Cameron B. Pick

ENS’ <a href="https://blockworks.co/news/ens-unstoppable-domains-paten">feud</a> last year with Unstoppable Domains has brought to light the prevailing skepticism many open source developers harbor toward the patent system.&nbsp;



While concerns over the potential misuse of patents are valid, the decision by organizations in the crypto space to abstain from the patent system altogether might inadvertently limit the advantages available for safeguarding their innovations.



Unstoppable Domains (UD) was awarded a patent on “<a href="https://patents.google.com/patent/US11558344B1/en?oq=11558344">Resolving Blockchain Domains</a>” at the end of 2023. This <a href="https://blockworks.co/news/ens-unstoppable-domains-paten">irritated</a> the lead developer of its largest competitor, ENS. In an open letter, ENS’s Nick Johnson argued that UD’s patent is “based entirely on innovations that ENS developed and contains no novel innovations of its own.” He criticized UD for pursuing patents,  even after they stated support for open innovation. While Johnson recognized that UD then did pledge its patent to the Web3 Domain Alliance, he expressed skepticism about the pledge being legally binding.



Read more: <a href="https://blockworks.co/news/ethereum-name-service-godaddy-partnership">ENS partners with GoDaddy to enable users to link wallets to domains</a>



However, companies do pursue patents for many reasons other than to initiate lawsuits against potential infringers or to stifle innovation. Patents serve as powerful signals to investors, which recognize a company&#8217;s development of groundbreaking products or processes.&nbsp; They can also be used to recognize inventors for their efforts.&nbsp;



Patents can also be used defensively.&nbsp; If a company is sued by a competitor for patent infringement, the company may use their existing patents that the competitor appears to infringe in a countersuit. This can be an effective negotiating strategy to reach a favorable settlement.&nbsp;&nbsp;



It is important to note that a company can make its software open-source under an open source license while still patenting the software. Typically, anyone who complies with the terms of the open source license is protected from a patent lawsuit. This gives patent holders another avenue to go after those who do not abide by the terms of the open source license. Therefore, crypto companies can still remain open source while filing for patents without using them to inhibit innovation.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/we-need-to-stop-forcing-use-cases-on-blockchains">We need to stop forcing use cases on blockchains</a>



For example, a company may want to protect themselves against a competitor who modifies open source code and seeks to protect it themselves. In this scenario, the competitor may try to sue the company who initially developed the code. If the company does not have a patent or other avenues of protection, it may be vulnerable to these unfair tactics.



Additionally, organizations that develop open source code may encourage others to freely use and improve the code. However, with a patent, these organizations can protect themselves against competitors who make similar products but do not use their code.&nbsp;&nbsp;



For example, Litecoin was a fork of the Bitcoin code. If Satoshi Nakamoto had patented a decentralized network for recording transactions using a blockchain, they likely would not have been able to go after Litecoin due to the open source license included in the <a href="https://github.com/bitcoin/bitcoin/blob/master/COPYING">Bitcoin code base</a>. However, if another entity developed a similar system without using the Bitcoin code, Nakamoto may have been able to prevent them from competing in this space.&nbsp;&nbsp;



Allowing others to use and modify the original code while preventing competitors from profiting off their own version of the same concept does not go against the ethos of the crypto community. Instead, a combination of open source licenses and patent protection encourages open innovation and allows developers to build off each other’s software. This approach discourages the proliferation of numerous versions of similar products, promoting a more cohesive and collaborative community.



In light of these considerations, companies in the crypto space should feel empowered to explore patent protection without fear of alienation. If a company decides to patent its open source software, it should make it very clear that anyone who properly uses the software also has a license to the patent —&nbsp;it may be pursuing patent protection simply to raise funds and formally recognize inventors’ creations. And, if someone runs afoul of the license terms or independently creates a similar product without using the company’s code, it now has a way to protect its business.



