Patenting blockchain technology in Asia: trends and patentability

Wensen An

31 Dec 2019

Duong Vu, Patent Specialist in Vietnam, Dr. Wensen An, Director and Patent Attorney in China, and Arifia Fajra, Head of Patent Group in Indonesia, of Rouse, examine the approaches taken towards blockchain in China, Vietnam and Indonesia.

 

Blockchain technology has become a global “hot” trend in recent years and is believed by leading researchers to bring a commercial benefit of 1 trillion USD for SMEs, especially those in emerging markets in Asia. This technology has large utilizations in modern life, from financial technology, manufacturing, public services, and supply chains, to education and energy.

In this article, we investigate the patent landscape of blockchain-related inventions in Asia and the key players in the region in its development. Blockchain can be explained simply as a distributed, shared, encrypted database that serves as an irreversible and incorruptible public repository of information1. Blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block’s timestamp, and transaction data. Blockchain is resistant to modification of the data, and it carries no transactional cost2. Blockchain creates a trusted, secure ledger through a mix of peer-to-peer technology, cryptographic functions, distributed storage, and decentralized consensus mechanisms3.

 Most patent filings in blockchain technology have taken place in China (40%) and the United States (20%). The leading global applicants include IBM, Alibaba and Coinplug. The top EPO applicants include Visa, Mastercard, Siemens and Nokia.

 

Blockchain in Asia

Relatively speaking, blockchain technology in Asia is still in its early stages, but has a strong start-up community showing great potential. The majority of the domestic market is only aware of a proportion of blockchain’s potential utilizations, such as cryptocurrencies (eg. bitcoin). However, blockchain is widely regarded as the technology transforming daily processes across the world, and is one of the motivations of the 4.0 industrial revolution. The capacity of this technology is potentially huge in Asia in financial technology (Fintech), manufacturing, public services, supply chains, education and energy.

China, the United States, Japan, South Korea and Finland are the leading patent applicants in the blockchain technology. In Asia, however, the number of blockchain inventions filed has been increasing rapidly in the last decade, particularly in China, Vietnam and Indonesia.

 

China

The technology of blockchain is attracting more and more attention from the Chinese central government, and blockchain industrial policy in China has indeed taken many positive steps forward. On 24 October 2019, the Political Bureau of the CPC Central Committee conducted the 18th collective study on the current status and trends in the development of blockchain technology. Xi Jinping, the General Secretary of the CPC Central Committee, stressed that the integrated application of blockchain technology plays an important role in new technological innovation and industrial reform. The suggestion was that blockchain is an important breakthrough for the independent innovation of core technologies and this has set off a research boom in blockchain in China.

In terms of its application, blockchain technology has great potential in many respects, such as technology depository, copyright protection, commodity traceability and supply chain, finance, credit collection, charity, advertising, insurance, IoT, and digital asset transaction.

In the last three years, Chinese companies have been actively accelerating the patent layout in the blockchain field, ranking in the top two in the world in terms of patent applications. In particular, it shows by the statistical ranking on the number of global blockchain inventions published from 1 January to 25 October 2019 that, compared to 2018, the total number of invention applications of enterprises has increased significantly.

The top 100 companies are mainly from 10 countries and regions, with China accounting for 63%, the United States 19% and Japan 7%.

 

Vietnam

Vietnam has also been at the forefront of development in patenting blockchain inventions from both foreign and domestic patent applicants. The blockchain technology industry in Vietnam has the capability to become a major Asian hub in the future. This has been encouraged by domestic and foreign investments, as well as the government’s supporting programs and research into a new regulatory framework to create a dynamic blockchain ecosystem.

Vietnam does not currently have a system that protects blockchain-related inventions adequately. The IP Law provides that mathematical methods, methods for doing business, methods for playing games, computer programs, and presentations of information are unpatentable subject-matters as inventions or utility solutions4.

Although computer programs are not patentable under current IP Law, if the claimed subject-matter has a “technical character” and is a technical solution for resolving a technical problem by technical means to create a technical effect, such a subject matter is patentable.

Accordingly, a computer program, when it is run on a computer that can attain a technical effect beyond the “normal” physical interactions between the program (software) and the computer (hardware), can be patentable5.

As such, if a claimed subject-matter comprises of unpatentable matters, for example a computer program, but it additionally describes an apparatus or a technical process to perform methods with additional technical features, it may be patentable when considered as a whole.

In summary, blockchain-related inventions may be patentable if the claimed subject-matter has a “technical character” and is a technical solution for resolving a technical problem by technical means to create a technical effect. Moving forward, Vietnam will need a transparent legal infrastructure in place to facilitate the industry’s growth for future applicants and emerging technologies in the country.

 

Indonesia

In the last two years there have been significant developments in blockchain technology in Indonesia. The current Indonesian president Joko Widodo has set a positive tone for the introduction of blockchain technology to help with the country’s business growth, and to prompt overseas investment.

As a result, there has been a huge increase in patent filings, demonstrated in the Online Database maintained by the Indonesian Patent office6 which shows that the most prominent increase over the past two years has come from China. Nichain Holdings Limited, one of the top 10 international patent owners, are just one of many to enter into the Indonesian Market7. Another example is ALIBABA, a Chinese multinational conglomerate holding company specializing in e-commerce, retail, internet and technology, which filed about 100 patent applications per year in Indonesia over the last two years, many of which were related to blockchain technology.

The Blockchain Innovation Centre, Blocktech Indonesia and the Indonesian Blockchain Network are amongst the most significant private blockchain organizations in Indonesia8. Funding and research into blockchain technology is a national priority, with one of the biggest local universities, Badung Technology Institute, contributing to blockchain innovation and filing applications for blockchain technology. With such a supportive environment being developed by both new and well-established non-governmental entities, it’s no wonder that so many promising startup companies have emerged from Indonesia, such as Indoda and Triv.

 

Conclusion

While blockchain developments in Asia are still at a relatively early stage, it has quickly become a hugely disruptive technology on the continent due to its vast range of applications and utilizations. As a result, Vietnam, China and Indonesia have all seen a surge in blockchain-related patent filings, and as government support and domestic and foreign investment continue to increase, so too will the number of patent filings.

 

1 Monique Clarke, Blockchain – a new frontier or a new type of internet. Available at https://www.blockemledger.world/blog/blockchain-andsmart-contracts

2 Ameer Rosic, What is Blockchain Technology? A Step-by-Step Guide for Beginners. Available at https://blockgeeks.com/guides/what-is-blockchaintechnology/

3 Wright, Aaron and De Filippi, Primavera, Decentralized Blockchain Technology and the Rise of Lex Cryptographia (10 March 2015). Available at SSRN: https://ssrn.com/abstract=2580664

4 Articles 59, the IP Law

5 Article 5.8.2.5 of the Guidelines

6 Online database maintained by Indonesian Patent office https://pdkiindonesia. dgip.go.id/

7 Who are the patent leaders in blockchain?, available at https://www.iammedia.com/who-are-patentleaders-blockchain

8 As Indonesia Emerges As An ASEAN Force, Blockchain Is the X Factor, available at https://www.entrepreneur. com/article/342828

 

* This article was initially published on The Asian Patent Lawyers Annual.