Blockchain & Business: Improving Your Companies’ Future

By Pablo N. Garcia Rodriguez

As a second post on this blog series regarding Blockchain, Stein IP introduces “Blockchain & Business: Improving Your Companies’ Future.”

Considering the power of Blockchain, it is not surprising that it can also be applied to business. In fact, companies such as Walmart and FedEx implement Blockchain technology as a way to manage their supply chains since it makes possible tracking a product from its origin[1] and controlling assets’ conditions instantly. There are a lot of applications for this technology in the business field, such as smart contracts and transactions recording which can be achieved thanks to Blockchain being a distributed ledger. But what is a distributed ledger and why is everyone talking about it?

A distributed ledger is a decentralized, synchronized and shared database where information is recorded.

  • Decentralized: Data doesn’t rely on a central point of control, it is stored within a network of nodes. Due to lack of a single authority[2], is a more secure place to record transactions and valuable information to the company.
  • Shared: Every member on the network has access to the recorded information, unless there is a permission prohibiting it. This helps the organization save time and money as everything is uploaded just once.  
  • Synchronized:The information is shared simultaneously among all the network’s participants.

Permissions

Because Blockchain is a shared ledger, organization members might be concerned about people from their network having the possibility of modifying information that is important for the company, causing security problems such as data leaks. This leads us to another concept: permissions. If the business network’s operator chooses to set permissions, he or she will have the ability to restrain members’ participation and access to information. This means that participants get a selective visibility into the ledger which protects the organizations’ relevant data from malicious attacks.

Smart Contracts

Contracts are commonly used in business transactions, and Blockchain is no stranger to this area. Although traditional contracts and smart contracts have the same objective, which is to get parties to reach an agreement, there are many differences that make smart contracts more suitable for the business world in the future. Below, a graph shows how smart contracts work.

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Graph from “What Are Smart Contracts? A Beginner’S Guide To Smart Contracts”. Blockgeeks, 2018, https://blockgeeks.com/guides/smart-contracts/

Consensus is an important part of smart contracts’ functionality because conditions are settled and accepted by the parties. The next step is that requirements are met to validate the contract which executes automatically with no third party intervention.

According to a PwC’s[3] 2018 survey of 600 executives, 84% say their organizations have at least some involvement with Blockchain technology. Also, there are some existing predictions that express that by 2030 10% to 20% of global economic infrastructure will be running on blockchain-based systems. This means that companies are getting into this technology because of its benefits since costs are reduced, there is more transparency and a better control in what transactions concern, and besides is easier to trace the origin and conditions of assets and information. Blockchain is certainly improving business and that is why everyone is talking about it.

 


References:

[1] “5 Companies Using Blockchain To Drive Their Supply Chain”. Youtube, 2018, https://www.youtube.com/watch?v=5BGia46oBGA.

[2] “What Is Decentralization? » Basics Explained | Lisk Academy”. Lisk, 2018, https://lisk.io/academy/blockchain-basics/benefits-of-blockchain/what-is-decentralization.

[3] PricewaterhouseCoopers is the biggest Professional Services’ company in the world headquartered in London, United Kingdom.

Sources:

 

Blockchain 101: The Basics

By Carla Vercellone

As the first post in our new series on Blockchain technology, we will comment on the basics of blockchain, who participates in a blockchain network and how it works, and finally we’ll touch on the major cryptocurrency in the network, Bitcoin. Since its introduction in 2008 as the creation of a person, or group of people, known by the pseudonymous Satoshi Nakamoto, blockchain has grown and evolved into becoming the future of today’s internet and transactions.

What is blockchain?

The blockchain is a decentralized, shared, and immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, a car, etc.) or intangible (intellectual property, patents, copyrights, etc.).

  • Anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved. Transactions made in bitcoin or other cryptocurrencies are recorded chronologically and publicly between two parties, being efficient and in a verifiable and permanent way.

A peer-to-peer (P2P) network like Blockchain is, according to the Oxford English Dictionary, a network in which each computer can act as a server for the others, allowing shared access to files and peripherals without the need for a central server.