In conclusion, the coexistence of open source and patents in the crypto space encourages a healthy ecosystem of innovation. Companies can strategically leverage both, fostering a community where developers can build upon each other&#8217;s work without compromising on protection and recognition.&nbsp;



The ENS and Unstoppable Domains argument likely won’t be the last time that someone in crypto is critical of a competitor’s patents. Nonetheless, the crypto community would benefit by being open to multiple strategies for encouraging, pursuing and protecting innovation.



DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney. Views expressed are those of the author and are not to be attributed to Marshall, Gerstein &amp; Borun LLP or any of its former, present, or future clients.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Cameron B. Pick is a partner and patent attorney at the Chicago-based intellectual property boutique law firm Marshall, Gerstein &amp; Borun. He prosecutes patents for emerging technologies, including blockchain and crypto, among other innovative areas. He may be reached at cpick@marshallip.com. </div>


<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Crypto can benefit from patents without losing its open source ethos 

James Cirrone

Blockchain validation. Payments between different network layers. Digital asset recommendations in the metaverse.&nbsp;



These are some of the areas <a href="https://blockworks.co/tag/paypal">PayPal</a>’s research and development efforts appear focused on, according to a slate of recently published patent applications.



The most recent application, published Thursday and originally filed in March 2022, delves into the details of how validators or miners should be selected during the process of adding transactions to the blockchain. The <a href="https://image-ppubs.uspto.gov/dirsearch-public/print/downloadPdf/20230306418">document</a> states that the company’s disclosed techniques could “advantageously allow steering of blockchain requests to a desired subset of miners/validators.”



Three other patent applications, released on Sept. 21, were also filed in March 2022.



<a href="https://image-ppubs.uspto.gov/dirsearch-public/print/downloadPdf/20230298001">One</a> offered up supposedly new “methods and systems” to enable off-chain transactions through NFT marketplaces.&nbsp;



<a href="https://image-ppubs.uspto.gov/dirsearch-public/print/downloadPdf/20230298008">Another</a> mentions the concept of a so-called omniverse, which in this context suggests a product that deals in multiple metaverses. PayPal says it developed an “online transaction processor” that would provide recommendations for which digital assets a user should buy based on the user’s blockchain preferences and which metaverses they interact with most.&nbsp;



<a href="https://image-ppubs.uspto.gov/dirsearch-public/print/downloadPdf/20230298005">A third</a> describes another conceptual online transaction processor. This processor’s goal is to facilitate payments between users and merchants operating on different network layers (layer-1s and layer-2s) in a more efficient manner.&nbsp;



The applications, in sum, offer a window into PayPal’s thinking as it builds out its suite of crypto products and services.&nbsp;



For instance, with <a href="https://blockworks.co/news/paypal-launches-stablecoin">PayPal releasing a stablecoin</a> in August, these proposed provide a window into the direction of PayPal’s use of the technology for payments. Venmo, the firm’s popular payment app that <a href="https://blockworks.co/news/venmo-crypto-transfers-coming">enabled crypto transfers in May</a>.



PayPal did not immediately respond to Blockworks’ request for comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

PayPal patent apps signal an interest in layer-2s, NFTs

Shalini Nagarajan

With digital assets on the upswing once more, businesses across the board have been locking down blockchain-related patents anew.&nbsp;



Filings for US — and international — patents or trademarks related to cryptocurrency sectors, including <a href="https://blockworks.co/tag/blockchain">blockchain</a> initiatives and <a href="https://blockworks.co/tag/nft">NFT</a> enterprises, are one main means for <a href="https://blockworks.co/news/fico-blockchain-usage-patented">companies to secure related intellectual property</a>. And potentially gain a competitive advantage in the meantime.&nbsp;



As mainstream tech giants, including <a href="https://blockworks.co/tag/amazon">Amazon</a>, hop on the NFT bandwagon, the industry has been parsing the possibility of a spring-to-summer surge in exclusive access to events and collections. 



