Overview
With the re-election of Donald Trump, the U.S. is expected to enter a notably blockchain-friendly environment. A Trump administration could see a more favourable regulatory environment thereby easing the restrictions on blockchain startups, and encouraging innovation and investment in the technology. Here we take a brief look at what this new environment could mean for blockchain in the coming years, with an emphasis on IP rights.
Impact on Fintech
In the fintech sector, blockchain enables fast and secure transactions, reduces the need for intermediaries, and lowers transaction costs. Blockchain also facilitates decentralized finance (DeFi) platforms, where a user can access financial services outside the traditional banks and institutions. With a potentially newly supportive environment and policies, blockchain-based fintech is likely to see accelerated growth, particularly for payment processing, cross-border transactions, and digital asset management.
IP rights for Fintech inventions often involve computer programs, methods of doing business, and increasingly the application of AI, all of which present initial challenges for patent protection. With more investment in this area, we will likely see an upturn in IP right applications and the boundaries of the case law being tested as the legal framework runs to catch up with the technological developments.
Tokenization
DeFi platforms and applications can also create new ways to value and monetize intellectual property rights. For example, tokenization allows creators to fractionalise their IP rights and make them tradeable. The new era could free the way for IP right owners to maximise the value and exploitation of their work. However, in the past this has caused complexities for IP valuations and regulation, and as the issue potentially gets tested more in the future we could hope for further clarity.
NFTs
This new supportive environment could once again see the rise of digital assets such as NFTs (non-fungible tokens). A resurgence in NFTs would require the additional securing of copyright, trademarks, and licensing agreements. Furthermore, the minting of the NFTs could involve new blockchain applications and digital processes that themselves are eligible for patenting, trade secrets, copyrights, and an expanding list of protection IP rights.
DeSci
There has been a recent renaissance in the decentralized science (DeSci) movement which aims to build a decentralized and distributed blockchain based system for scientific research and data. The DeSci ecosystem facilitiates a time stamped and immutable record of IP rights, and incentivizes scientists to openly share their research and receive acknowledgment for their work. DeSci also facilities more diverse funding sources, such as DAOs and crowdfunding, avoiding the lengthy and slow process of written applications to a funding agency.
One creative example of the use of Web3 in DeSci is the IP-NFT which facilitates biopharma research, and the associated IP, to be funded as an NFT. This project alone has surge in funding since the election and could signal a trend to watch in the coming years.
Blockchain for securing and enforcing Intellectual Property (IP) Rights
The transparency and immutability of a blockchain makes it very well suited for the management of IP rights. Blockchain IP registries can also streamline patent filings, registrations, and renewals. Blockchain further enables a reliable, and tamper-resistant records system for the first creation of IP, a trademarks first use, a record of a chain of ownership, execution of transactions, and licensing. The additional use of smart contracts for self-executing agreements on the blockchain could enable IP right owners to automate licence agreements, transfer ownerships, and ensure that royalties are distributed accurately and quickly.
The EUIPO continues to expand its blockchain based IP register, and Malta is the latest adopter of a blockchain platform to store and deliver trademark and design data as part of its National IP Register. China further looks to align blockchain and judicial records within its court systems with a blockchain-based copyright registration system for secure creative works in digital form.
Therefore, further investment and development in the technology could see an increase in the speed of adoption of blockchains for IP registries. A Trump administration could also use its influence to foster international support for blockchain-enabled IP systems. Global cooperation could create a cohesive international standard that reduces IP theft and enhances enforceability worldwide.
Conclusion
The re-election of Donald Trump appears likely to introduce a new era of blockchain-favourable policies, with potentially far-reaching implications for intellectual property. Through government support for blockchain registries, a more straightforward regulatory environment for smart contracts and digital assets, and potential for further international partnerships, the blockchain sector stands strong to benefit – and, with it, the scope and future of IP rights.
Please contact one of our attorneys if you would like to discuss any of these points, and how they could apply to your business, in greater detail.