How is it decentralized you may ask? Every participant is an “administrator” of the blockchain, joins the network voluntarily and thus, anything that happens on it is a function of the network as a whole. As opposed to traditional transaction (as seen below in a server-based network on Fig. 1) methods involving third parties, such as banks, in which every piece of information is stored and recorded by one entity, the central bank. A main characteristic of this decentralization is that information is continually managed and hosted by millions of computers simultaneously worldwide on a distributed database, making the data accessible to anyone on the internet.

p2p 2
Figure 1. Kologynski, Maria. “P2P”. Proyectoidis.org

Who participates?

To understand how Blockchain works, we need to first learn who participates in a blockchain network. The main participants of a blockchain network are (See Fig. 2 above):

  • User: A participant with permissions to join the blockchain network and conduct transactions with other network participants.
  • Node: A computer connected to the network.
  • Regulator: Individuals who oversee the transactions happening within the network, don’t have the authority to issue or control assets
    • Regulators simply receive blocks and view blockchain data.
    • Perform the duty of an observer, auditor, and/or analyst.
  • Developer: Creator of applications and smart contracts that interact with the blockchain and are used by the users.
  • Operator: Individuals who have define, create, manage, and monitor the blockchain network.
    • Businesses on a blockchain network have a blockchain network operator.
    • Determines who can participate in the blockchain, gather valid transactions from participants, etc.
  • Certificate authority: Manages the different types of certificates required to run a permissioned Blockchain.
  • Traditional Processing Platform: An existing computer system, such as Windows, Android, Apple OS X or iOS, Linux, etc., that may be used to augment processing or to initiate requests into the Blockchain.
    • There’s a mobile blockchain-enabled virtual operating system being developed now called “Nynja” that would allow the mobile device to combine communication and commerce in a single unified platform.
  • Traditional Data Sources: An existing data system which may provide data to influence the content and structure of smart contracts, as well as define how communications or data transfer will occur into the blockchain.

How does Blockchain work?

Figure 2 - Hash (blockchain)
Figure 3 – Gupta, Manav. Blockchain stores transaction records in a series of connected blocks. 2018. Graph. Blockchain for Dummies. Hoboken, NJ: John Wiley & Sons, Inc., 2018. 14. Print

In order for exchanges in today’s traditional transaction methods to take place, one of three things needs to happen: the individuals exchanging the item or data need to trust each other, engage in a legal contract, or involve third parties. Most of the time these exchanges are subject to several challenges, such as the time a customer waits between transaction and settlement, fraud and cyberattacks due to simple mistakes, the possibility of exposing the participants in the network to risk if the central system (i.e., a bank) is hacked or compromised, etc. On the other hand, Blockchain promises to facilitate the process of business transactions through tracking and trading of valuable assets in a shared, immutable network.

Blockchain owes its name to the way it stores transaction data —in blocks that are linked together to form a chain. As the number of transactions grows, so does the blockchain. Each block contains a hash (a digital fingerprint or unique identifier), timestamped batches of recent valid transactions, and the hash of the previous block. The previous block hash links the blocks together and prevents any block from being altered or a block being inserted between two existing blocks (Fig. 3 above). When a user requests a transaction (cryptocurrency, contracts, records, etc) in a network, said request must be validated by all the participants of the network to reach a consensus (Fig. 3 below). Once it has been verified, a block created with the new hash, the previous hash, and the transaction identifier (Fig 3 above), is added to the existing blockchain making it permanent, visible and unalterable. If the transaction were in error, a new transaction is made to reverse the previous one, and both transactions are visible to the participants, showing transparency in the network. All the nodes in the network check for errors in this transactions with the previous transactions correlated to the asset the user wants to transfer. When all transactions are finished, validated, and added to the blockchain, the transaction is complete.

how does it worl
Figure 4 – What is Blockchain Technology? A Step-by-Step Guide For Beginners. Digital Image. Blockgeeks. Blockgeeks, 13 September 2018. Web.

