Brunei’s Approach to Crypto-IP Rights: Coining Patents for Blockchain Innovations

There are few areas in the rapidly evolving domains of digital innovation and intellectual property (IP) developing faster than blockchain technology and its applications, which include smart contracts, cryptocurrencies, and others. Countries deemed smaller, such as Brunei Darussalam, are quietly but strategically positioning themselves in this space as larger economies such as the United States, China, and members of the EU have jumped ahead of the rest with bespoke IP protections for blockchain innovation and a regulatory framework. Brunei has an established common law legal system and has engaged with the various international IP arrangements. As a result, both creatively and affordably, Brunei’s approach to crypto-IP rights is uniquely balanced between existing IP principles or concepts and flexibility for adaptation to the new reality.

WHAT IS BLOCKCHAIN TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS?

Cryptocurrencies like Bitcoin and Ethereum are built on blockchain technology, a decentralized and immutable ledger which can also apply to smart contracts, supply chain management, digital identity, etc. Blockchain-based proprietary applications are being developed by innovators, and now some questions of legal protection arise.

Intellectual property rights (IPRs) like patents, copyrights and trade secrets can provide a legitimate way to protect and commercialize blockchain-based innovations. However, these IPR laws will differ from jurisdiction to jurisdiction, and no one country’s system will harmonize equally with another’s as they relate to registration and the legal recognition of blockchain based innovations. Each nation must calibrate the potential incentives or disincentives from the IPR protections against the benefits from open source and alternative commercial development models.

EVOLUTION OF BRUNEI INTELLECTUAL PROPERTY

Brunei Darussalam, on the northern shore of Borneo, may not have considerable achievement as a tech hub yet; however, it has made it clear that it intends to develop an IP-conscious economy. With a strong posture toward innovation, education, and technology as the cornerstone of its growth agenda, Brunei envisions an economy that is vibrant and sustainable, advancing a knowledge-based economy, through its Vision 2035 agenda.

The Brunei Intellectual Property Office, under the Ministry of Finance and Economy is the lead agency for the Vision 2035 agenda. In addition to managing registration, enforcement, and promotion of IP rights in Brunei will be an active participant in integrating blockchain-related policy consultations in Brunei’s intellectual property legislation.

BLOCKCHAIN TECHNOLOGY: A LEGAL INDUSTRY IN BRUNEI

The primary piece of legislation that governs inventions, including those that are governed by blockchain technology, is the Patents Order, 2011. The law is technology neutral, which means it applies equally to inventions in all industries. This also includes an emerging technology such as distributed ledgers and smart contracts, even if a lot does not specifically mention blockchain.

Many blockchain related inventions can meet these limitations including better consensus mechanisms, more scalable transaction models and cryptographic payment gateways which means that many inventions are potentially patentable in Brunei.

Most importantly, Brunei is a Contracting Party of the Patent Cooperation Treaty (PCT), which allows inventors to file one application internationally and potentially get protection in over 150 countries, Brunei being one of them. Through this process, either international applicants1 may apply for Bruneian patent protection for blockchain technologies directly, or Bruneians may apply for patent protection on blockchain technologies internationally.

IMPORTANCE OF TRADEMARKS AND BLOCKCHAIN BRAND VALUE

Trademarks remain critical foundations of authenticity, trust, and brand value in the overall blockchain ecosystem, in which many of its core values are often characterized by anonymity and decentralization. There is an abundance of blockchain companies engaging in various services, including tokenized applications, decentralized finance platforms, and crypto wallets. Thus, it is increasingly important to distinguish genuine providers from fraudulent or imitation activities. In such circumstances, trademark protection is critically important.

In Brunei, the Trademarks Act, 2017 provides the ability to register distinctive names, logos, slogans, and even domain names associated with blockchain-based products and services and provides a modern framework for strong legal protection. This legislation consolidates international best practices and allows Bruneian parties to register their marks through the Madrid Protocol, providing protection in more than 100 jurisdictions with a single application.

As the blockchain innovators explain, a trademark will protect more than just company names, logos, or product names: blockchain company trademarks will protect cryptocurrency names, tokens symbols, and platform logos from abuse or infringement. Further, a registered trademark protects intellectual property in a world of digital duplicity and fraud, but it also builds trust with its users, attracts investors, and engenders legitimacy, especially in multi-jurisdictional commerce. Strong trademark protections for blockchain enterprises will be essential for building a safe and competitive tech economy as Brunei works towards digitalization under its Vision 2035.

