Patents on Bitcoins

One of the questions that comes up often for IP attorneys is  "who owns Bitcoin'? 

In a sense, no one owns Bitcoin.  It is a distributed peer-to-peer unit of exchange. However this answer rarely satifies people who have come to you for your indepth legal opinion.

It should be noted that the concept of a network wide, anonymous, crypto-currency was only really implemented in 2009 by an individual known as Satoshi Nakamoto. Mr. Nakamoto (we have no way of knowing if that individual was/is a he/she/cybernetic construct from the future) published a paper describing the basic elements of the bitcoin system and released the software that underpins the peer-to-peer networking aspect. This software was released open source, without restriction. As such, no one legally has the right to prevent others from modifying or using the software for their own purposes. Thus while the Nakamoto Hivemind owns the software that bitcoin are mined with, it does not own the underlying conceptual framework.

There is some speculation that a Neil King, et al, listed inventors on US 2010-0042841 A1 (now abandoned for failure to respond to an office action) are the true inventors of bitcoins. Even if true, the patent office found several prior art references. Thus, the attempt to patent the concept appears to have been abandoned.  However, there is a thriving trade in bitcoin patent applications. People can, and do, attempt to file patent applications on the use of bitcoins for all manner of transaction. However, these patents do not reach back to the underlying concept of the Bitcoin and its use as a digital currency.

The actual software implementation of bitcoin generation is somewhat complex, but involves scanning for a value that when hashed twice with SHA-256, begins with a number of zero bits (you don't want me to explain this in more detail that that but ... a hash is an algorithm which takes a arbitrary amount of data and generates a fixed length of data. This is useful when attempting to use encode something for privacy. It is easy to hash something, and it is easy to verify that the data matches the hash, but hard to fake the data if you were up to no good. I am not a cryptanalysis guru and this was all distilled from 3 or 4 really good Wikipedia articles).

This is all a long winded way of saying that the process of generating bitcoins is technically complex and rests on the security and usibility of the SHA-256 Hash Function. However, in one of those ironic twists of fate that only happens in America, the NSA, bane of anonymous privacy advocates everywhere, actually owns the patent on the SHA-256 Hash function.

US Patent 6,829,355 to Lilly, and assigned to the NSA, covers the technical details employed in using the SHA-256 function to authenticate data (e.g. bitcoin transactions). All is not lost, the US has granted the world a royalty-free license to the patent.

However, the terms and conditions of this royalty agreement are murky. The royalty-free notice was filed in 2004. However, there is no easily available record of the exact terms of the grant of a royalty free (i.e. is it irrevocable?).

Thus, the long answer to the question of "who owns anonymous peer to peer government agnostic pro-privacy transaction crypto-currency" might, in fact, be the United States Government.  It is their world, we are just trading digital currency in it.

Jordan Garner
jgarner@leasonellis.com
(c)2013

IP in the age of self-replication technologies

During a recent business trip to Asia, I had the opportunity to discuss the Bowman case with many colleagues and clients.

For the unaware; in Bowman, the US Supreme Court held that chemical giant Monsanto's patent rights in its Ready Round-Up seeds could not be exhausted through the first sale doctrine. A farmer, Bowman, tried the circumvent the patent license on a genetically modified soybean plant by purchasing the seeds from a plant grown from Round up seeds AS opposed to Monsanto directly.

The Supreme Court held that each time the plant produced a new seed, or that seed grew into a new plant which in turn produced new seeds, that event was a new infringement of the patent. The reasoning was that the plant "manufactured" new seeds. By harvesting the seeds, you were essentially harvesting the seed technology, in violation of the patent.

Many commentators have pointed out that the Court's reasoning was highly specific, only applicable to the particular facts at issue. However, I am not convinced.

A reasonable argument could be made that any self-replicating technology, be it biological, informational or mechanical is the functional equivalent to a seed.

For example, computer viruses have the peculiar nature of replicating themselves. Is a software agent which is able to package a copy of itself into a compressed format for transport (i.e. a seed) any different from a biological entity which is able to produce a small portable package containing its build and execution code base (DNA)?

In both instances, the technology has all the features of a seed; storage, portability and self-replication. A single computer virus is capable of replicating itself infinite times. So are seeds.

This opens the door to all manner of self replicating technologies.  For example, imagine a patentable custom-made virus or bacteria designed to infect a person with the goal of generating a specific medicine to treat a chronic illness. Once in the body the organism replicates and continues to provide live saving medicine. Excellent. However, what if the patient decides he doesn't want the treatment? It is possible that even after a course of antibiotics, or anti-viral, the organisms could continue to live on in the subject.

Is that patient now infringing? If not, why not? How is a patient who schemes to contract this patentable virus from a friend, not the same as Bowman?

Autonomous technology is a fascinating field which holds significant promise to reshape the very basic tenants of society, economics and health.  However, it is too easy to try to fit essentially identical technologies into different classes based on how we intuit them. Seeds are different from computer viruses, which are different from designer organisms. The principals underlying all these technologies are highly correlated. We would all be better off if we formulated a framework now, then doing it piecemeal later.

Twitter:JordangarnerEsq