Key characteristics

What makes Blockchain different from other transaction systems are four key characteristics:

  • Consensus: As explained before, all participants of a network must agree for a transaction to be considered valid.
  • Provenance: Participants know where the asset came from and how its ownership has changed over time due to the trajectory of the asset in the ledger shown to the participant (Fig. 3).
  • Immutability: No participant can tamper with a transaction after its been recorded to the ledger.
    • If a transaction is in error, a new transaction must be used to reverse the error, and both transactions are then visible.
    • Transactions are combined into single blocks and are verified every ten minutes through mining[1]. The nature of this structure permanently timestamps and stores exchanges of value, preventing anyone from altering the ledger. If someone wanted to steal a Bitcoin, for example, they’d have to rewrite the coin’s entire history on the blockchain in broad daylight and “fake” all the participant’s consent.
  • Finality: A shared ledger provides one place to go to determine the ownership of an asset or completion of transaction; facilitating information to users in an open network rather than using intermediaries like banks, ports, etc. The accessibility of the blockchain during and after its creation is determined by the blockchain operator and/or the smart contracts associated with the network.

Bitcoin vs Blockchain: Difference

Although most people have heard of the Blockchain’s biggest cryptocurrency, Bitcoin, some still confuse both terms as interchangeable. Blockchain is a database that is simultaneously stored on a set of computers connected to each other on the Internet where each transaction is written down and safely stored; along the lines of an operating system like Microsoft Windows. On the other hand, Bitcoin is a digital currency, created and operated only on the Blockchain network; a similar example can be an application running on an operating system, such as Skype on Microsoft Windows.

 

Next in this blog series on blockchain, we will explore the application of blockchain in Intellectual Property, explaining its role in the field of IP, determining the classes and subclasses of blockchain technology-based patents, and many other topics.


Sources:

 

[1] Mining: Confirmation process. “Cryptocurrency Glossary”. Blockchain Support Center.

America runs on just Dunkin’

By Pablo N. Garcia Rodriguez and Carla Vercellone

It was 1950 in Quincy, Massachusetts, when Bill Rosenberg founded “Open Kettle”, a coffee and doughnut shop later renamed as “Dunkin’ Donuts” [1] . But that has changed in 2018, and after 68 years of using this name, one of the biggest food chains in the world is changing and dropping its last name, resulting in just Dunkin’. The brand has received mixed reactions from confused consumers and fans from across the world (see at the end of this post).

Last year’s opening in Pasadena, Calif. of the first store with what is the brand’s new name today, meant a change was coming for its loyal consumers. Rumors had been swirling around about a new name, but it wasn’t until January 2018 that the coffee and food chain made a move and filed a new trademark application (87768615) with the United States Patent and Trademark Office (‘USPTO’) for goods such as hats, aprons, doughnuts and bakery products, etc., since it already owned the “Dunkin’” trademark for restaurant services, cafe services, snack bar services, carry-out food services from 2011 (4290078). Additional applications were filed including the characteristic orange and fuchsia color-combination, as well as the iconic design of the US map and the silhouette of a man running, – referencing their famous phrase America runs on Dunkin’®️.

ezgif.com-video-to-gif 22

Dunkin’. 2018. Photograph. Dunkin’ Donuts. Web. October 2018.

There are more than 11,300 Dunkin’ Donuts stores worldwide, with over 8,500 restaurants in 41 states across the U.S.A [2].  so it is not just a name change but a rebranding process directed to modify customer’s perception on the brand’s significance. Basically, there are three reasons why Dunkin’ is dropping “donuts”.

The first reason is that Dunkin’ Donuts’ top managers insist on its product diversification, making a reference to selling not just donuts but a wide range of beverages and other types of food such as sandwiches. Another relevant fact related to this is that coffee represents 60% of sales [3].  Secondly, Chief Marketing Officer Tony Weisman announced on its website [4] that its desire is to get closer to customers by settling on a first-name basis. The last reason is that, nowadays, society is going through times where personal health care is really important, so the brand is looking to relate to that idea and lifestyle.

The company’s efforts to modernize its arguably iconic brand helps shine a light on how important it is to protect the brand with a strong trademark foundation in place, whatever the reasoning behind such a change.

https://twitter.com/FaceTatPat/status/1044829495172235265

 


References:

[1] “William Rosenberg”. En.Wikipedia.Org, 2018, https://en.wikipedia.org/wiki/William_Rosenberg.

[2] DUNKIN’ DONUTS – COMPANY SNAPSHOT, 2018, https://www.dunkindonuts.com/en/about/about-us.

