Summary: Innovations associated with Bitcoin/Blockchain -- advancements which are largely Free/Open Source software-centric -- are under threat from financial giants that effectively besiege/threaten startups using a barrage of software patents
THE USPTO insists that it makes the US more competitive, but in many cases it actually helps large companies undermine small ones, not foreign ones.
When the financial services industry started paying attention to blockchain technology, many companies, seemingly as a reflex, sought patent protection for their ideas.
It was ironic, since the original bitcoin blockchain was a breakthrough of open-source development, in which software code is made freely available for anyone to use or modify. As the industry has gained a clearer understanding of how distributed-ledger technology could change its business, it's begun to see the merits of such openness in supporting collaborative innovation, and the limitations of the traditional, you-can't-touch-this approach.
Some are even using a hybrid strategy, pursuing patents to secure a competitive advantage – or at least protect themselves from legal challenges – while publishing code and inviting others to improve it by submitting fixes or patching bugs. The situation underscores the cultural differences between the banking and technology fields as the former looks to the latter for help meeting the demands of an increasingly digital world.
"Thankfully, a lot of software patents pertaining to payments and finance are being invalidated these days (thrown our by court), more so than in any other field.""Over the past few months," one of these articles says, "some of the world’s largest financial companies including Goldman Sachs, Bank of America and Mastercard – have been patenting promising Blockchain methodologies. Despite a common perception that Blockchain is Open Source and developers can freely use Sotoshi Nakamoto’s ideas from bitcoin to build new systems, it still could mean costly legal problems for fledgling startups, lawyers and others are saying."
We wrote about this not too long ago in relation to MasterCard. A lot of the above culminated in the publication of "Big Banks Are Stocking Up on Blockchain Patents" (early yesterday in Wall Street media). To quote:
In the headlong rush to revolutionize modern finance, blockchain enthusiasts are overlooking one potentially costly problem: their applications, built on open-source code, may actually belong to someone else.
Recently, some of the biggest names in business, from Goldman Sachs to Bank of America and Mastercard, have quietly patented some of the most promising blockchain technologies for themselves. Through mid-November, the number of patents that companies have obtained or said they’ve applied for has roughly doubled since the start of the year, according to law firm Reed Smith.