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BarJournal INTELLECTUAL PROPERTY

JULY/AUGUST 2015
FEATURE The Burgeoning Patent Revolution in

Blockchain Technology

BY DOMINIC A. FRISINA

nnovators tend to speak in terms of What is blockchain? are patent-eligible unless they fall into
disruptive technologies that change the In a nutshell, blockchain denotes a a judicial exception. This is where the
way business is done. Truly disruptive distributed ledger system where all nodes of two-step Mayo test begins. Step one is to
technologies are rare. Rarer still are a peer-to-peer network have a copy of the determine whether the claims are directed
I technologies that permeate ways of ledger and participate in validating every to a judicial exception to patent eligibility,
life and transform societies. The inventions transaction by consensus. The ledger is namely an abstract idea, law of nature, or
of the electric grid, the transistor, and the immutable in the sense that transactions can natural phenomenon. If step one indicates
Internet have transformed society in ways be appended but not edited. Transactions that the claims are drawn to a judicial
that even the inventors themselves could are bundled in groups called blocks, and the exception then we move on to the second
not have foreseen. Blockchain technology blocks themselves are chained together with step. Step two is a search for an inventive
is poised to be a worthy addition to this character strings called hashes. A hash is the concept that transforms the nature of the
list because it has the potential to replace output of a hashing algorithm that converts claims into a patent-eligible application of
centralized institutions at the core of civil the transactions of a block into a fingerprint- the otherwise ineligible judicial exception.
society, essentially, by allowing strangers like fixed-length string, e.g. 256 bits in the According to step two of the analysis, claims
to trust each other. Where traditional case of the SHA-256 hashing algorithm. The that contain only elements that are well-
institutions like banks create trust between blocks begin and end with a hash, where understood, routine, or conventional lack
strangers by serving as an intermediary, the end-hash of the preceding block is the an inventive concept. To summarize, if a
blockchain creates trust algorithmically, beginning-hash of the succeeding block. In judicial exception is found in step one, and
obviating the need for an intermediary. this way, each block has a unique place in no inventive concept is found in step two
The blockchain revolution is not limited the chain, and changing any one transaction the claim is invalid or not allowable.
to cryptocurrencies and FinTech. This would break the chain. As a result, every The Mayo test for patent-eligible subject
technology has spawned innovative startups member of the network can trust that their matter is notoriously difficult to apply and
and nonpracticing entities with applications copy of the ledger is accurate and honest has produced inconsistent results. Faced
as diverse as regulatory compliance, voting, so long as it remains an unbroken chain of with having to implement the Supreme
public health, and smart contracts. Let transaction blocks. The value of blockchain Court’s new test, starting in 2014 the USPTO
us explore how patent law is affecting the consists in transactions being made peer- issued a series of guidance memoranda to
blockchain revolution, and how companies to-peer, among members of the network, the examining corps that were intended to
are effectively adapting patent prosecution without the need for a trusted intermediary. provide clear instructions. While the objective

and business strategies to stake their claim was laudable, the guidance effectively enabled
in the blockchain goldrush. Blockchain Patent Law. examiners to make conclusory findings

Like other forms of software and business of patent ineligibility literally based on no
PRIVATE MEDIATOR methods, the Alice and Mayo decisions more than their own gut feeling. With this
pose significant challenges to innovators in as their guidance, examiners reliably found a
blockchain technology. Alice Corp. Pty. Ltd. disqualifying abstract idea in Mayo Step One,

v. CLS Bank Intern., 134 S.Ct. 2347 (2014); and rarely found a saving inventive concept
Mayo Collaborative Services v. Prometheus in Mayo Step Two. Argument was usually

Laboratories, Inc., 132 S.Ct. 1289 (2012). In futile. As far as the USPTO was concerned the
Mayo the Supreme Court set forth a two- examiner had fulfilled his duty; no evidence

step test for patent eligible subject matter. was necessary.
THOMAS REPICKY, ESQ. But before delving into the test it is worth Enter Berkheimer v. HP Inc. decided in
"Tort, Employment, Commercial and

Malpractice Claims" mentioning that “patent-eligible” subject February of this year. Berkheimer v. HP Inc.,

Over 1400 Mediations matter refers to the items recited in Section 881 F.3d 1360 (Fed. Cir. 2018). A key issue in

“Effective & Experienced” 101 of the Patent Act, namely a “process, this case was whether Berkheimer’s claims
machine, manufacture, or composition could be found patent-ineligible abstract
Mediated Claims $10,000 to $12 Million
www.ClevelandMediator.com of matter.” 35 U.S.C. §101. Generally, ideas when HP presented no evidence that

Tel: 440-247-3898
blockchain inventions are processes, which they recited only well-understood, routine,
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