Tokenization of IP rights is something that is sure to come. Companies like Lexit, Molecule, the Open Innovation Platform DEIP are looking for ways to tokenize and liquidate IP rights for different reasons (like M&A or just to increase collaboration in innovation).
On one hand, it is known that IP rights involve different legal barriers such as being dependent on a registry, having long-waiting times for granting of the right which create friction in the market.
On the other hand, there is the speed and borderlessness that blockchain technology has introduced. How do they match? Where does the law stand? Let’s step back and take a look at the IP rights in this post and have a general understanding.
Intellectual Property Rights- A Small Introduction
“Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time”[1]. Rights are divided into two: Copyright and Industrial Property rights. For this series, the focus is on the latter.
Industrial Property Rights
These rights are sub-divided according to the subject matter of the protection. The most important ones are trademarks, designs and patents.
Trademarks protect distinctive signs of a product or service.Patents protect technical innovations and processes.Designs protect industrial designs.
Industrial property rights do not require a protection to be used. However, if one wants to ban third parties from using them, the protection and therefore the registration is necessary. Patents, trademarks and designs need a registration in the registry of the patent and trademark office of the respective country.
In principle, the protection is limited with the country where the right is granted. Therefore, a company which wants to protect its right in many countries should apply separately to the patent and trademark offices of the countries in which the protection is wanted.
As there is no global patent or trademark law, procedures in each country are different and take different amount of time to be completed. This costs money, time and requires know-how to fill out the forms.
To ease the pain, there are international conventions and treaties which aim at creating a hassle-free application experience for the applicants. They allow applicants to designate their applications to different countries at the same time by filing only one application.
To name a few, on the international level, there are Patent Cooperation Treaty (PCT) or Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to the Madrid Agreement.
On the EU-level there is the Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark for trademark and designs.
As for the patents, there is the European Patent Convention, which is not only limited with EU Member States.
In the next post, patent rights will be explained and assessed how much they are suitable for tokenization.
References :
[1] ‘WTO | Intellectual Property (TRIPS)- What Are Intellectual Property Rights?’ (Wto.org, 2019) <https://www.wto.org/english/tratop_e/trips_e/intel1_e.htm> accessed 4 October 2019.