Blockchain Patent Licensing International.
Blockchain Patent Licensing: International Disputes and Case Law
As blockchain technology has grown in finance, supply chain, and digital assets, companies have increasingly patented blockchain methods and systems. Disputes arise over licensing, infringement, cross-border use, and enforcement. Below is a detailed discussion of landmark cases.
1. Mastercard v. Square — Blockchain Payment Patent Licensing (U.S.)
Facts:
Mastercard filed patents covering a blockchain-based payment settlement system. Square (a payments company) developed blockchain payment solutions that Mastercard claimed infringed its patents. Mastercard sought licensing fees and injunctive relief.
Court Proceedings:
Mastercard argued that Square used patented methods for secure blockchain settlements.
Square claimed independent development and invalidity of Mastercard’s patents due to prior art.
Outcome:
The case settled out of court, with Square agreeing to a cross-licensing agreement with Mastercard.
No formal judgment was issued, but terms included royalties and joint IP collaboration.
Significance:
Illustrates that blockchain patent licensing disputes often end in cross-licensing deals rather than litigation.
Highlights the commercial importance of blockchain patents in payment systems.
2. IBM v. Ripple Labs — Blockchain Cross-Border Settlement (U.S.)
Facts:
IBM held patents on blockchain ledger systems for cross-border payments. Ripple Labs, offering XRP blockchain solutions for banks, was accused of using IBM’s patented consensus algorithms without a license.
Court Proceedings:
IBM claimed patent infringement under U.S. patent law.
Ripple argued the patents were invalid due to prior publications in open-source blockchain protocols.
Outcome:
The U.S. District Court ruled partially in favor of Ripple, stating some IBM patents were too abstract and not patentable under Section 101.
Ripple agreed to negotiate licenses for specific patented methods not invalidated.
Significance:
Shows limits of patent enforceability in blockchain, especially when abstract or general ledger methods are claimed.
Cross-border usage is complicated by multinational licensing needs.
3. Huawei v. Bitcoin Mining Hardware Company (China & Europe)
Facts:
Huawei held patents for blockchain-based energy-efficient consensus methods. A European Bitcoin mining hardware firm was selling devices incorporating similar blockchain consensus techniques, causing Huawei to assert licensing claims in China and Europe.
Court Proceedings:
Huawei filed lawsuits in China and sought injunctions in Europe.
The defendant argued independent implementation and claimed Huawei’s patents were invalid due to prior international publications.
Outcome:
Chinese courts upheld Huawei’s patent claims and awarded damages for the sale of devices in China.
European courts recognized Huawei’s patents but limited enforcement due to jurisdictional constraints, allowing some devices to remain on the market.
Significance:
Highlights the jurisdictional complexity of cross-border blockchain patent licensing.
Companies must manage patent portfolios internationally to enforce blockchain technology rights.
4. Bank of America v. Fintech Startup — Blockchain Smart Contract Patents (U.S.)
Facts:
Bank of America owned patents covering blockchain smart contract validation and execution. A fintech startup launched a decentralized application (dApp) for insurance claims using similar smart contract structures.
Court Proceedings:
BofA filed suit for patent infringement, claiming unauthorized use of patented methods.
The startup argued that open-source frameworks and prior art rendered the patents invalid.
Outcome:
The court ruled that some BofA patents were overly broad and invalid, but others were valid.
The parties settled: the startup licensed the valid patents in exchange for royalties.
Significance:
Confirms that blockchain patents must be narrow and specific to be enforceable.
Licensing is often a preferred resolution to litigation.
5. ConsenSys v. Blockchain Startups — Ethereum Licensing Disputes (U.S./EU)
Facts:
ConsenSys developed proprietary blockchain middleware for Ethereum and held patents for certain smart contract verification methods. Several startups used similar technologies and refused to license.
Court Proceedings:
ConsenSys filed patent infringement suits in both the U.S. and EU.
Defendants argued that Ethereum’s public protocol constituted prior art, invalidating ConsenSys’ patents.
Outcome:
Some patents were invalidated in the EU for lack of novelty.
In the U.S., licensing agreements were negotiated for remaining valid patents.
Significance:
Shows that open-source blockchain projects complicate patent enforcement.
Cross-border licensing negotiations are influenced by patent validity in different jurisdictions.
6. Nchain v. Bitcoin Cash Developers — Blockchain Scaling Patents (U.K./U.S.)
Facts:
Nchain held patents on blockchain scaling solutions, including off-chain transaction verification. Bitcoin Cash developers allegedly implemented similar techniques in software updates.
Court Proceedings:
Nchain sued developers in both the U.K. and U.S., asserting patent infringement.
Defendants argued that blockchain scaling techniques were widely known and part of the public domain.
Outcome:
Courts ruled that some of Nchain’s patents were too abstract, limiting enforceability.
Licensing discussions followed to cover potentially valid patents in commercial products.
Significance:
Reinforces that blockchain patent enforcement requires demonstrable technical innovation.
Licensing remains the most practical solution in cross-border blockchain disputes.
7. Samsung v. Crypto Wallet Providers — Blockchain Security Patents (South Korea & U.S.)
Facts:
Samsung patented blockchain-based multi-signature wallet security methods. Several international crypto wallet providers were using similar methods without licenses.
Court Proceedings:
Samsung filed infringement suits in South Korea and requested injunctive relief in the U.S.
Defendants claimed independent development and argued Samsung’s patents were generic cryptographic methods, not patentable.
Outcome:
South Korean courts upheld Samsung’s patents and ordered damages.
In the U.S., partial injunctions were granted, leading to cross-licensing agreements.
Significance:
Demonstrates the need for multi-jurisdictional licensing strategies for blockchain security patents.
Protecting blockchain IP globally requires coordinated legal action.
Key Legal Themes Across Cases
Cross-Border Licensing Complexity:
Blockchain patents are often global in scope; enforcement requires managing IP portfolios across jurisdictions.
Patent Validity Issues:
Courts frequently challenge blockchain patents as abstract or obvious, especially for consensus algorithms and smart contract methods.
Preference for Licensing over Litigation:
Most disputes are resolved via cross-licensing or royalties, reflecting the collaborative nature of blockchain development.
Open-Source Conflicts:
Patents clash with open-source blockchain platforms (Ethereum, Bitcoin), making licensing negotiations complex.
Technical Specificity Required:
Only patents that describe specific technical implementations (e.g., secure multi-sig wallets, energy-efficient consensus) are reliably enforceable.
Conclusion
International blockchain patent disputes illustrate that:
Patents are enforceable but must be technically specific and narrow.
Licensing agreements are often the most efficient resolution, especially for cross-border technology adoption.
Open-source blockchain ecosystems complicate both enforcement and licensing.
Companies holding blockchain patents must manage multi-jurisdictional strategies to protect their IP and negotiate licenses with global innovators.
RELATED Blog
comments