Intellectual property rights are the exclusive rights given to a person over the creation of their mind for a certain amount of time. They are basically of two types:

Copyrights and rights related to copyrights: The rights of authors of literary and artistic works such as writing, musical compositions, paintings, computer programs, and films are protected by copyright, for a minimum period of 50 years after the death of the author. The rights related to copyrights are the rights of the performers (e.g. actors, singers, and musicians), producers and broadcasting organizations. The social purpose of IP rights is to encourage and reward creative work.

Industrial property: It takes a range of forms, including patents for inventions, industrial designs (aesthetic creations related to the appearance of industrial products), trademarks, service marks, layout-designs of integrated circuits, commercial names and designations, geographical indications and protection against unfair competition

All the different types of IP rights share a common characteristic – they are creations of the mind and feature unique and distinguishing characteristics that differentiate them from other IPs. In the business world, this uniqueness is monetarily profitable. IP is an important strategic asset for business. Thus it is important to protect and grant individuals their IP rights; in the UK first trademark legislation was passed in the English Parliament in 1266.

How to protect intellectual property rights using blockchain?

The problem any inventor faces today is of counterfeit and infringement. This problem has escalated with the advancement of technology and thus, it has become important to preserve the IP rights in the face of this relentless corruption. Traditionally, IP rights were managed by notaries which were an expensive and cumbersome procedure, the time between innovation to the time it gets notarized can be quite long and between that time an idea is unprotected and unpatented so it can be forged by anyone. In most countries the right to an invention belongs to the first person who files the patent, therefore application date is important in the patent process prior to this date no protection is provided,usually inventions are kept confidential and if plagiarized it will be hard to prove the rightful owner of an idea since it was kept under the wrap. SMEs put a lot of investment in R&D and little in securing the rights which then get forged by large firms because proving the ownership of an idea is an expensive and hectic procedure which could be discouraging for further creativity. The state of forgery worsens online, as it is easy to copy or download something illegally, for example, the digital art you worked hours working on is being used a desktop image without your knowledge. It is easy to falsely declare any content like digital image, poem, music on the internet as your own but; what’s hard is proving the authenticity of your own creation. The lack of any official document or timestamp proving which version of the work came first makes copyright little more than a vanity, while copyright protects your rights to some extent, there’s no registration system that proves you are the owner. But luckily, this changes with blockchain.

Blockchain & smart contract

Blockchain is a group of block storing some information chained together cryptographically, it was first introduced for the secure transaction of cryptocurrency and since then it has found its application in numerous industries. In one such use-case of Intellectual Property Rights, it is giving innovative people ways to protect their IP rights. With the advent of blockchain, it has become easier to defend the intellectual property rights as it leaves no doubt on the ownership. Blockchain establishes ownership via a ledger that is open to anyone who uses the system. Blockchain can be used for copyright purposes by registering the work on a blockchain based platform. The two main features of Blockchain that are useful for copyrights are:

Hashing: it is equivalent to a digital fingerprint, it is the process by which a document is encrypted into a fixed length of code which can only be decrypted by a private key known only to the user.

Proof of existence: is the recording of hashing on the Blockchain at a specific time, every transaction or changes taking place on the Blockchain are recorded with timestamp.

By registering work on blockchain, a digital certificate of authenticity is issued which is tamper-proof because of hashing and proof of existence. Since blockchain is immutable, once the information is registered on blockchain it can never be changed or lost. The IP information stored in the blockchain can be decrypted by an authorized party.

With the help of smart contracts, it has become easier to licensing work. A smart contract is a computer program which is self-executing hence diminishing the need of an administrative party. By using a smart contract, two parties decide the terms and conditions of a business which is then recorded as a code on the blockchain, IP is mapped which makes the IP traceable, recoverable and able to be found when used. Owners of the IP are paid instantly every time their licensed work is used. Monetary transactions take place by assigning a Bitcoin address to the content, which allows users to make a small payment to utilize the IP.

