Mura), in A. Fatás (editor), The Economics of Fintech and Digital Currencies, CEPR ebook, Fintech and Digital Currencies Policy and Research Network, CEPR March 2019.
There is broad support among economists and policy makers for the notion that a certain degree of protection of property rights with patents and trade-marks provide incentives to innovations and fosters growth. The existing system of national patent offices, however, imposes lengthy and costly processes. Moreover, as the ongoing dispute between the US and China vividly illustrates, they fall well short of protecting property rights effectively in the context of international trade in goods, services, and assets.
Blockchain technology is particularly well suited to decentralize certification processes and could be applied to the design and development of a Global Patent Office (GPOX) under the auspices of Trade-Related Aspects of Intellectual Property Rights agreement of the World Trade Organization.
Blockchain has the potential to be applicable wherever ledger-based record keeping has a role to play. Examples include medical record-keeping, land and property registry, financial contracting, accounting standards and certification, and so on.
The idea to use blockchain to decentralise the functions of a patent office is not too far-fetched. Bitcoin is already used by private companies in the patenting field to store the hash value of documents related to inventions, or to timestamp the creation of a document, taking advantage of the sequence of characters that can be inserted when marking a transaction output as invalid. And these hash values can be admitted, like any other piece of evidence, in national enforcement proceedings. However, blockchain usage for this purpose can be pushed much further to fully manage the submission, editing, review, and storage of content subject to intellectual property right protection.
To achieve this, there is need to develop an open, community-based protocol to encrypt and store patents, trademarks, software, documents, graphical objects, and 3-D printed prototypes. The blockchain can contain either the actual content or the hash value in order to universally timestamp the content itself. More specifically, the registered invention is broadcasted to the GPOX network. The GPOX research community validates with the current criteria of originality, applicability, and replicability. Validation contributions will carry a reward in either cash or GPOX tokens. Tech experts and patent lawyers will continue to play a key role in the process, in order to assess and eventually validate a patent for final formal registration, but differently than in the traditional system. Their credibility and reliability can be established through algorithms that take into account the track record of previous works, successful disputes, and judgements from other peers.
Newer inventions enter in full, ideally the complete file. Older inventions could be re-registered on the GPOX database simply with reference to their traditional identification number, amplifying the reach and scope of the existing national patent systems. For inventions entered in full, adherence to submission standards can be checked through automated intelligent filters and natural language processing techniques.
All submitted content can be initially put in ‘stealth mode’, in a way that ensures time-stamping, but only its creator/owner (other authorised party) can access it. At any time, the owner can decide to switch the whole or part of the content to ‘visible mode’, while keeping the original time-stamp. At this time, the whole content must be made accessible to anyone through either dedicated public servers or a fully decentralised filing system. The GPOX platform would allow anyone to browse any open intellectually protected object and to review and annotate it. The novelty of an innovation in the GPOX system can be challenged by either referencing internal or external sources.
Once up and running, GPOX could be financially self-sufficient. The platform/protocol will use an incentive-based system of rewards for contributors of submissions, reviewers, upvotes and downvotes, akin to the one used in Steem applications. R&D entities will register their inventions on the platform, paying a submission fee. If ownership is transferred, the inventor gets registration costs back plus the market value of the invention assessed by the GPOX community within the platform. If ownership is not transferred, a maintenance fee is assessed annually for the life of the patent.
Any individual submitting new content subject to intellectual property right protection can choose to submit a legally binding, digitally signed form that transfers the rights of her/his invention in exchange for tokens created by the GPOX platform and bound to the invention itself. From that time, GPOX tokens bounded to the innovation will represent its ownership and could be freely exchanged and traded on the secondary market. This would establish a link between the protection of the invention to its financing and acquisition. In the long term, such a system could be used as a source for crowdfunding of pure ideas, which are much harder to finance than viable business entities even in the most advanced financial markets like those of the US.
GPOX’s ambition is to become a simplified and efficient source of intellectual protection that is globally accepted. Patent trials routinely rely on a variety of sources of evidence, but their validity is usually specific to each country, making the international patenting system incredibly expensive. In a legal proceeding, the time-stamped objects and the community reviews – especially when submitted by R&D professionals – could be used to support the novelty of the invention and to claim its rights, together with other more conventional tools. Initially, GPOX could operate alongside the national offices, prompting them to modernise and improve in the same way public exchanges compete for trading businesses nationally and internationally. But thanks to its lower costs, shorter approval times, and supranational validity, such a system has the potential to become the leading source of originality certification, especially in business areas in which the standard protection system is not working well, such as software and algorithms, and to stimulate the world supply of inventions in these areas.
