Smart IP: Blockchain Technology in China

What is blockchain?

Blockchain is open ledger of information where people can record and track transactions which can be exchanged and confirmed on a peer-to-peer network. It allows multiple users to verify the transaction & control how record of information is amended and updated. Administrator keeps control of database and further provides access and permission for modification of information. Each and every transaction is transmitted to all the participants in the network and must be verified by each participant that hosts the blockchain, this eradicates the need of a central authority and middlemen. Once data is recorded in a blockchain-based ledger, it cannot be altered.

Potentials for applications and their usage

Blockchain and related ledger technology offers potentials for IP protection and registration as evidence, at the stage of registry or in the court. It is a cost-effective way to pace up such processes. It can also be used for confirmation and derivation purposes in detection and/or retrieval of counterfeit, stolen and parallel-imported goods.

Further, Chinese government is introducing measures to protect blockchain IP they are also trying to bring it under China’s cyber security law.

As per Yu Jianing (director of the Institute of Industrial Economics at the Ministry of Industry and Information Technology) over the next three years, the cutting-edge technology is expected to be widely integrated into sectors such as product traceability, copyright protection, bill verification, precision marketing, energy and healthcare

If IP offices use this technology to create “smart IP registries” it will not only be convenient to track and maintain the records of transactions but will also help in collating, storing and providing evidences.

For example: It can help in tracking entire life cycle of a trademark

  • It can track, when a trademark was first applied for
  • Registered,
  • First used in trade;
  • When design, trademark or patent was licensed or assigned etc.

It could smoothen IP right audits procedure and also simplify the due diligence exercises which are necessary for IP transactions, for example in mergers and acquisitions. Confidentiality concerns of IP owners could be addressed by an opt-in scheme.

On recognizing the importance of blockchain as a future technology, leading companies of China like Baidu, Alibaba and JD.com have already begun using the technology to improve their business operations.

  • Alibaba and Ant Financial are using blockchain as a public ledger to trace counterfeit wines and liquor,
  • JD.com is using it in supply chain to trace imported food products
  • and Baidu launched Totem, which uses the technology to timestamp digital images for rights management.

Alibaba is amongst world’s leading enterprises which has maximum number of blockchain patents;

They have also created a blockchain-based logistics system which can track information such as details of production, transport methods, customs, inspection, and third-party verification.

As the blockchain technology becomes conventional, industry participants and developers will increasingly collaborate to develop standards and interoperability protocols. Various governmental agencies and IP registries such as the European Union Intellectual Property Office (EUIPO) are actively looking into the capabilities of blockchain; the EU Commission has plans for a blockchain observatory and the US Congress recently created a Congressional Blockchain Caucus. Global standards for self-executing contracts are being discussed by various organizations.

The central government of China has also included blockchain development on its agenda. Blockchain appeared in China’s 13th Five-Year Plan for the development of information technology, which notes that artificial intelligence and blockchain will build a strategic technological advantage. Realizing its importance, the state encourages companies to develop innovative research in these areas. In a recent meeting with members of the Chinese Academy of Sciences and the Chinese Academy of Engineering, Chinese President Xi Jinping listed blockchain as a breakthrough technology in his speech addressing the need for China to become the global center of science and innovation.

Author: Ms. Deepika Sharma, Sr. Patent Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at  deepika@iiprd.com.

References:

[1] http://www.wipo.int/wipo_magazine/en/2018/01/article_0005.html

[2] https://www.bna.com/china-aims-spur-n73014481842/

[3]https://www.brookings.edu/blog/techtank/2018/07/19/is-china-leading-the-blockchain-innovation-race/

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