Use of Blockchain in IP Protection
Blockchain, the technology behind cryptocurrencies like Bitcoin, is finding new and innovative applications in fields not only connected to the fintech sector but also in areas as diverse as the defence industry and notary services. It is even being used in gift card and loyalty programmes. Due to the technology’s high suitability for data management, blockchain is also being increasingly adopted in intellectual property (IP) protection. This article, based on the China Intellectual Property Rights (IPR) Small and Medium-sized Enterprise (SME) Helpdesk Guide on IPR Protection for AI Technology and Application of Blockchain in China, explores current and future uses of blockchain in IP protection in China.
In essence, blockchain is an open digital ledger of information that can be used to record and track any transaction. The information on transactions is shared on a peer-to-peer network allowing all parties to see, exchange and verify it. This allows for transparency among multiple parties, all of whom can see what will be entered onto a ledger in advance, without any single party having the ability to change entries later on. Each transaction or ‘block’ is transmitted to all the participants in the network and must be verified by each participant ‘node’, which involves solving a complex mathematical puzzle. Once the block is verified by all, it is added to the ledger or ‘chain’.
These characteristics make blockchain highly suitable for data management, and thus a useful tool for IP protection also, as it could be used to show evidence of registered and unregistered IP rights. For example, in copyright protection it can be used as evidence of authorship, and in trademark protection it could serve to prove the first use of the trademark. While the use of blockchain technologies in IP protection is still in its nascent phase, there are already some cases of its practical application in China.
Use of blockchain to register copyright in China
While copyright registration is not mandatory in China to enjoy the right, the registration certificate is often requested when commencing enforcement procedures, and it can also serve as prima facie evidence in court. The use of blockchain can also facilitate copyright registration. If a user logs into the copyright registration website using blockchain technology, they can register at any time or place, enabling a more efficient process than copyright registration agencies alone can currently provide. The registration information is recorded on the chain with an immutable timestamp, which forms a powerful proof of rights. Using blockchain could offer a more effective means of copyright registration.
Blockchain could also be used in China to invalidate a bad faith copyright registration certificate, since the technology can provide evidence of authorship from the moment the work was first created. Bad faith copyright registration occurs when an entity/person maliciously registers copyright that does not belong to them, which regularly occurs in China as copyright registration does not undergo substantial examination. If the true copyright owner has used blockhain to preserve evidence of authorship, this can help invalidate the certificate given to the bad-faith registrant.
Blockchain to prove prior use of trademark
Blockchain technology can be used to record the prior use of a trademark, meaning that it can prove that the trademark was used by the claimant at a certain date, for example, if a right owner sells a cup online with their brand on it. When they copy all the website information to the blockchain, they will be able to prove in the future that they are already using that brand for selling. The right holder could also create an information chain with a timestamp of the first time the trademark was used. This method would effectively solve the problem of proving prior use in cases of trademark dispute. While not yet in use, this technology is likely to be available in the near future.
Blockchain as a means of trade secret preservation
Blockchain technology uses a ‘hash algorithm’; it transfers each piece of information on the chain into a unique ‘hash’ (usually a number sequence) with a timestamp. This can be used to encrypt trade secrets. Since the recorded information is in the form of hash value and not that of the trade secret itself, the specific content of the trade secret is not exposed. Therefore, blockchain technology can provide proof of existence without exposing any trade secret content.
Blockchain technology can also track the theft of trade secrets. Cases of trade secret theft usually involve internal employees; after the theft, the employees sometimes use the data to start their own business or join a competitor, while the plaintiff (original owner of the trade secret) often struggles to prove that the data had been stolen. The advantage of using blockchain is that downloaded information leaves a trace, allowing the trade secret owner to locate the source of the theft. This can then be used as valid evidence in a lawsuit, facilitating trade secret enforcement.
Legal basis for preservation of evidence through blockchain
In September 2018, the Supreme People’s Court of China issued the Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Cases by Internet Courts (Provisions). The Provisions stated that the Internet Courts, which specifically handle online infringements, shall accept electronic data as evidence if the submitter can prove its authenticity. This provision legally determines the validity of electronic evidence preserved by blockchain. Both Chinese and foreign companies are allowed to present blockchain evidence in China’s Internet Courts.
How does preserving evidence by blockchain work?
Taking copyright infringement evidence preservation as an example, the right holder captures the infringing page, calculates its hash value and uploads that to the blockchain. During a trial, the court ensures that the electronic evidence has not been tampered with and establishes authenticity through a hash value consistency check. There have been cases in China in which the courts approved evidence preserved by blockchain. One of the most famous cases concerns Douyin’s (also known as TikTok) claim against Baidu in 2020, where ByteDance, the owner of Douyin, successfully used blockchain evidence in the Internet Courts to prove copyright infringement.
While blockchain is already considerably facilitating SMEs’ IP enforcement, it can be expected that evidence preserved by blockchain technologies will be more widely used in China in the coming years, including outside of the Internet Courts system.
This article is based on and includes excerpts from the China IPR SME Helpdesk Guide on IPR Protection for AI Technology & Application of Blockchain in China.
The China IPR SME Helpdesk supports SMEs from European Union (EU) member states to protect and enforce their IPR in or relating to China, Hong Kong, Macao and Taiwan, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (email@example.com) and gain access to a panel of experts in order to receive free and confidential first-line advice within 3 working days.
The China IPR SME Helpdesk is an initiative by the EU.
To learn more about the
China IPR SME Helpdesk and any aspect of IPR in China, please visit our online
portal at http://www.ipr-hub.eu/
 Clark, B. (2018, February). Blockchain and IP Law: A Match made in Crypto Heaven? Retrieved from <https://www.wipo.int/wipo_magazine/en/2018/01/ article_0005.html. >
 See: Matej Michalko, How TikTok Used Blockchain to Defeat Copyright Infringement, IPWatchdog.com. 17th March 2020, ,viewed 5th November 2020, <https://www.ipwatchdog.com/2020/03/17/tiktok-used-blockchain-defeat-copyright-infringement/id=119878/>