How feasible is to implement such a blockchain application? It is now well understood that blockchain technology (i.e. encrypted decentralised ledgers) has potentially widespread applicability, well beyond the world of cryptocurrencies. What is less clearly understood is that not all ledger-based record keeping activities can be profitably decentralised via blockchain technology.
While the system of reward and fees outlined above can make GPOX financially self-sufficient in the long run, in order to prevent risks of bifurcation as witnessed in the cryptocurrency markets, there is the need for a sponsoring institution. One possibility is to task the WTO with the launch and initial adoption support of the GPOX application. The WTO already has a mandate on protection and enforcement of intellectual property under its Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement negotiated during the 1986-94 Uruguay Round. But TRIPS has proven not effective over the years in resolving disputes in this area, as the Apple-Samsung case exemplifies. Fundamental research has historically been subsidised by governments. Indeed, the internet was developed for defense purposes by the US Department of Defense, and internet applications took years to become mainstream in government and business.
The ongoing dispute on protection of property rights between the US and China is a golden opportunity to launch such a new multilateral initiative. It is possible to see how a platform designed along the lines above, under the auspices of the WTO, could address several of the issues on the table, resolving problems created by lack of trust and credibility with a community-based system of certification. It would be hugely popular in China, which is very eager to promote widespread adoption of blockchain technology and is also looking for ways to accommodate US demands without losing face domestically. The European Community has already developed a supranational patent office and would have important experience and know-how to contribute. And the US, currently enjoying the strongest and most successful national patent office, would have a way to extend its reach into the new economy on a global scale for years to come.
This post written by Alessandro Rebucci.
This is a nice sister post to Prof Hamilton’s post on Libre. A lot of this is WAY over my head. I suspect this is a very good policy idea by Mr. Rebucci, but due to the incompetent people currently inhabiting the White House the implementation timing would be bad. Maybe wait until Bernie Sanders is in the White House and then try it.
Offered without comment:
https://www.asiatimes.com/2019/04/article/us-helpless-against-chinas-ip-theft/
“Helpless” is the incorrect word here. I think the descriptor for American businesses you are looking for is “intellectually lacking” or “intellectually out-dueled”. It’s important to remember why we have the word consent. If you agree to have it done to you then you can’t call it r*pe.
The white guys were the dumb ones here—which is hard for Bruce Hall to compute in his tiny tiny white trash mind.
What nitwits like PeakTrader and Bruce Hall do not get is that some American multinationals have Chinese affiliates that are doing well and paying royalties back to the U.S. for the use of their “IP”. Next time you are in China – you might see the local Starbucks or McDonald’s (not that you would feel compel to eat at either place – go for the local cuisine). But note both of those stores are paying market rates for the IP. 6% of sales for Starbucks and 5% of sales for McDonald’s. So this claim of stealing IP is often based on the sheer ignorance of the dimwitted aka PeakTrader, Bruce Hall, and their ilk.
whoever,
When you conflate coffee with computers you tend to show a lack of depth. When you conflate McDonalds with Microsoft you tend to show a lack of depth. When you try to use personal attacks in place of discussion and debate, you prove a lack of depth.
I see – you represent Microsoft. A company that peddles IP it stole from others at its own obscene prices. Atta boy Brucie – make Bill Gates even richer as he peddles his horrific Office Suite.
Moses, I agree that corporations have allowed China to usurp much IP in exchange for short-term access to the Chinese market. However, as dumb as that is, it is not the whole story which I know that you know because you are smart.
Outright IP theft and espionage constitutes a major part of the Chinese strategy to move into the 21st century. Those who turn a blind eye to that for some cheap electronics may also be “intellectually lacking”.
I see you enjoy paying $1000 to Apple for something it pays Foxconn a mere $225 to manufacture. I bet you also don’t mind paying Gilead $1000 a day to treat your Hep C. I trust you know the cost of making that product is a mere 5% of what you pay. Oh wait – you don’t pay the price, we taxpayers do. Never mind!
whoever, here are some data on profits by industry. While drug manufacturers have a healthy margin, so do many others. In which industry do you play? Are your margins really low and does that make you special?
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html
Bruce Hall called me “smart” today. This is psychological warfare at its most vicious and inhuman. Does anyone know what donald trump does when Judy Shelton or Stephen Moore calls him a genius?? I feel very confused right now and I don’t know the correct course of action here.
Oh gee – I was wondering when PeakTrader would re-appear with his fear that the Chinese are so much smarter than we are. Is that your real name Brucie boy?
whoever,
Fearing that China is smarter is not the issue. Somalian pirates may not be smarter than ocean cargo ship captains, but that doesn’t make them benign.
Keep trying personal attacks instead of using reason.
