Blockchain prosecution easier at USPTO but more reliable at EPO
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Blockchain prosecution easier at USPTO but more reliable at EPO

Stakeholders in the distributed ledger market say Section 101 creates eligibility uncertainty for filing at the USPTO, but the EPO sets a higher standard for granting software-related patents

Blockchain patent prosecution is often easier at the USPTO but can be more reliable at the EPO, according to in-house counsel at market stakeholders.

In the debate over which patent office is better for blockchain patents and software-related registrations broadly, five sources from large tech companies say that filing in each office has its advantages and disadvantages, but argue that one is always better than the other depending on what a business is looking to achieve.

They say that while the USPTO has traditionally been a friendlier place for software-patents, a post-Alice Section 101 has created an atmosphere of uncertainty for blockchain patent eligibility. The lack of consistency in patent rulings that this development has created has led many businesses to determine that the EPO offers a better service; even though its eligibility standards are stricter.

The EPO can offer a level of consistency in prosecution that the USPTO often cannot and has been more active in clarifying the rules for software patentability. The office published guidelines for artificial intelligence prosecution at the end of last year.

“Everything has changed so much in US over the past five years with regard to patenting software related inventions,” says the senior counsel at a US insurance company. “In the US, the handling of patent applications is less certain and less sure. Even today, if you filed an application and it was classified in one technology centre of the USPTO versus another you could get a different result.”

Section 101 can also makes it difficult for patent attorneys to challenge the rejection of a patent application. The likelihood of getting a patent approved can come down to getting the right technology centre.

“If an invention is identified as ‘abstract’ under Section 101, it can be very difficult to amend or argue out of it, particularly in tech centre 3600 electronic commerce,” says the senior counsel.

“For software-related inventions, if your application is assigned to tech centre 3600 instead of 2100, which is for computer architecture and software, you face drastically lower odds of getting approval.”

Another difficulty for blockchain filing has emerged in the US because of the eligibility gap between the patent offices and federal circuit.

The director of IP at a US tech company says: “Right now there is a gap between what the patent office says is patentable and what the federal circuit says is valid, with the federal circuit setting a higher standard for eligibility."

He explains that the USPTO released guidance on patent eligibility at the beginning of this year that seems to have produced a more consistent examination process for inventions related to abstract ideas, laws of nature or natural phenomena.

In subsequent judgments handed down by the federal circuit, however, the courts followed precedent and emphasised that they did not have to adhere to the USPTO’s guidance.  “As such, having an eye for what the federal circuit is looking for and making sure it is up to their standard is something every applicant must consider,” says the director.

European advantage?

Despite the US eligibility challenges with Section 101, some sources find that the US is the best place for blockchain applications because of the wider scope of what can be patented there.

“What’s funny is that the US is still the best jurisdiction for blockchain in the world,” says the chief IP counsel at a US tech company “It’s much harder to get those patents in Europe or China.”

According to him, the EPO defines what is patentable as a way of operating a machine or methods of performing an industrial task.

“Most software falls outside of that narrow description. In the US, software doesn’t have to be attached to a machine. Despite the challenges, the US is still one of the most accessible spaces for pure blockchain.”

Across the pond at the EPO, sources explain that the higher threshold makes blockchain patents more difficult to get; but at least businesses filing applications know what to expect.

A senior counsel at the US insurance company says: “The EPO is advantageous because the law related to computer software and software-related inventions has not changed.” “The law is more mature and you will get a consistent handling of applications. In the US the case law and related regulations could change during the pendency of the application. At least with the EPO nothing has changed so the outcome in a given case is more predictable.”

Key to success

While sources say filing blockchain applications with the USPTO can be challenging, a patent application should be successful so long as the claims establish an inventive step or solution to a problem.

According to the chief patent counsel at a US software company, the key to blockchain patenting success is like any other invention; it needs to be innovative.

“Is patenting blockchain just like patenting a chair? No.

“A chair is a lot less sophisticated and with blockchain you have to deal with those things that are unique with respect to computer-implemented technology. You need to find a way to be innovative with your technology.”

The tech US IP director says that recent rulings in the US suggest practical applications to improving software are becoming more successful.

“If you are just going to use it as a black box instead of changing the way something works, you won’t get a patent because it is too obvious,” he says. “Blockchain is just an algorithm but if you are using it to improve the functionality of a computer, it is inventive. Using a formulaic approach to file your blockchain patent won’t work.”

One problem with blockchain applications is they describe solutions to problems that already exist. One tip is to keep the scope of the patent narrowed to a particular function.

The tech chief IP counsel says: “There is a tendency to try to grab too much claim scope with your blockchain application, and end up being told that you’re just describing something folks already do, just without blockchain.”

He suggests giving the application a narrower scope by limiting the claim to those areas where only blockchain can provides the critical feature to the invention.

All dressed up with nowhere to go.While applications for blockchain patents have been steadily increasing, widespread commercialisation of this technology outside of cryptocurrencies such as Bitcoin has yet to be seen.

Some suggest that blockchain is more hype than substance, calling it a solution in search of a problem.

“If everyone saw its clear superiority the technology would have taken over,” says the insurance IP counsel. “But where’s the party? Everyone is waiting for it, and when it does come, they’ll have the patents to get in on it.

“Oddly, the finance industry is openly skeptical about the technology. They say they don’t know what the big deal is but they’re still aggressively pursuing patents.”

The rush to file blockchain patents can be seen as a preparation for future commercialisation. If the blockchain party ever does arrive, different industries want to be ready to get in on the action. 

The senior IP counsel at a US insurance company tells Patent Strategy: “I think with these major advances nobody wants to be left behind if it is transformational. They could end up with a bunch of maintenance fees, but only time will tell.”

With innovation evolving at unpredictable speeds it could be that blockchain’s time in the sun has yet to come. Scott Frank, president and CEO of intellectual property at AT&T, says: “Blockchain today is where cloud computing was 10 years ago.

“The technology was ready before businesses were ready to take advantage of the value proposition. We expect networking capabilities will accelerate growth in blockchain use cases.”

Blockchain is already finding uses outside of cryptocurrencies. The IBM Food Trust uses blockchain technology to track food along every step of the supply journey. Future suggestions for blockchain technology include securing elections by providing unhackable voting machines and making property transactions easier with the trustworthy ledgers.

Wherever the technology evolves, industry giants and start-ups are getting their IP war chests ready – and to do that, they need to get to grips with what the EPO and USPTO expect from applications. 

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