CRYPTO ASSETS AND ITS CHALLENGES

Brunei has successfully established a robust IP framework, but confusion remains regarding the acceptance and regulation of crypto assets (digital securities, utility tokens, cryptocurrencies). To date, Brunei has not yet enacted any legislation which provides a definitive framework and recognition of cryptocurrencies. Furthermore, Brunei’s financial regulatory framework does not recognize cryptocurrencies as legal tender.

Brunei’s approach to the regulation of crypto assets is in part a function of the perceived need to protect consumers, adhere to anti-money laundering requirements, and protect its financial stability. Although there is, at present, no clear framework addressing the registration, taxation, or legal treatment of crypto-assets, the Autoriti Monetari Brunei Darussalam (AMBD), Brunei’s central bank and financial regulator, has issued public notices cautioning the public against investing in unregulated crypto-assets. Due to this regulatory vacuum, Blockchain innovators who are planning to tokenize a real-world asset, establish another initial coin offering, or create a crypto exchange in Brunei are faced with some legal uncertainty.

Whether this conservative approach is in the best interests of Brunei may still be disputed, it does close off opportunities for fintech start-ups and foreign investors to access Brunei’s digital economy. Additionally, although a conservative approach lends greater assurance to the financial system against systemic risk, undeniably, a lack of dedicated regulation on crypto-assets as set against an otherwise commercially innovative intellectual property (IP) environment, does appear to obstacle the commercialization of blockchain technologies.

Indeed, unless Brunei eventually creates a comprehensive policy suite for crypto assets that are proportionate and facilitate innovation, and which encourages responsible development without abandoning regulatory diligence, Brunei’s chance of being a key player in the territory of digital innovation will unlikely vanish.

ROLE OF COPYRIGHT AND SMART CONTRACTS IN SAFEGUARDING THE BLOCKCHAIN TECHNOLOGY

In the blockchain technology ecosystem, software code is one of the more valuable assets, especially open-source software when it relates to smart contracts (self-executing contracts that enforce the terms of an agreement directly on the blockchain). These contracts power NFT minting, token governance, decentralized finance transactions, and other applications. The primary law that protects digital creation, in Brunei, is the Copyright Law, which protects original, literary and artistic works including software and computer code(s).

The source code that is written that forms the smart contract is considered copyright-protectible as a literary work, while the abstract concept and functionalities of the smart contract may not receive any protection through copyright law. While voluntary registration may serve as evidence in enforcement proceedings, this protection is automatically granted at the time of creation and formal registration is not required.

Bruneian blockchain developers benefit from this protection automatically at the moment of creation and are legally entitled to ensure their own proprietary algorithms, scripts, and graphical user interfaces are not skipped or adapting without their permission. Furthermore, copyright in Brunei may also cover digital content used in the development of blockchain applications, for instance images, music, or text.

Copyright offers authors a way to assert ownership in decentralized environments. It is important to note that while copyright law protects the structure and form of code, it does not provide rights in relation to the technical functionality or processes which can be patentable. Copyright is a key component of a broader IP strategy that ‘fills in the gaps’ in your patent, trademark, and trade secret regime – Brunei’s copyright regime is a strategic way to give extra protection to developers, artists and programmers, as blockchain innovation is becoming increasingly complex.

CONCLUSION

Although Brunei Darussalam is not a significant player in the global blockchain revolution as of now, the country is uniquely positioned to cultivate future innovation in this transformative space with its planned and deliberate practices around intellectual property rights. Even though Brunei does not have laws specific to cryptocurrencies, Brunei has allowed its laws to be flexible enough to accommodate developing technology such as blockchain because it has maintained a technology-neutral intellectual property framework. Its commitment to ensuring a legally secure space to promote innovation is further demonstrated by Brunei signing onto international treaties such as the Patent Cooperation Treaty (PCT) and the Madrid Protocol, which allow smooth rights acquisition for registered IP at approximately 109 other member parties. Brunei offers strong protection via its intellectual property structures for blockchain technologies, platforms, and content, notwithstanding certain challenges- especially the lack of official recognition and regulations for crypto-assets.

This makes Brunei a choice for blockchain developers and start-ups who want reliable IP protection within Southeast Asia. Brunei’s regulatory caution, which also allows for new projects and such regulatory caution might be a smart, long-term approach as the landscape for digital assets and decentralized technologies continues to evolve, allowing Brunei to benefit from the innovation wave, while remaining diligent as a regulator. In doing so, Brunei is positioning itself as a quiet, but meaningful player in the crypto-IP space, which other small, creative countries would do well to observe and be inspired by.

Author: Tanya Saxena, in case of any queries please contact/write back to us via email to [email protected] or at IIPRD. 

References

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