Personal attacks? Ahhh Brucie – please call me more names. Your insults at least are more interesting than your pathetic attempts at economic analysis.
whoever, I don’t call you names; you haven’t even admitted to a name. Since you don’t actually offer analysis or an attempt at discussion but simply like to make attempts at ad hominem attacks, I find you comments non-sequiturs.
“Their policies favoring theft of intellectual property on an industrial scale have contributed to the greatest wealth transfer since the Iranian-Arab creation of the OPEC cartel raised the price of energy to the West.”
What a load of malarky. Apple accuses Samsung of IP theft and Samsung accuses Apple of IP theft. And their lawyers make yuuuge bucks making sure neither have to face real competition. The real theft is the obscene prices consumers are charged when true competition is blocked. For example, we have obscenely high prices for pharmaceuticals because this nation does not even try to have real competition.
whoever, we could have extremely low pharmaceutical prices if we simply stole the formulations.
Oh my – sharing basic science is stealing formulations? You are indeed the lap dog for Big Pharma. No wonder you support right wing positions 24/7. They pay you to peddle their spin. Atta boy Brucie!
whoever, “sharing” would include the cost of research too? You seem to be taking the Chinese approach to “sharing”.
For this to work properly, assuming the blockchain will function well and not consume too much energy, we would need all with potential property rights to be equallly informed about this and equally ready to get at it. I guess there is always a prioritization problem with patents anyway, but it looks to me that it might take a long time, if ever, to get this functioning in a way that would be really acceptable internationally for determining these matters.
open, community-based protocol to encrypt and store patents, trademarks, software, documents, graphical objects, and 3-D printed prototypes.
This statement is impossible as long as WIPO’s policy objectives are not constrained. The reason it’s impossible is the protocol’s methods would be patented, and thereby not free for use.
The whole reason there’s an open source computing community is because of the many constraints WIPO policy create on ideas.
Has anyone done any research comparing national growth rates between countries who meet more of WIPO’s policy goals and countries that meet fewer of WIPO’s goals?
I’m not sure the trade conflict between the U.C. and China can be answered with better record keeping for innovations.
In the past, while China was amassing $4 trillion in foreign exchange reserves, the U.S. Treasury Department regularly failed to brand China as a “currency manipulator.” One explanation is that some U.S. companies had a lot to gain from the arrangement – companies like Apple and Nike, that benefited from low production costs denominated in Chinese Yuan, and that sold the output in the U.S. and other developed countries. These companies had an incentive to lobby to keep that setup in place.
If you look at the biggest U.S. companies by market value, they are dominated by companies with intellectual property rights that give them ‘super normal’ profits. Now that China is becoming an effective competitor, these companies might be pressuring for measures to hold the competition at bay.
don,
You should keep in mind that it is not that easy to prove any particular nation is actually “currency manipulating” as many nations intervene in the forex markets to influence the value of their currency. As it is, while there is reason to believe that the Chinese were lowering the value of their currency substantially some years in the past (by lending us lots of money that kept interest rates on our national debt low), that has not been the case in most recent years prior to Trump starting up his trade war with China. Since then the Chines rmb has depreciated against the USD, although there are plenty of reasons to expect that to the be the natural market reaction without any intervention by the Chinese authorities, and there is also good reason to suggest that all they have done is sit back and let those markets do their stuff without barely a shred of manipulation.
This is a rather empty tree to bark at.
Bruce Hall is worried that we might steal the formulations of some overpriced Big Pharma multinational. I guess this know nothing has no idea that Glaxo’s Zantac was not only the first blockbuster drug but also a “me too” drug”:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5659838/
“Critics of me-too innovation often argue that follow-on drugs offer little incremental clinical value over existing pioneer products, while at the same time increasing health care costs.”
Glaxo basically stole the formulation from a competitor, jacked up the price, and then shipped a lot of its obscene profits to tax havens.
In his sheer ignorance, Bruce Hall defends all of this. Go figure!
“Bruce Hall
July 16, 2019 at 10:04 am
whoever, here are some data on profits by industry. While drug manufacturers have a healthy margin, so do many others. In which industry do you play? Are your margins really low and does that make you special?”
Oh my – Bruce no relationship to Robert Hall really has gone all whiny in the sandbox. Of course that’s because the other kiddies do not want to play with the dumbest brat EVER. But Damodaran! Great sources of data and discussions of financial economics – even if little Brucie Boy would never understand any of that. Oh gee – the gross profit margins for all sorts of companies including start ups. Yea – that is really informative. NOT. Hey Brucie Boy – try reading what Aswath has written and you might get why you have no clue what this Excel file even means. Or do the kiddies have to draw that in crayons for you?