How will Craig Wright's attempts at patenting Bitcoin technology impact your life?

By Asheeta Regidi Virtual currencies show great promise as the currency of the future. Everyone, including governments, are examining how best to exploit cryptocurrencies and are even attempting to create their own version of them. The technology behind it, particularly the blockchain technology, has the potential to revamp the entire financial system as we know it. Bankers are looking to blockchain technologies for a range of purposes: introducing transparency in the financial payment and settlement systems, reducing the costs for international payments, use in governance and audit costs, and even to tackle software piracy. The reports that attempts are being made at patenting these technologies , therefore, has all entities interested and invested in this technology very worried. Who is Craig Wright? Craig Wright is an Australian man who claims to be the creator of Bitcoin and he’s going around attempting to patent the technologies behind Bitcoin. The question of whether he can get a patent on the Bitcoin and other technology is subject to a lot of factors. The patent applications have been made in Britain, and the applicable laws are codified under the Patents Act, 1977. Under this law, for an invention to be patented, it must be new. Considering that ‘Satoshi Nakamoto’ disclosed the technology behind bitcoins as far back as 2008, and made it freely available to the public for use, it’s possible that the technology may simply be considered to be not ‘new’, or part of the ‘prior art’. If this is proved, there will be no question of patenting it. Despite this, a problem may arise if Craig Wright does indeed turn out to be the mysterious ‘Satoshi Nakamoto’. Under UK Patent law, a patent is granted to the ‘inventor’. The inventor need not be the first inventor of the invention. He may be a subsequent or simultaneous inventor, provided that he is the first to disclose the invention. Therefore, if Craig Wright turns out to be the person who disclosed it, it is very well possible that the patent be granted to him. Even if Craig Wright is not proven to be Satoshi Nakamoto, it is possible that the invention will simply be considered to be ‘new’, and therefore patentable. Patents are also granted for new combinations of technology, so if the patent application relates to a combination using the bitcoin technology that is considered to be new, then it may be patentable. Intentions of patent holder will determine the impact of the patent grant The grant of a patent on these technologies will definitely impact all projects that are being designed around it. The extent of this impact, particularly in terms of revenue payment or collection, is entirely subject to the intentions of the patent holder. For example, if the patent holder chooses to continue to provide the technology on the same basis on which it was available, then the impact will be minimized. However, it seems unlikely that a person would invest the huge amounts required to acquire 51 patents, as are said to be applied for by Craig Wright, just to make them available free of cost. In the more likely event, the patent holder may provide the technology under the terms of some license or the other. Once patented, all such projects using this technology will have to obtain a license from the patent holder in order to continue using it. Otherwise they run the risk of patent infringement suits. The payment of royalties will also increase the costs of such projects. Even if the technology is licensed on an open-source basis, it can have a negative impact. For example, open-source software licenses allow users to create derived software, or software that modifies or is based on the original open-source software. These licenses often contain restrictions such as that the derived software can only be used for non-commercial purposes, or must in turn be licensed as open-source software. Either way, this will spell trouble for ongoing projects who are hoping to obtain returns on their investments through royalties or other commercial use of the derived technology. Considering that the cryptocurrency technology being attempted to be patented forms the basic building blocks for future virtual currencies as well, until a new building block is invented, all future inventions will have to be licensed. Bitcoin holders needn’t worry The patenting will not affect holders of bitcoins and other virtual currencies. The patent, if granted, will apply only to the technology behind virtual currencies, not to the currency in itself, which is too abstract to be made subject to intellectual property rights like copyrights and patents. The use of bitcoins themselves will therefore not be affected. Individual bitcoin production will become more expensive However, the patenting will have an impact on the individual production of bitcoins. Until now, the bitcoin software was freely available for anyone to download and use. As a result, anyone could mine their own bitcoins. Bitcoin mining is already an expensive process, particularly in terms of power (electricity) consumption. A further increase in cost in the form of royalties may prove to be a major deterrent to the mining. Once patented, only a person willing to pay the required royalties will be able to mine their bitcoins. Patenting was inevitable, but perhaps necessary The outcome of the Craig Wright patent applications will be closely watched. Though the original ‘Satoshi Nakamoto’ made the technology behind bitcoin freely accessible to the public for use, along the lines of open-source software, an attempt at patenting this technology was inevitable. Whether Craig Wright is ‘Satoshi Nakamoto’ is being widely debated. But if not him, this attempt would have been made by some patent troll or the other. Even open-source software, though freely available, is often patented by the owners to prevent such misuse. Patenting of this technology is therefore probably necessary in order to allow the continued free use of the technology behind virtual currencies. However, this comes with the risk that the intentions of that one patent holder alone will determine the future of virtual currencies and blockchain technology. The author is a lawyer with a specialisation in cyber laws and has co-authored books on the subject.