The blockchain and cryptocurrency sector continues to evolve at a rapid pace, driven by relentless innovation despite fluctuating market sentiment. While trading volumes and investor enthusiasm may ebb and flow, the underlying technological advancements—ranging from Layer 2 scaling solutions to decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs)—underscore a maturing industry where intellectual property (IP) protection is becoming increasingly strategic.
Although open-source development remains a foundational principle of the crypto ecosystem, companies investing in novel blockchain applications must consider securing patents to protect core innovations. This is especially critical in a space where first-mover advantage and technical differentiation can define long-term success.
The Rise of Blockchain Patent Filings
Patent activity related to blockchain and crypto technologies has seen significant growth over the past decade, with a noticeable spike in filings during the early 2020s. Although the rate of new applications has recently stabilized, the cumulative trend reflects growing recognition of blockchain’s commercial potential across industries.
Major financial institutions such as Mastercard, Visa, and Bank of America, along with tech giants and retail conglomerates like Alipay and Capital One, are among the top filers of blockchain-related patents. These organizations are actively exploring ways to integrate distributed ledger technology into payment systems, supply chain tracking, identity verification, and secure data management.
This surge in patenting activity signals a shift: blockchain is no longer just a disruptive experiment—it's a legitimate field of technological investment. For startups and mid-sized firms, this landscape presents both opportunity and risk. While large corporations build expansive IP portfolios, smaller innovators must act early to secure rights to their unique solutions before competitors do.
Overcoming Patent Eligibility Challenges: Lessons from Rady v. BCG & De Beers
One of the biggest hurdles in obtaining blockchain patents lies in meeting U.S. patent eligibility standards under 35 U.S.C. § 101. Courts have consistently ruled that abstract ideas—such as methods of organizing data or financial transactions—are not patentable unless tied to a specific, inventive technological improvement.
In Rady v. Boston Consulting Group, LLC (2022), the plaintiff held a patent (U.S. No. 10,469,250) covering a system that used blockchain to authenticate high-value physical items like gemstones through spectral analysis and 3D scanning. The idea was innovative: create a tamper-proof digital record of an object’s unique characteristics on a decentralized ledger.
However, the court dismissed the case, ruling that the claims were directed to an abstract idea—collecting, analyzing, and storing data—implemented using generic computer components and blockchain technology. Citing the landmark Alice Corp. v. CLS Bank decision, the court found that merely recording data on a blockchain did not constitute an “inventive concept” sufficient to transform an otherwise ineligible idea into patentable subject matter.
This outcome highlights a crucial lesson for patent drafters: simply applying blockchain to an existing process is not enough. To survive eligibility challenges, claims must clearly articulate how the invention improves the functioning of computers or networks, enhances data integrity in a novel way, or solves a technical problem specific to distributed systems.
Effective strategies include:
- Detailing specific hardware configurations or algorithmic improvements.
- Explaining how the blockchain integration reduces computational load or increases verification speed.
- Emphasizing technical advantages over prior art in the patent specification.
Avoiding Inventorship Disputes: Insights from Lancium v. BearBox
Beyond eligibility, another critical issue is inventorship accuracy—a factor that can invalidate a patent if mishandled.
In BearBox LLC v. Lancium LLC, a dispute arose over whether Austin Storms, creator of the “BearBox” system (a containerized crypto mining solution with dynamic power management), should be named a co-inventor on Lancium’s U.S. Patent No. 10,608,433. The patent covered methods for adjusting mining operations based on energy demand—a concept central to sustainable crypto mining.
Storms had shared technical documentation with Lancium executives before filing his own provisional application. However, after reviewing timelines and communication records, the court ruled that Storms had not contributed to the conception of the patented invention prior to Lancium’s independent development.
The takeaway? Companies must maintain detailed, time-stamped records of all R&D activities. Best practices include:
- Using inventor notebooks or digital logs with audit trails.
- Requiring employees and contractors to sign IP assignment agreements.
- Establishing clear collaboration protocols when working with third parties.
Key Patenting Strategies for Blockchain Innovators
To navigate this complex landscape successfully, innovators should adopt a proactive and technically grounded approach:
1. Focus on Technical Contributions
Avoid framing inventions as business methods wrapped in blockchain jargon. Instead, emphasize how your solution improves system performance, security, scalability, or interoperability.
2. Draft Claims with Specificity
Use precise language that ties abstract concepts to concrete implementations—for example, specifying consensus mechanisms, node architectures, or cryptographic techniques unique to your design.
3. Leverage Comprehensive Specifications
The patent specification should provide rich technical detail, including flowcharts, system diagrams (in prose form), and pseudocode where applicable. This strengthens both prosecution and enforcement positions.
4. Monitor Competitive Filings
Conduct regular freedom-to-operate searches and landscape analyses to identify potential conflicts or white spaces for innovation.
5. Consider International Protection
Blockchain operates globally; so should your IP strategy. File via the Patent Cooperation Treaty (PCT) to secure options in key markets like the U.S., EU, Japan, and South Korea.
Frequently Asked Questions (FAQ)
Q: Can blockchain-based software be patented in the U.S.?
A: Yes—but only if it provides a technical solution to a technological problem. Purely abstract uses of blockchain (e.g., "using blockchain for recordkeeping") are unlikely to pass § 101 scrutiny.
Q: Is open-source development incompatible with patenting?
A: Not necessarily. Many companies release code under open licenses while retaining patent rights for commercial enforcement or defensive purposes.
Q: How early should I file a patent application?
A: As soon as you have a working prototype or detailed design. Public disclosure before filing can bar patent rights in many countries.
Q: What types of blockchain inventions are most patentable?
A: Innovations in consensus algorithms, privacy-preserving techniques (e.g., zero-knowledge proofs), cross-chain interoperability, and energy-efficient mining systems show strong patent potential.
Q: Can I patent a DeFi protocol or NFT standard?
A: Possibly—if the protocol introduces a novel technical mechanism for asset transfer, liquidity pooling, or metadata handling that goes beyond generic smart contract logic.
Q: Does having a patent guarantee freedom to operate?
A: No. A patent gives you the right to exclude others but doesn’t ensure you aren’t infringing someone else’s IP. Always conduct due diligence before launching a product.
Blockchain technology is no longer just about decentralization—it's about differentiation through innovation. As competition intensifies, securing robust intellectual property protection will be essential for long-term viability.
By focusing on genuine technical advancements and adopting sound IP strategies from the outset, developers and enterprises alike can turn groundbreaking ideas into enforceable assets—ensuring they don’t just participate in the digital revolution but lead it.