That could turn passive customers into active players, according to Gökçe Güven, CEO of Web3 tooling platform Kalder. The goal of ratcheting up engagement and branding loyalty could apply to both individual NFT creators and big brands.&nbsp;



“Blockchains and blockchain-based systems are poised to unlock a wide variety of use cases that we probably haven’t even thought of yet,” Güven told Blockworks. “But those use cases need to be structured in a way that incentivizes the individual creator to participate, and this includes legal and regulatory systems.”



While crypto initiatives continue to develop broadly, patents and tradements are on the rise in terms of enforcing the verification that NFTs inherently provide on the blockchains they’re based on, according to Nihar Neelakanti, the chief executive of carbon-backed NFT maker Ecosapiens.&nbsp;



“Trademarks and NFTs are like Cinderella and the magic slipper – a natural fit,” Neelakanti said.



<blockquote class="wp-block-quote">
Added Neelakanti: “NFTs and other digital assets are the best technology to verify identity anywhere on the web and through any transaction, and in that sense, a trademark enhances and enforces the technical protection an NFT may provide through a legal framework.”
</blockquote>



Here’s a snapshot of five businesses with brand recognition that have recently filed patents for Web3 offerings. Companies often file for patents with no expectation of employing a product in the immediate future.&nbsp;



<h2 class="wp-block-heading">Haribo&nbsp;</h2>



German candy maker Haribo has taken a leap into the world of NFTs.&nbsp;



The gummy bear maker registered an NFT-related trademark <a href="https://tsdr.uspto.gov/documentviewer?caseId=sn79336702&amp;docId=ORC20230410174534#docIndex=0&amp;page=1">application</a> with the US Patent and Trademark Office on April 25. The company filed for a number of applications related to “digital collectibles in the nature of downloadable multimedia files.”&nbsp;



Those sectors, per the filing, include “downloadable audio and video recordings, digital avatars and cartoons relating to confectionery.”&nbsp;&nbsp;



<h2 class="wp-block-heading">FICO&nbsp;</h2>



Global analytics software firm <a href="https://blockworks.co/news/fico-blockchain-usage-patented">FICO recently hit a patent jackpot</a>. Not only was it awarded 12 patents, but its use of blockchain for data and model governance was also patented.



FICO, the company behind its popular FICO Credit Score product, has long been a resource used by lenders to assess people’s creditworthiness and decide whether they are suitable for loans or credit cards.



Scott Zelda, the company’s chief analytics officer, has said that blockchain technology has practical value-adds in terms of AI, analytic governance and conducting audits.



FICO’s new patent is all about keeping track of how machine learning models are created, used and monitored. It’s using a “shared ledger.”



<h2 class="wp-block-heading">Fujitsu</h2>



In March, Japanese electronic giant Fujitsu <a href="https://blockworks.co/news/fujitsu-files-trademark-crypto">filed a trademark application</a> covering scores of services, including crypto trading.&nbsp;



The filing for Fujitsu made possible the company’s ambitions to dive into everything from money exchange to digital asset management — on top of brokerage services for crypto.



<h2 class="wp-block-heading">Fidelity Investments</h2>



Boston-based investment management firm <a href="https://blockworks.co/tag/fidelity" target="_blank" rel="noreferrer noopener">Fidelity</a> Investments broke new ground by filing trademark applications in December that indicated <a href="https://blockworks.co/news/fidelity-trademarks-hint-at-big-banks-vying-for-metaverse-customers">plans to service customers in a virtual world</a> powered by digital currencies. 



Three patent applications showed Fidelity’s plans to explore marketing, placements, recruiting and referral services for investment and financial planning in the metaverse. It was also looking into creating an NFT marketplace where one can buy, sell and trade digital goodies.



Read more: <a href="https://blockworks.co/news/fidelity-doubles-down-metaverse">Fidelity Doubles Down on Metaverse With Financial Literacy Experience</a>



<h2 class="wp-block-heading">Formula One</h2>



In the fourth quarter of 2022, auto racing league Formula One <a href="https://tsdr.uspto.gov/documentviewer?caseId=sn97620234&amp;docId=APP20221008081326#docIndex=2&amp;page=1">filed</a> a number of crypto-related trademarks for its “F1” abbreviation, changing from NFTs to retail stores for virtual goods.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

These 5 Companies Have Filed Web3 or NFT Patents

Ben Strack

The analytics company behind one of the standard measures of consumer credit risk in the US has used blockchain technology in recent years to improve its accountability and compliance when developing models.



