The U.S. Patent and Trademark Office (USPTO) has posted a new patent filing from Bank of America that describes a multi-signature blockchain system that can be applied to the Internet of Things (IoT). The system will allow a wide variety of devices to exchange data, while also allowing users to curate that data and share it with third parties at will. However, while this patent might be a good thing for Bank of America, it probably won’t be such a good thing for the blockchain industry.

Bank of America Could Become a Blockchain Patent Troll

What sort of interest might Bank of America have in a blockchain system for the Internet of Things? This large American bank does not have any obvious ties to the IoT industry. Therefore, it would be warranted for skeptics to wonder why Bank of America filed this particular patent.

Banks have attempted to demonize cryptocurrencies and, by extension, blockchain for practically as long as this up and coming technology has been well-recognized. Now not only is Bank of America filing a patent that will apply blockchain and data to IoT, but it has also filed a patent for recording and storing cryptocurrency-related transactions in a blockchain-based system. Bank of America is reportedly one of the largest holders of blockchain patents with a staggering 50 filings.

This would seem to imply that Bank of America is looking for ways to legally control what blockchain and cryptocurrencies are used for, even if controlling them on a technological level is near-impossible. This is bad news for cryptocurrency and blockchain startups that wish to operate in the United States because they may unintentionally infringe on patents held by Bank of America or a similarly large corporation, like IBM.

IBM has made no secret of its interests in blockchain and has also been awarded a patent that describes a system directed at autonomous self-servicing devices within a blockchain-based IoT system.

By filing patents like these, multinational corporations, like Bank of America and IBM, appear to be positioning themselves to become the patent trolls of the blockchain world. Patent trolls are notorious for never actually using the technologies described by the patents they own. They earn their money by suing individuals and businesses that unintentionally infringe on their intellectual property instead.

Bank of America could become the worst sort of patent troll simply because it can afford to hire the best patent attorneys. This is likely to reduce the level of growth in the blockchain industry, due to the fact that businesses with less clout will be less likely to invest in this nascent industry if they are afraid of legal backlash from a corporation that owns multiple blockchain-related patents.

Would Patent Reform Help?

The cryptocurrency and blockchain community may have been blindsided by the idea that large corporations would file patents for DLT-related applications. Perhaps some true believers in this technology could have ousted the corporations by filing patents first, then allowing anyone who asked politely use the technology described. Failing that, paying attention to the flaws in patent law may help keep these so-called “trolls” that can hire good lawyers under control.

If anyone should have received the patent for recording and storing cryptocurrency transactions, it should have been Satoshi Nakamoto, but he, she, or they chose to stay anonymous and disappear, probably for personal safety reasons. Satoshi Nakamoto invented the original application of this technology, but Bank of America is likely to win the patent because it was the first to file an application.

A better patent system would involve forcing Bank of America to prove that it hired Satoshi Nakamoto to invent Bitcoin as the first practical blockchain application if it wants to patent cryptocurrency transactions. That would be unlikely, given a headline describing bank bailouts baked into the Bitcoin Genesis Block that has been interpreted as a criticism of banks and the governments that support them. By forcing businesses to prove that they invented or purchased the technology described in patent filings, most patent troll behavior would be eliminated.

Does this sound paranoid?

Well, at their best, patents can incentivize innovation by enabling inventors to monetize their work even when they don’t have the means to bring their inventions to market on their own. However, patents also create effective monopolies on the systems and technologies they describe and can be used to crush smaller businesses that want to use them, especially in the hands of a banking industry that has a history of spreading malicious propaganda against cryptocurrencies and blockchain technologies.

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