Is Cryptocurrency Patentable?

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Andrew Rapacke is a registered patent attorney and serves as Managing Partner at The Rapacke Law Group, a full service intellectual property law firm.
Is Cryptocurrency Patentable

Is cryptocurrency patentable? It’s a question that has been popping up more and more lately, particularly with the race to innovate in the cryptocurrency world. Bitcoin continues to be the dominant crypto-currency, but there are now hundreds of other currencies with different purposes or features that have popped up in recent years. The answer to this question is complicated because it depends on a number of factors which we’ll review below. In some cases, patents may be granted for specific types of blockchain technology while others may not be eligible at all. With the rapid growth in the decentralized currency space, many companies are now seeking patents on cryptocurrency and its underlying blockchain technology to secure their place in the market.

Can Cryptocurrency Be Patented?

The hype over cryptocurrency and blockchain technology has led to an increase in patent filings, though relatively few patents have been issued thus far in this area. Although many entities are eager to file patent applications on cryptocurrency and blockchain technology, a significant amount are still unclear as to what actually can be patented. The open-source nature of some of the related software further complicates the patenting issue. However, new blockchain and cryptocurrency technology continues to emerge, driving the need for patents to safeguard technological investments.

Cryptocurrency is essentially data that is run through software computer programs. There have been other cases of patentable software and computer programs, though a common misconception is that software and business methods cannot be patented. This is not the case if the criteria for patentability are met.

Under §101 of the Patent Act, the United States Patent and Trademark Office determines patentability if an invention is:

  • A new, useful, and non-obvious process, machine, manufacture or composition of matter (statutory claim); and
  • Not abstract, a law of nature, or a natural phenomena (judicial exception).

Issues with patenting cryptocurrency technologies can be similar to issues with patenting software programs, which may otherwise be classified as abstract ideas or algorithms that merely support a program’s functionality. However, utility patents can be used to protect the function and processes of various blockchain and cryptocurrency technologies and their platforms if certain additional criteria are met. Generally, any innovation that improves functionality or that produces a tangible result may be patentable.

Cryptocurrency Patent Examples

Despite some of the uncertainty surrounding patent potential for cryptocurrency, many large institutions, particularly in banking, have taken great strides to develop technology and systems associated with cryptocurrency. It is notable that several of the top patent filers in recent years are financial institutions, a sector that has previously remained underrepresented in the patent filing world. The innovations of these institutions require additional and innovative analysis and protection. Examples of recent cryptocurrency patent filers include Bank of America, Microsoft, and Visa, which are highlighted as follows.

Bank of America Cryptocurrency Patent

While the first cryptocurrency wallet was introduced in 2009 with the release of Bitcoin, in 2019 the United States Patent and Trademark Office published an application from Bank of America for a digital currency wallet. The proposal offers a digital wallet with layered access based on the amount of funds requested. The multi-tiered computing platform also improves security over private keys that have otherwise been susceptible to theft or mismanagement. The need for improved wallet structure has been driven by the number of diverse and competitive digital currencies emerging on the market, such as Bitcoin (BTC) and Ethereum (ETH).

Microsoft Cryptocurrency Patent

Microsoft has filed for a system intended to solve a computational problem associated with conventional cryptocurrency systems. The patent application, filed with the World International Property Organization, describes cryptocurrency mining using data collected from human activity.  The system additionally incentivizes certain human activities, such as running or reading, by unlocking blocks based on engagement in the activities and rewarding the user with cryptocurrency. In this way, the system offers an innovative approach to more traditional proof-of-work systems.

Visa Cryptocurrency Patent

Visa filed a patent application for a “Digital Fiat Currency,” including a centralized computer that capitalizes on blockchain technology. The system enables currency of any denomination (e.g., dollar, euro, etc.) to be digitized. The centralized computer system receives requests that include a serial number and denomination, then creates a digital currency for the linked serial number. This transaction is then recorded on a block and the system signals that the digital currency has been created, queuing removal of the physical currency from the system.

