Risk of ”Standard-Essential” Patent Litigation to Bitcoin

It’s tempting to think that Bitcoin services would be immune to patent litigation.

After all, Bitcoin protocol is open source and seems to be in the public domain. Satoshi Nakamoto, the pseudonymous designer of Bitcoin, uploaded a whitepaper describing the currency on October 31, 2008, and he released operative source code months later. Neither Satoshi nor anyone else filed a patent application within a year of these events, so Bitcoin should be public domain, right? Besides, as a former Bitcoin entrepreneur scoffed, “There is no issuer, who are they gonna sue?”

The answer may be “they will sue everyone.” As online merchants have learned, an issued patent can be asserted across an industry. As cryptocurrency businesses continue to grow, its operators will face similar patent litigation risks.

There are at least three types of patents that could be asserted against Bitcoin operators: (1) pre-October 2008 patents that claim elements of Bitcoin’s protocol, (2) patents that should not have been issued at all, and (3) patents for non-obvious applications of Bitcoin and other cryptocurrencies.

In this post, I address only the first sort of patent.

Patents filed years ago may cover portions of the Bitcoin protocol. Although Satoshi’s complete invention does not appear to be claimed by any patent application, elements of Bitcoin were publicly known long before 2008.

Bitcoin is a decentralized peer-to-peer open-source reusable proof-of-work cryptographic protocol. It was unprecedented at the time of its invention, but Bitcoin owes its existence to cryptographic proof-of-work concepts developed years earlier. Bitcoin was also presaged by theoretical digital currencies proposed a decade earlier.

Satoshi was apparently the first to combine all of Bitcoin’s features, but a patent over parts of the protocol may be asserted against Bitcoin adopters. This is because patents grant their owners the right to exclude others. Multiple patents

Originally appeared at: http://www.jdsupra.com/legalnews/risk-of-standard-essential-patent-77329/