[3] “Just Dunkin’: Dunkin’ Donuts To Change Its Name”. WTTG, 2018, http://www.fox5dc.com/money/consumer/just-dunkin-dunkin-donuts-to-change-its-name-1.

[4]  “A Letter From Dunkin’ CMO Tony Weisman: We’Re Changing Our Name To Dunkin’”. Dunkin’ Donuts, 2018, https://news.dunkindonuts.com/blog/justcallusdunkin.

Sources:

Net Metering

By Pablo N. Garcia Rodriguez

Nowadays renewable energies are a popular topic due to the benefits that they provide for our environment and our health. Moreover, 15 years ago, a new mechanism was implemented in the United States which enables people to get money from using alternative ways of energy. This is Net Metering.

Its first implementation was in 2003 but, as it was a new technology, it was not allowed in several states. Today, considering that this system has improved people’s lives economically, new regulations allow its use in 38 states plus D.C. The chart below shows Net Metering increasing since 2003 to 2010.

NetMeteringCustomers_graph Chart from Eia.Gov, 2018, https://www.eia.gov/todayinenergy/detail.php?id=6270.

The following presentation is to provide an understanding of the basics of Net Metering and to present some existing policies that regulate this mechanism in the states of Delaware, Maryland, New Jersey and Washington D.C.

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The Music Modernization Act: A Step Forward In Today’s Music Industry

By Carla Vercellone

The “Big Music Bill”, also referred to as the Orrin G. Hatch–Bob Goodlatte Music Modernization Act, the Music Modernization Act (‘MMA’) or the Musical Works Modernization Act, is a piece of legislation that was introduced by Senator Hatch (R-Utah) and Senator Alexander (R-Tennessee) earlier this year. It was passed unanimously by both chambers this past month of September and was sent to President Trump’s office on September 25th , giving him 10 days to sign the bill after receiving it, or veto it, and turn it into law. If  he chooses not to sign the bill within these 10 days (including weekends), and Congress is in session, the bill will automatically become law.

This act is a reform to the Copyright Act of 1976 §115 and §114 (i). The bill aims to solve the current problem of unmatched works, so that digital music providers are protected from liability and songwriters are given the royalties they deserve (more on the topic of unmatched works in an upcoming post). Second, the bill will better align royalties for songwriters with royalties for recording artists, and with market demand it will bring transparency to the music licensing system by creating a public database that identifies musical works and their owners. Third, it will create an organization responsible to create said database, to collect and to distribute royalty payments starting in 2021. And lastly, creators of songs recorded prior to 1972 will be paid royalties as well. This bill protects streaming services (such as Spotify, Apple, Pandora, Amazon, or Google) from being sued by artists or producers for licensing violations that occurred prior to this Act, while also holding them accountable for their obligations.

“It’s the most important piece of legislation in a generation to help make sure songwriters in this country are paid a fair market value for their work,” co-creator Senator Alexander said during the introduction of the bill to the Senate earlier this year.

Both senators introducing the bill are songwriters and Senator Hatch even has a platinum record, a gold record and another one on the way to potentially becoming gold. This bill has had very strong bipartisan support in both chambers even though the version that passed in the Senate last week differed from the version that passed in the House back in April, but the House agreed to take up the bill as amended by the Senate, and it’s expected to be signed by President Trump.

You can check out some reactions on the progress of this bill, below.

To read the entire bill, click here

UPDATE [10/11/2018]: President Trump has signed the Music Modernization Act into law today.


 

Lost Profits Arising from Foreign Sales: WesternGeco LLC v. ION Geophysical Corp.

By Alex Rhim

Summary:

The US Supreme Court held in favor of Petitioner WesternGeco LLC (“WesternGeco”) on the issue of whether 28 U.S.C. § 271(f)(2) (2010) and 28 U.S.C. § 284 (2012), taken together, entitled damages award for lost foreign profits against Respondent ION Geophysical Corp. (“ION”). Since the Court found that the combined focus of the two statutory provisions recognizes inclusion of foreign lost profits resulting from a domestic infringement, WesternGeco was entitled to damages award. 