Now, the firm’s blockchain use for data and model governance is patented.



Founded in 1956, Montana-based FICO — formerly known as Fair, Isaac and Company — uses predictive analytics and data science to improve operational decisions. It holds more than 200 US and foreign patents.



The company is perhaps best known for its <a href="https://www.fico.com/en/products/fico-score">FICO Score</a>, which reflects how consumers repay credit obligations. These scores are used by lenders, who use FICO Scores, among other factors, to assess credit risk of potential borrowers.&nbsp;



Scott Zoldi, the company’s chief analytics officer, told Blockworks in an interview that blockchain’s ability to enforce contracts — along with its immutability — makes it a natural tool for artificial intelligence (AI) and analytic governance and audit.&nbsp;



One of its latest patents covers the concept of a shared ledger that would “track end-to-end provenance of the development, operationalization and monitoring of machine learning models in an immutable manner,” the company said in a <a href="https://investors.fico.com/news-releases/news-release-details/fico-granted-12-patents-used-fico-platform-operationalize-real">statement</a> earlier this month.&nbsp;



<a href="https://www.fico.com/en/about-us">FICO</a> first applied for the patent in 2018 — believing the technology was ideal to offer an immutable record of the development standard for each of its analytic models, according to Zoldi.



The company’s standard defines data requirements, model architecture, allowable variables and ethics testing, for example, so that data scientists can more easily comply.&nbsp;



Keep reading for more excerpts from Blockworks’ interview with Zoldi.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: When did FICO start using blockchain technology?&nbsp;



Zoldi: We started blockchain proofs of concept on select projects in 2018 and productionalized the capability in 2019. Since then, we have continued to enhance the user interface to optimize the experience for data scientists, the management team and approvers.



Blockworks: What exactly will the patent cover, and what is FICO planning to do with it?



Zoldi: The patented blockchain technology is used in all AI model development projects in my data science organization.&nbsp;



In this invention, each model requirement and development step is codified and added to an immutable blockchain. Specific scientists’ confirmations that the model meets those requirements, along with model testers and approvers, are added to the blockchain.&nbsp;



The blockchain provides auditability months and years after the model build, providing fine detail as to how the model was developed, what it’s sensitive to, and under what conditions the model should be used with caution or not at all.



Blockworks: How might FICO be looking to use blockchain differently than competitors?



Zoldi:&nbsp; Before blockchain we had model standards and enforced these through agile standups, sprint reviews and approval meetings. Blockchain now provides the automated tool to enforce our model development standard and reduce the risk of requirements, tests and approvals slipping through the cracks undone.&nbsp;



Project sign-off requires the data science team to demonstrate on the blockchain that the model has been completed, tested and meets acceptance criteria before the model is released.&nbsp;



This level of automation and enforcement is unique and allows FICO to achieve great efficiency in automating compliance with its responsible AI standards, compared to other companies that may have not invested in a model development standard or have less controls on enforcement.



Blockworks: Why is FICO bullish on blockchain? How can blockchain help businesses in ways other technologies can’t?



Zoldi: We are bullish in our use of blockchain because it provides mini contracts of tasks completed, tested and accepted per our model development standards for Responsible AI. Each scientist, tester and manager are accountable to meeting FICO’s standard, and that accountability is enforced and recorded to the blockchain.&nbsp;



Accountability promotes the right level of seriousness in developing AI. This is paramount in achieving and promoting confidence in the models we develop. Moreover, models need owners manuals that record all the details during development — these are invaluable when the models are used in production.&nbsp;



Applying model details to the blockchain gives us the granular information we need to responsibly monitor, support and maintain models deployed in production.&nbsp;



Blockchain’s nature of enforcing contracts, and the immutability of those contracts, makes it a natural tool for AI and analytic governance and audit. I highly encourage other businesses to consider similar use cases in their data science organizations.



