The Race to Patent Technology

Transparency in the supply chain, intellectual property rights and piracy issues that relate to blockchain technology are the two most significant areas that impact the legal landscape. Transparency in supply chain and brand management allow companies to demonstrate a product's chain of custody from manufacturer to customer—which is critical in industries where counterfeiting is a problem, especially for countries such as China, where there is high-value pharmaceutical products, technology devices or fashion merchandise.

Companies may also want to protect their brand by ensuring guaranteed ethical sourcing of goods and be assured of its fairtrade credentials. When lawyers advise these companies, a possible solution is to use blockchain technology as evidence of the authenticity and chain of custody of its goods. Companies can also rely on the use of blockchain technology as a defense to claims involving fair trade.

What are the growing trends around financial institutions using blockchain technology to improve e-payments?

Blockchain technology has the ability to reduce transaction costs while ensuring a faster, more transparent and more reliable process. Many Chinese banks have built their partnerships with fintech companies or developed their own fintech development strategies for these reasons.

Take China Construction Bank, for example, which announced a strategic partnership with Ant Financial, which allows the bank to offer wealth management products through its Alipay and Ant Fortune platforms through remittances powered by blockchain technology. Agricultural Bank of China Ltd. also worked with Baidu, one of the major internet search engines, to build an intelligent bank.

Bank of China and Tencent have established a joint financial technology laboratory that will work on cloud computing, big data, blockchain and artificial intelligence. In July 2017, the CITIC bank announced that it has established a system for the settlement of credit that uses an electronic transmission network backed by blockchain technology known as BCLC, which was the first ever letter of credit system in the banking industry built with blockchain technology. These examples increase the variety of e-payment system options and help banks facilitate e-payments more efficiently and securely at the backend.

What is the importance of blockchain patents for the financial services industry?

Blockchain patents allow individuals the freedom to conduct transactions across borders without having to address foreign exchange issues. But more importantly, it allows parties to pay for goods and services without having to wait for another part of an organization to send payments to their accounts payable department. It also means that parties will not have to deal with the hassle of the current banking system.

That said, the blockchain technology is viewed as the future of the fintech industry, and has incredible economic potential. Given that, firms would want to protect their invention and investment. Banks that develop their own blockchain technology would want to file a patent even if they do not yet know the commercial potential of a particular technology, just to mitigate the risk of being sued, or they could have market control over a welldeveloped technology.

Why does China support blockchain but not bitcoin/cryptocurrency?

While China supports the development of underlying blockchain technology, it is still trying to limit speculation in digital currencies—it has been roughly one year since they have banned sales of "initial coin offerings." Blockchain technology is great because it creates a secure, basically permanent record of transactions between two parties, eliminating the need for a third-party intermediary such as a bank. Although bitcoin and cryptocurrency was the first application of this technology, hundreds of other cryptocurrencies have since emerged. Chinese courts generally do not support bitcoin because it may be used for illegal fundraising using overseas servers that may target Chinese investors.

Is it easier to obtain software patents in the U.S. or in China?

Generally, software patents are easier to obtain in China versus in the U.S. Additionally, even if granted in the U.S., software patents are more vulnerable when challenged in the U.S. court system. Accordingly, a current trend is for Chinese companies to file and obtain software patents in China first and then use PCT or the Paris Treaty to extend its Chinese software patents to the U.S.

The U.S. Patent and Trademark Office essentially reviews all patents in the same manner—irrespective of origin. But it is no secret that an economy on the rise reveals itself at some level through patent applications. Look at the significant role that Korean companies play in the total number of U.S. patents awarded on a yearly basis in the U.S.

Will China suffer a decline in IP now that the U.S. is pulling out of China, restricting movement of technology?

It is too early to tell whether China as a whole will experience a decline in IP applications because of the current U.S.-China trade disputes. However, our take is that U.S. companies will likely remain incentivized to mark their technology territory (even in China) irrespective of the trade disputes.

What is the future of autonomous vehicle/robotic technology? And what are some of the unprecedented challenges IP professionals and corporations will face as autonomous vehicle technology becomes a reality?

Investments and research and development in autonomous vehicles are on the rise both in the U.S. and China. There are so many U.S. companies that are far ahead in this space, that the U.S. may just lead the efforts to initiate standards that become widely accepted globally (i.e., LTE or USB).

Some of the challenges IP professionals and corporations will face as autonomous vehicle technology becomes a reality include the need to protect innovations. Companies will need to assess whether they want to keep their technology secret (by maintaining this as a trade secret) or by filing patent applications (which are public). Companies need be prepared for possible patent cases given that AV technology is unprecedented, and consider collaborating with other companies to combat patent trolls, and ensure the Patent and Trademark offices expedite patent applications for AVs to help spur innovation.