The Application and Challenges of Blockchain in Intellectual Property Driven Businesses in China

• Author: Frederick Mostert and Wang Jue
• Pages: 14-42

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14 TSINGHUA CHINA LAW REVIEW [Vol. 11:13

THE APPLICATION AND CHALLENGES OF BLOCKCHAIN

IN INTELLECTUAL PROPERTY DRIVEN BUSINESSES

IN CHINA

Frederick Mostert

WANG Jue

Abstract

“Blockchain” is the buzzword of the year, if not the d ecade. Aside from the role Blockchain

plays in cryptocurrency transactions, Blockchain technology has the potential for significant

real-world applications. Disruptive Blockchain technology can be applied to intellectual

property-driven businesses – fighting piracy, securing supply-chains, and tracking and tracing

provenance for example. However, the use of Blockchain in intellectual property d riven

businesses also raises some questions. For example, how can users be sure the information on

Blockchain is completely reliable? How will providers and users c ope with possible cross-

jurisdictional legal issues? Can the integrity of Blockchain based data be guaranteed and how

will providers and users handle data protection? Equally, regulatory issues will continue to be

of major concern to the implementation of Blockchain. Discussions over these legal issues

will, for now, remain to some extent embryonic. However, China i s now at the forefront of

releasing Blockchain Potential in Intellectual Property, and some initiatives already

undertaken in China and els ewhere could potentially set new standards, norms, and legal

principles.

I. INTRODUCTION

Blockchain has received a fair amount of public attention as the

underlying technology for cryptocurrencies such as Bitcoin.

However, even more intriguing from a legal perspective are the

myriad ways Blockchain technology can be applied to the real world.

This is particularly the case for intellectual property-driven

businesses and applications. Blockchain technology is setting new

technical standards and concomitant legal norms in respect of

intellectual property-driven businesses. This development requires

some legal analysis.

In simple terms, Blockchain transactions and data are grouped

into blocks, which are linked into chains in the digital space. Digital

ledgers, as it were, are created and distributed throughout the Internet

on a global basis (hence the term “distributed ledger technology

(DLT)”. Each one of these blocks contains a “header” which

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includes a unique digital fingerprint (a hash)1. The header neatly

organises and timestamps the data in that block. But the key feature

is that the data in these blocks is “immutable”: it cannot be modified

or deleted.2 It is this security feature which makes Blockchain so

attractive in today’s digital world. For example, online track-and-

trace applications for trademarked products, authentication and

provenance technologies, privacy and individual data protection,

copyright registries, music licensing platforms and smart IP contracts

are all possible outflows from Blockchain development.

The following six fundamental functions of Blockchain can be

used for intellectual property purposes in the real world:

1) The ability to track-and-trace the origin, provenance and

data of authentic products

2) The authentication, proof and registration of copyright

3) The ability to track-and-trace licence royalties for digitally-

stored products such as music and films

4) Evidentiary proof of fake copies of artistic works such as

photos

5) The protection of private data and trade secrets

6) The automatic execution of “smart” intellectual property-

based contracts.

The implications are clear: disruptive Blockchain technology can

be applied to intellectual property-driven businesses – fighting

piracy, securing supply-chains, and tracking and tracing provenance

– through intrinsic guarantees on immutability of data, distributed

systemic trust, and automatic and verifiable smart contract execution.

This article will seek to explore existing uses of Blockchain and

the potential for further Blockchain technology applications, as well

as possible challenges facing its adoption in the intellectual property

space.

1 A hash is used in computer science to turn any length of data into a unique numeric fingerprint.

Changing the data changes the fingerprint, so if you are given data and fingerprint, you can verify th at

one matches the other.

2 “A majority of users must agree to the validity of one block by adding other blocks to the specific

“chain” of blocks, and since future blocks are dependent on previous blocks, it is impossible to alter or

delete a block.” See Blockchain Technology Primer, version 1.0, IAB TECH LAB (July 24, 2018), at 6,

available at https://iabtechlab.com/wp-content/uploads/2018/07/Blockchain-Technology-Primer.pdf.