Hugendubel on Blockchain Technology and Intellectual Property – A Basic Introduction

Julia Hugendubel (CMS) has posted “Blockchain Technology and Intellectual Property – A Basic Introduction” on SSRN. Here is the abstract:

Blockchain technology is predicted to have a major impact on the intellectual property (IP) ecosystem. More and more projects are being launched, both in the public and private sector. The World Intellectual Property Organization (WIPO) has built up a Blockchain Task Force and is preparing a new WIPO Standard to encompass all types of IP rights and the entire IP lifecycle; the German Government published a strategy paper on blockchain with a chapter on applications in the creative arts sector; a European Blockchain Service Infrastructure is being built up; the European Union Intellectual Property Office (EUIPO) established an Anti-Counterfeiting Forum as part of the broader EU strategy to create a blockchain ecosystem and now has its own blockchain for trademarks and designs in the EU. Furthermore, LVMH, with brands such as Louis Vuitton, developed its own blockchain to track luxury goods; Kodak started a blockchain initiative for image rights management; music and film streaming are offered on blockchain platforms; sports clubs discuss micro-licensing of their IP rights; digital fashion is created for distribution using blockchain.

Moreover, news abounds of blockchain-based non-fungible tokens (NFTs) representing basically everything imaginable – both digital and physical – in the IP ecosystem, to track the origin of art and all manner of products. However, interestingly enough, as early as 2012 a whitepaper was published linking the idea of smart property by Nick Szabo and digital collectibles to blockchain and at the same time introducing the first kind of NFTs, coloured coins.

The developments in the blockchain space, including in the area of IP, are progressing at a rapid pace, both from a technological and a value perspective. For example, the value of crypto art traded on blockchain from 2018 to 2020 was estimated at about 15 million US Dollar (with about 8.2 million US Dollar worth of crypto artwork in December 2020 ). In March 2021, the most expensive piece of artwork linked to an NFT in history was sold by Mike Winkelmann (Beeple) for 42,329.453 Ether, at the time worth 69,346,250 million US Dollar. The NFT marketplace OpenSea has set and then beat daily records several times, reaching a new peak of 322,982,301 million US Dollar of trading volume on 29 August 2021.

Nevertheless, many applications for IP matters are still in their infancy. The reason for this might lay, aside from the rather complex technological details, in uncertainties about their regulation and legal standing in court, such as the recognition of a legal binding smart contract.

Therefore, the article introduces the very basic features of blockchain technology and blockchain-based IP applications. The article then dives into concrete IP use cases that are currently offered and developed on the market. It also gives a general overview of opportunities and existing challenges for the IP ecosystem. The legal perspective is mainly a German and European one.