Facts:

ION manufactured and shipped components to companies abroad. The shipped components were assembled by those foreign companies after shipment into a system used to survey the ocean floor. This system was indistinguishable from patents owned by WesternGeco. 

Procedural History:

WesternGeco sued ION for patent infringement under §§ 271(f)(1) and (f)(2) in the United States District Court for the Southern District of Texas. The jury found ION liable and awarded WesternGeco damages of $12.5 million in royalties and $93.4 million in lost profits under § 284. ION moved to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because § 271(f) does not apply extraterritorially. The District Court denied the motion.

On appeal by ION, the Court of Appeals for the Federal Circuit reversed the award of lost-profits damages. ION was liable for infringement under § 271(f)(2), the Federal Circuit reasoned, but § 271(f) does not allow patent owners to recover for lost foreign profits. WesternGeco petitioned for review in the US Supreme Court. On review, the Court vacated the Federal Circuit’s judgment and remanded for further consideration in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct. 1923 (2016). The Federal Circuit reinstated the portion of its decision regarding § 271(f)’s extraterritoriality on remand. The Court granted certiorari again to review this case. 

Relevant Statutory Provisions:

“Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in a whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” § 271(f)(1).

“Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial non-infringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” § 271(f)(2).

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” § 284.

Holding:

The US Supreme Court held WesternGeco’s damages award for lost profits was a permissible domestic application of § 284. The Court reversed the Federal Circuit’s decision to deny damages award and remanded for further proceedings.

Reasoning:

While there is a presumption against extraterritoriality when applying federal statutes, this presumption can be overcome by a two-step test: “whether the presumption against extraterritoriality has been rebutted” or “whether the case involves a domestic application of the statute.” The first step can be rebutted by a “clear indication of extraterritorial application” in the text of the statute. The second step can be determined by identifying the focus of the statute and whether a conduct relevant to that focus has occurred domestically.

The Court deliberately and expressly avoided discussing the first step because such discussion can potentially have far-reaching effects on statutory interpretation of statutes other than the Patent Act, which is not something the Court was ready to decide on.

Under the second step, a statute’s focus is identified by analyzing the provision at issue with attention to context. The focus and the overriding purpose of § 284 is the infringement. In addition, the focus of § 271(f)(2) is domestic conduct. Taken together, domestic infringement is the focus of the statute in this context. The conduct at issue here was directly relevant to the focus of domestic infringement because ION supplied the infringing components from the United States.

ION’s counterarguments were unsuccessful in overcoming the Court’s decision. First, ION claimed that the focus of § 284 is “self evidently on the award of damages.” However, the Court rejected this argument since what a statute authorizes, such as damages, is not necessarily the focus. Second, ION asserted that the Court’s decision was an extraterritorial application of § 284 but this argument was also mistaken since the overseas events after shipment were merely incidental to the infringing domestic act of supplying the components. Third, in light of the reasoning in RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016), ION extracted a general principle that “damages awards for foreign injuries are always an extraterritorial application of a damages provision.” However, this argument was unconvincing to the Court because the interpretation of § 1964(c) in RJR Nabisco was about applying the presumption against extraterritoriality of an injury requirement. Injury requirement and damages requirement are separate legal concepts.

PCT Collaboration Search and Examination Pilot Effective July 1, 2018

By Michael Stein

A new pilot program, the Collaborative Search and Examination (CS&E) under the Patent Cooperation Treaty began effective July 1, 2018, with the United States Patent and Trademark Office (USPTO), the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), and the State Intellectual Property Office of the People’s Republic of China (SIP), collectively known at the IP5 offices, participating in the program.

Instead of other similar pilot programs, applicants will select international patent applications to be handled under the CS&E.  A first, only international applications filed in English will be accepted.  After some time, international authorities that work in languages other than English will begin to accept patent applications in those other languages into the pilot program.

Under the pilot program, an examiner of the IP5 office selected as the International Search Authority (ISA) will perform a search and examination, to generate a provisional international search report and written opinion.  Examiners of the other participating IP5 offices will each provide his/her contribution to the main examiner, taking into account the provisional international search report and written opinion. The main examiner will prepare the final international search report and written opinion after considering the inputs from the peer examiners.

Requests for participation in the pilot program will be accepted from July 1, 2018 to June 30, 2020.