Who owns blockchain? Goldman, BofA amass patents for coming wars

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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.

As the blockchain—essentially a shared, cryptographically secure ledger of transactions—evolves and startups like Chain and Hyperledger open their source code to the public, the risk is growing that patents will turn into powerful weapons in protracted lawsuits over intellectual property, especially in the hands of trolls trying to cash in on the technology’s rise.

“Open-source code—that doesn’t necessarily restrict the ability to patent the underlying innovation,” said Patrick Murck, a long-time blockchain legal expert who joined Cooley LLP last month. “Anybody who’s investing in the ecosystem, anybody who’s interested in the technology should be worried about this.”

Goldman spokeswoman Tiffany Galvin declined to comment, while Bank of America didn’t respond to requests for comment.

Playing defence

Mastercard’s Justin Pinkham said that like many other companies, it’s simply filing patents to defend its blockchain inventions—as it always does, in all areas of its work. The company has filed for more than 30 patents related to the blockchain and cryptocurrencies, he said.

“We have expanded our patent portfolio to protect the company’s thinking, innovations and intellectual property,” said Pinkham, the head of payments innovation at Mastercard Labs.

In the fledgling blockchain industry, stakes are rising fast. Originally developed to record bitcoin transactions, the distributed ledger has attracted big-name backers like Blythe Masters—a former JPMorgan banker who has become one of its most vocal proponents because of its potential to reshape financial services, supply chain and health-care industries.

In finance alone, blockchain’s adoption could create a multi billion-dollar market in the coming decade, from just tens of millions today, according to Gil Luria, an analyst at Wedbush Securities.