On the Coin Center Tangents podcast this week I talked to Kirupa Pushparaj (who runs the intellectual property practice at Square) about the Crypto Open Patents Alliance. If you’re part of a crypto firm or project, you should listen to it — and you should join the Alliance.
Patent trolls are a massive threat to innovation. They are firms made up mostly of lawyers that buy up large quantities of patents without any intention of using the patents to innovate or build products. Instead, they use the patents they acquire (often from innovative startups that have gone out of business) to shake down entrepreneurs and innovators. They’ll go to an innovative firm and say, “Hey, your product arguably falls under an incredibly vague patent that we own. Pay us a $100,000 licensing fee and we’ll go away or otherwise we’ll make you spend $1 million fighting us in court.” It’s a pernicious and persistent problem, but crypto has an opportunity to avoid it.
Because the cryptocurrency space is still relatively nascent, there haven’t been that many patents filed. And many of the patents that have been granted are held by innovative firms that understand that crypto is meant to be open source and open network, permissionless and unowned. If all crypto firms banded together now, at this early stage, they could not only protect each other from offensive use of patents today, they could prevent those patents from ever falling in the hands of trolls in the future.
That’s what the Crypto Open Patents Alliance is trying to do. Any organization that builds crypto software is eligible to join—whether it has patents or not and whether it will ever have patents or not. By joining members make a pledge to never use offensively any foundational crypto patents they have—not only against other members, but against anyone. That means that even if a patent-holder gets acquired by a larger firm or goes out of business and its patents are acquired by a troll, those patents can’t be used offensively against anyone. And since the cryptocurrency ecosystem is still young, joining now has the potential to head off a threat to innovation in the future.
While members pledge not to use patents offensively, they can still of course use them defensively if they are ever sued by a troll. Not only that, they have access to the library of patents from all other members to use defensively. And (I can’t stress this enough) this is available to members whether they themselves have patents or not. If your business includes developing or using software that connects to cryptocurrency networks, mines, stores cryptocurrency—that is, anything foundational to the operation of a cryptocurrency network—you have no reason not to join the Alliance and every reason to do so. Not only is it in the interest of your own organization, it’s in the interest of the whole ecosystem.