Blockchain Technology:

Drafting Effective Patent Claims

Disclaimer
The materials on this presentation
are provided for informational Salvatore P. Tamburo
purposes only. They are not Ameya “Arun” V. Paradkar
intended as and do not constitute
legal advice and should not be acted
on as such. You should seek the
advice of an attorney with respect
to any matter contained in the
presentation.

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE.
 Blockchain Overview

• Blockchain Resolves Traditional Recordkeeping Issues

 Old Technology: Centralized Authority for Records Creates a Single Point of
Failure
 Susceptible to hackers
 Susceptible to hardware failure
 Increased transaction costs due to middlemen and hardware/financial limitations

 Blockchain: Distributed Ledger

 Decentralization prevents hackers from compromising the entire system at one node
 Decentralized hardware prevents collapse due to a single point of failure
 Peer‐to‐peer nature of the transactions eliminates middlemen and reduces costs

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 2
 Blockchain: Basics of How it Works

• Transactions in Blocks • Blocks Linked by Hash

HEADER HEADER HEADER
Hash of Block 1 Header Hash of Block 2 Header

Hash of Block 1 Data Hash of Block 2 Data Hash of Block 3 Data

Block 1 Data Block 2 Data

(from A to B, $ 5; (from X to Y, $ 3;
Block 3 Data
from C to B, $ 15; from Y to Z, $ 7;
(. . . . )
from A to D, house; From Z to B, car;
....) ....)

September 27, 10:00 AM September 27, 10:15 AM September 27, 10:30 AM

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 3
 Blockchain Overview

• Decentralized, distributed database technology

• Multiple actors
 Managing Entity (Ethereum, Bitcoin, etc.)
 Nodes (Users & Miners)

• Applications
 Supply chain management
 Licensing chains / deeds
 Smart contracts / financial transactions
 Cryptocurrency

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 4
 Divided Infringement

1. A method to record transactions

on a distributed network comprising,
submitting one or more proposed
transaction to the distributed
network (user);
providing a cryptographic algorithm
to hash the submitted transactions
(managing entity);
cryptographically hashing the
submitted transactions based on the
provided algorithm (miner);
verifying the hashed transactions
(other miners); and
recording the verified transaction in
one or more databases
(miners/managing entity).

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 5
 Divided Infringement
Akamai Tech. Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed.
1. A method to record transactions Cir. 2015) (en banc)
on a distributed network comprising,
submitting one or more proposed (1) an entity directs or controls others’ performance: an alleged
transaction to the distributed
network (user); infringer
providing a cryptographic algorithm • conditions participation in an activity or receipt of a
to hash the submitted transactions benefit upon performance of a step or steps of a
(managing entity); patented method; and
cryptographically hashing the • establishes the manner or timing of that performance.
submitted transactions based on the
provided algorithm (miner);
verifying the hashed transactions (2) actors form a joint enterprise, requires proof of:
(other miners); and • an agreement, express or implied, among the members
recording the verified transaction in of the group;
one or more databases • a common purpose to be carried out by the group;
(miners/managing entity).
• a community of pecuniary interest in that purpose,
among the members; and
• an equal right to a voice in the direction of the
enterprise, which gives an equal right of control.

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 6
 Extraterritorial Activity

1. A method to record transactions

on a distributed network comprising,
submitting one or more proposed
transaction to the distributed
network (user);
providing a cryptographic algorithm
to hash the submitted transactions
(managing entity);
cryptographically hashing the
submitted transactions based on the
provided algorithm (miner);
verifying the hashed transactions
(other miners); and
recording the verified transaction in
one or more databases
(miners/managing entity).

“We therefore hold that a process cannot be used ‘within’ the United States as
required by section 271(a) unless each of the steps is performed within this
country.” NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1318 (Fed. Cir. 2005)
© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 7
 Extraterritorial Activity

1. A system to record
transactions on a distributed
network comprising,
a distributed network to which a
proposed transaction is
submitted;
a first device for
cryptographically hashing the
submitted transactions based on
a cryptographic algorithm; and
a second device for verifying the
hashed transaction; and
a database for recording the
verified transaction.

“The use of a claimed system under section 271(a) is the place at which the system as a
whole is put into service, i.e., the place where control of the system is exercised and
beneficial use of the system obtained.” NTP, Inc. v. Research In Motion, Ltd., 418 F.3d
1282, 1317 (Fed. Cir. 2005)
© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 8
 Drafting a Blockchain Claim – Best Practices

• System Claims
 Every element should be directed to a single actor’s activities
 Managing Entity (i.e. all elements directed to a single server)
 Node (i.e. all elements directed to the activities of a user/miner)
 Control of the system and the benefits derived from it should be in the
United States

• Method Claims
 Each step should be controlled or directed by a single actor
 Conditional Participation or Receipt of a Benefit upon Step Performance
 Control over Manner and Timing of a Step
 Each step must be performed in the United States

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 9
 Blockchain Technology and Patents

Salvatore Tamburo
[email protected]

Ameya (Arun) Paradkar

[email protected]

© 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 10