• Imogen Heap is a British musician who debuted last year on a site called Ujo Music where users can buy music via Ether, the money goes directly to the musician, producer, songwriter and everyone involved. There is no middle party like companies that collect royalties to distribute the pay, exchange takes place between two parties only i.e musician and buyer. Aside from providing easier transactions, it protects musician’s IP rights as well a smart contract is formed which contains the terms and conditions of usage of music set by the artist. Hence every transaction on that specific IP is traceable, recoverable and preventable.
• E-commerce giant Alibaba is planning to integrate blockchain into intellectual property rights and they are in the process of upgrading the files of IPR using Blockchain. The system will purportedly allow electronic deposits from international brands to directly link to the Internet Court through the blockchain-based Ali Intellectual Property Protection Platform (“IPP Platform”), providing a basis for litigation rights protection.
• Sony Music Entertainment (Japan) Inc. and Sony Global Education recently announced the development of a rights management system for digital content that utilizes blockchain technology. This newly-developed system is specialized for managing rights-related information of written works, with features for demonstrating the date and time that electronic data was created, leveraging the properties of blockchains to record verifiable information in a difficult to falsify, and identifying previously recorded works, allowing participants to share and verify when a piece of electronic data was created and by whom. In addition to the creation of electronic data, booting up this system will automatically verify the rights generation of a piece of written works, which has conventionally proven difficult. Furthermore, the system lends itself to the rights management of various types of digital content including electronic textbooks and other educational content, music, films, VR content, and e-books.
• Bernstein is a platform that allows users to create a digital trail of record of their innovations, providing a digital certificate that proves ownership, existence, and integrity of an IP asset.
• The Blockchain Intellectual Property Council (BIPC) is an initiative of the Chamber of Digital Commerce to promote blockchain innovation and help companies better navigate intellectual property decision-making processes, they aim to combat Blockchain patent trolling.

dNFT AND IP RIGHTS

In order to understand dNFTs, it is important to first know what NFTs (Non-Fungible Tokens) are. These are the unique, irreplaceable and uncopyable tokens that are designated to an asset like a song or a video. They are launched on Ethereum Blockchain as ERC-721 token which has individual traits and identities, for example, a painting, a song or an invention.
Artists or innovators are sometimes not the sole creators of a product, for example, a musician doesn’t make a song alone producers, lyricists, composers are involved therefore they should hold some IP rights of a song as well. This issue can be resolved by Quillhash’s dNFT. dNFT is the standard for the distributed ownership of a non-fungible asset, usually music, videos or latest inventions which require distributed ownership of an asset as in the example. Hence, multiple accounts have ownership of an asset without it being fungible and each owner in a group will have a percentage ownership of an asset. A category like an ebook, video or music is set along with the name of the token, for one account xPER token is issued where x ≤ 100. So in our example, category and the name of the music is set for example token for Inside out in music category. So 40 PER of MI-A means singer has 40% ownership of a song and can not trade more than that. Similarly, producer may have the right to 30 PER of MI-B and can not distribute more than that. In the same manner, percentage ownership among a group of people can be distributed.
Hence dNFT helps to secure the IPR of an individual as well as provide distributed ownership of an asset. It has huge potential in terms of distributed ownership of an asset.

A look into the future

Blockchain has great potential in a real-world application that could change the functioning of the world. It is still a nascent technology, the idea of its application are just concept right now. The world is still coming to terms with the decentralized system, as blockchain technology goes mainstream, industry participants and blockchain developers have to collaborate to develop an interoperable system. Various governmental agencies and IP registries such as the European Union Intellectual Property Office (EUIPO) are actively looking into the capabilities of blockchain; the EU Commission has plans for a blockchain observatory and the US Congress recently created a Congressional Blockchain Caucus. Global standards for self-executing contracts are being discussed by various organizations. However, successful management of IP rights using blockchain requires an agreed upon and internationally supported platform. In this way, the blockchain as technology presents no differences from current systems. We still have a long way to go before we can utilize the huge scope this technology has to offer to us.