This interview was edited for brevity and clarity.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

FICO’s Blockchain Usage — Now Patented — Boosted Firm’s Accountability

Sebastian Sinclair

<div id="highlights-block_61e4aec475016" class="highlights">
 <ul>
 <li>Walmart is exploring the possibility of introducing a &#8220;virtual currency for use by members of an online community&#8230;in the field of NFTs&#8221;</li>
 <li>The retail giant is also looking at providing a means for customers to interact with the metaverse and providing financial services involving crypto</li>
 </ul>
 
</div>



Retail giant Walmart has filed <a href="https://www.scribd.com/document/553279853/USPTO-97197296" target="_blank" rel="noreferrer noopener">several patents</a> with the US Patent and Trademark Office (USPTO) seeking to register a number of services and offerings related to the metaverse, non-fungible tokens (NFTs) and cryptocurrency.



Holly Lar, Senior Counsel for Intellectual Property at Walmart has filed a total of seven related applications on behalf of the retail giant. The news was <a href="https://www.cnbc.com/2022/01/16/walmart-is-quietly-preparing-to-enter-the-metaverse.html" target="_blank" rel="noreferrer noopener">first reported by CNBC</a> late Sunday.



According to the <a href="https://www.scribd.com/document/553280602/USPTO-97197301" target="_blank" rel="noreferrer noopener">applications</a>, filed Dec. 30, Walmart is exploring the possibility of introducing its customers to a &#8220;virtual currency for use by members of an online community&#8230;in the field of NFTs&#8221; as well as &#8220;financial transaction services involving cryptocurrency, NFTs and blockchain technology.&#8221;



<a href="https://cms.blockworks.co/?s=nft">NFTs</a> are digital assets that provide proof of ownership over virtual and real-world assets which can also interact with the blockchain in unique ways. Since bursting onto the scene in early 2020, NFTs have sparked a vibrant movement and an active market valued at <a href="https://www.bloomberg.com/news/articles/2022-01-06/nft-market-surpassed-40-billion-in-2021-new-estimate-shows" target="_blank" rel="noreferrer noopener">over $40 billion</a>. Walmart appears to be positioning itself for a slice of that pie.



Other detailed patent applications further list Walmart&#8217;s ambitions to explore monetizing the metaverse by offering customers &#8220;downloadable augmented reality software, downloadable mixed reality software, virtual reality software for interactive entertainment and virtual reality gaming.&#8221;



The <a href="https://cms.blockworks.co/?s=metaverse">metaverse</a> refers to virtual worlds whereby several technologies are combined to create an online 3D- gaming, social and interactive experience. 



Though Walmart&#8217;s patents are by no means a definite confirmation it will act on them in the future, the retailer said it is “continuously exploring how emerging technologies may shape future shopping experiences,” according to CNBC&#8217;s reporting. 



Walmart did not comment on the specific trademark filings.



“We are testing new ideas all the time,” Walmart said. “Some ideas become products or services that make it to customers. And some we test, iterate, and learn from.”



It&#8217;s not the first time Walmart has filed applications with the USPTO relating to crypto. In 2019, the retailer filed an application for a stablecoin backed by real-world currency to service those &#8220;low-income households that find banking expensive.&#8221; Though that application has yet to be expanded upon.



The new applications will be assigned to an examining attorney in roughly six months&#8217; time.



See one of the seven applications listed below:



<figure class="wp-block-embed is-type-rich is-provider-scribd wp-block-embed-scribd wp-embed-aspect-9-16 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="USPTO 97197301" class="scribd_iframe_embed" src="https://www.scribd.com/embeds/553280602/content" data-aspect-ratio="0.7729220222793488" scrolling="no" id="553280602" width="1000" height="1000" frameborder="0"></iframe><script type="text/javascript"> (function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "https://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })() </script>
</div></figure>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.