How might this technology affect IP-intensive industries · counterfeit medicines (Rx and some OTC products) entering the legitimate supply chain • Secure supply chain between manufacturer

© 2018 Baker & McKenzie LLP

Blockchain Revolution? How might this technology affect IP-intensive industries

Ruth Burstall and Birgit Clark 12 December 2018

Agenda

1 What is blockchain?

2 How can blockchain be applied in IP intensive industries? Some examples

3 Possible applications in the world of IP

4 Who owns blockchain? Implications for contracting

5 Outlook

1 What is blockchain?

Confused by jargon?

© 2018 Baker & McKenzie LLP 5

Situation: Amy needs to send money to Bob

Replacing the intermediary

Amy’s BankAmy Bob’s Bank BobTR

AD

ITIO

NA

L

AP

PR

OA

CH

BLO

CK

CH

AIN

AP

PR

OA

CH

Amy Bob

BLOCKCHAIN


user and recipient wish to conduct

a transaction (i.e. send data,

cryptocurrency, contract, etc.)

cryptographic keys

assigned to User and Recipient

transaction is “broadcast” to

and “verified” by a

decentralised P2P network

(“nodes”); using algorithms

▪ “miners” in the network “validate”

the transaction

▪ creation of a new date stamped

block (“proof of work”)

▪ network balances updated

▪ new block added to the

blockchain

▪ immutable and transparent

record of transaction

▪ cryptographic signature assigned

Transaction complete

U R

How a blockchain transaction works


Models

A centralised system

Model 1

Current system

An open network that anybody can

access. The digital ledger of

transactions is shared, transparent

and run by all participants

Model 2

Public blockchain

(permissionless)

Model 3

Private blockchain

(permissioned)

The preferred option of most

regulated entities. It is a private

system which controls access to

certain invited participants.


Use cases

▪ Payments

▪ Reconciliation

▪ Securities

FinancialServices

PharmaCreative services

Public sector

Retail EMI Real Estate

Applications across industries

Nature

▪ Supply chain

▪ Record keeping

▪ Asset management

▪ Digital identity

▪ Compliance

▪ Smart contracts

2 Applications in IP intensive industries


▪ RFID tags in clothing interact with blockchain

▪ Allowed clothes to ‘tell their own story’ –those scanning tag could access details about the design

▪ Possible application in sustainability messaging, promotions, authenticity checks

▪ RFID / QR Code technology also developing fast

▪ Verify origins and ownership of diamonds

▪ Number on diamond / features of diamond and ownership on a blockchain

10

Industry use cases: examples

Provenance: “Everledger”: Marketing / consumer

engagement: “Babyghost”:

https://www.youtube.com/watch?v=GAdjL-nultI

https://www.youtube.com/watch?v=GAdjL-nultI


▪ Interaction with NFC tags in physical world

▪ If NFC tag is absent, this indicates product is counterfeit.

▪ As NFC interacts with blockchain more difficult for counterfeiters to fake.

▪ Potentially help identification by customs

▪ Benefit of a global solution

▪ Identify where diversions out of legitimate supply chain occur

▪ Trace origin of products for easier enforcement

▪ Discourage tampering

▪ Consumer trust / ensuring repackaging is legitimate

Industry use cases: examples

Anti-counterfeiting: “Qadre” Parallel trade:


• EU wide system to prevent counterfeit medicines (Rx and some OTC products) entering the legitimate supply chain

• Secure supply chain between manufacturer and end user

• MA holders required to give packs a unique serial number and anti-tamper packaging

• Implementation by February 2019

• Requirement to add unique electronically readable product identifier

• Trace the product through the supply chain and verify authenticity

• Implementation by 2020

Impetus from legislation

Falsified Medicines Directive Drug Supply Chain Security Act


Blockchain holds the potential to speed up, reduce costs and improve authenticity:

Industry use cases: examples from the healthcare industry

Healthcare

Secure supply chain

Manage patient data

Accelerate R&D

Proactive, personalised healthcare

Improve service delivery

3 Possible applications in IP


IP Enforcement

Possible applications in IP

Anti-counterfeiting

Supply Chain Tracking

Provenance Authentication

Smart Contracts

Digital Rights Management

Patents

Trade Secrets

Smart IP Rights and Registries

Evidence of Use

Certification Trademarks

Evidence of Creatorship

Traceability

4 Who owns blockchain?


Who owns blockchain?

Patents

▪ Selecting and managing relationships with providers

▪ Contractual considerations

Open

source

approach

Hybrid

approaches Trade

secrets

5 Outlook


Hurdles to large scale application

1. High cost per transaction

2. Time delay

3. High energy usage

4. Compatibility and standards

5. Public's confidence in technology and participants

6. Anti-trust / privacy concerns

But solutions are being developed

▪ Addressing bandwidth issues by reducing computing power required by each user computer / node

▪ Addressing storage issues by using hybrid models, in which not all data is stored on the blockchain (storing less significant data "off chain")

Will blockchain live up to the hype?

20

Documents

How might this technology affect IP-intensive industries · counterfeit medicines (Rx and some OTC products) entering the legitimate supply chain • Secure supply chain between manufacturer