The Cryptocurrency & Blockchain Patent Landscape 

There is heightened interest in the application of blockchain across a range of industries, including finance, real estate, biotech, artificial intelligence and more. As such, innovative solutions utilizing cryptocurrency and blockchain technologies are believed to have widespread applications. Patents are the best way to protect innovation in this area. Additionally, patented subject matter is attractive to investors as a means of protecting their investments. Patents add value to the innovation and also demonstrate market sustainability.

Like many new technologies, the future of blockchain technology and cryptocurrency is largely uncertain. However, the rising number of recent patent application filings suggests that many companies, both large and small, are putting their faith in its future. By 2017, there were 607 patents issued for cryptocurrency and related matters. Examples of cryptocurrency related that have been patented include: securities, digital wallets, smart contract platforms, and exchanges, to name a few. Patentable applications have included voting systems, supply chain management, crowdfunding, and smart contract applications, among many more.

The competition to secure patents is not without challenges. For example, larger institutions, who typically have deeper pockets, may secure patents before the technology is fully developed. This may be done to create a placeholder for the technological development, but also threatens to eliminate smaller innovators from the market. It is increasingly important, especially for smaller-scale innovators, to patent their inventions in order to secure their place in the industry.

Needless to say, the landscape of cryptocurrency and blockchain patents is ever evolving. As new technologies continue to emerge, new guidelines are created that may attempt to treat each patent application equitably. Careful consideration needs to be given to how each innovation is presented in its patent application.

Drafting Effective Cryptocurrency Patent Claims

As new and existing companies are becoming aware that cryptocurrency and blockchain technologies are, in fact, patentable, patent filings will continue to increase. However, despite the hype and flurry to obtain patents, many of these same companies may be caught off-guard by the difficulty level in actually securing cryptocurrency and blockchain patents.

Eagerness to secure a patent can result in hastily drafted applications that lack preparedness and the required foresight. The key to filing quality claims is to be knowledgeable not only about the invention, but also about the patenting process. A good claim will describe what the inventor is accomplishing, not just the outcome of the invention. Remember, patentable inventions must be novel and non-obvious. Think about how you may explain to someone or prove your claims are non-obvious? Describing the technical hurdles that were experienced and overcome throughout the process can set the application apart from existing systems or technologies.

Be thoughtful – avoid being caught up in the buzz of cryptocurrency and blockchain and neglecting to focus on how the technologies are being used as solutions to specific issues in a unique way. This requires mindfulness towards the test for patentable subject matter and any applicable precedential cases. Do your claims fit into one of the statutory categories previously described (i.e., process, machine, manufacture, or composition of matter)? If so, are they directed towards a judicial exception (i.e., abstract idea, law of nature, or natural phenomena)? The answer is, likely. Thus, emphasizing the applicability of exceptions to these rules by describing the elements that might amount to significantly more than a mere abstract idea is vital.

In line with making sure your invention is patentable, keep in mind how your claims are drafted. Patent applications are assigned to specific art units, some with higher rates of allowance than others. Careful drafting of the claims and the detailed description can help avoid the possibility that your application is assigned to an incorrect art unit and thereby improve the chances of the application’s success.

If your patent is geared towards networks, consider the effect on your claims. Avoid divided infringement issues by ensuring that your claims are separated out to address areas of the system with different potential infringers, avoiding the problems that may be caused by implicating many infringers in one claim.

Also be aware of international patenting requirements. While you may be eager to file and be granted a patent, careful crafting of an application that would be accepted in both the United States and internationally may save you headaches down the road. Keep in mind that the European Patent Office has stricter support requirements than the United States, so a patent submitted and accepted in the United States may not be accepted elsewhere. Awareness of these requirements can make your filing more efficient and improve your odds at successfully attaining international protection.

The bottom line is that a competent patent attorney will be able to guide you through the hurdles and pitfalls of the patent application process. They will be able to tell you what aspects of your invention may be patentable, what aspects may not be patentable, and what your approach should be to increase your chances of successfully acquiring a patent.

Consult With an Experienced Software Patent Attorney

An IP attorney with extensive experience in cryptocurrency and blockchain technologies can assist you in protecting your innovation by identifying patentable subject matter, creating technical drawings, and drafting your patent application. 

At The Rapacke Law Group, we offer patent services to tech startups on a transparent, flat-fee basis, without the hassle of hourly billing or charges for calls or emails. 

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