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Blockchain Technologies Are Being Patented in Canada – What does this Mean for Future Blockchain Patents?

02/01/2019

We had previously written about the emergence of and issues of patenting blockchain technology in Canada.

Over the course of the past year there has been an increase in the number of Blockchain patents filed in Canada.

Notably, in 2018 at least two Blockchain patent applications have received a grant in Canada, including Canadian Patent No. 2 981 511 to Nasdaq, Inc., US (the “Nasdaq Patent”) and Canadian Patent No 2 943 230 to nChain Holdings Limited, AG (the “nChain Patent”).

Representative claim 1 of the NASDAQ patent recites:

  1. A distributed computer system, comprising:

a first client computer system;

a second client computer system; and

a server computer system;

wherein both the server computer system are configured to communicate with a distributed Blockchain computer system that includes multiple computing nodes, each computing node storing a copy, or a portion thereof, of a Blockchain of the distributed Blockchain computer system;

wherein the server computer system comprises:

a memory configured to store:

a first and second ordered list of a plurality of data transaction requests that are each associated with a type identifier and a respective quantity value; and

a plurality of digital wallets respectively associated with different clients, each of the plurality of digital wallets respectively linked to at least one corresponding private cryptographic key and at least one identifier that has been generated based on the at least one private cryptographic key;

a transceiver configured to receive, from remote computing devices, electronic data messages that each include data transaction requests; and

a processing system that includes at least one hardware processor coupled to the memory and the transceiver, the processing system configured to:

add a received first data transaction request, which is associated with a first digital wallet and the first client computing system, to the at least one ordered list;

receive a second data transaction request, which is associated with a second digital wallet and the second client computing system

identify a match between at least the first data transaction request and the received second data transaction request;

generate, using a hash function, a first hash identifier based on data included in the first digital wallet;

transmit the first hash identifier to the second client computing system;

generate, using a hash function, a second hash identifier based on data included in the second digital wallet; and

transmit the second hash identifier to the first client computing system;

wherein the first client computer system comprises at least one hardware processor and a transceiver that are configured to:

generate, based on the second hash identifier and the first data transaction request, a first blockchain transaction; and

transmit a first message based on the first blockchain transaction to the distributed blockchain computing system for inclusion of the first blockchain transaction into the blockchain,

wherein the second client computer system comprises at least one hardware processor that is configured to:

generate, based on the first hash identifier and the second data transaction request, a second blockchain transaction; and

transmit a second message based on the second blockchain transaction to the distributed blockchain computing system for inclusion of the second blockchain transaction into the blockchain, and

wherein the processing system is further configured to monitor the blockchain to verify that the first blockchain transaction and the second blockchain transaction have been included into the blockchain.

Whereas the original Satoshi paper1 describes a transaction system wherein a payor transfers a coin to the next owner by digitally signing a hash of the previous transaction, with no information corresponding to the payee’s obligations, the Nasdaq Patent described a system of matching orders between two separate parties2.

The Nasdaq Patent describes an exchange that uses a matching process in conjunction with block chain transactions. A first client generates a transaction request, which the exchange system stores in an “order book”3. The Nasdaq Patent teaches querying a market Blockchain to determine whether the first client has sufficient assets to complete the transaction request. The system subsequently is used to “identify a match”4 between two transaction requests (“For example, a new received order “A” that is of size 10 may be matched against two contra-side orders that are each of size 5.”5)

Once a match is identified, the claim language indicates that the exchange system generates hashes “based on data included in” each respective parties “digital wallet”, and circulates the aforementioned party specific hashes to the respective counter parties to the transaction. Each party to the transaction is subsequently configured to submit a Blockchain transaction to a Blockchain system (which Blockchain system may be private or closed and maintained by the exchange). The exchange monitors the Blockchain system, and the effect of having the Blockchain transaction incorporated into the maintained Blockchain system is that the assets forming the transaction requests are transferred.

In contrast to the Blockchain system outlined by the Satoshi Paper (which signs prior transactions), the nChain Patent describes a Blockchain like application which involves a tiered network where the system reviews and validates “transaction receipts.”

Representative claim 1 of the nChain Patent recites:

  1. A computer-implemented method performed by a validation one of a plurality of computing devices in a network, the method comprising:

receiving, at the validation computing device, a transaction request

requesting transfer of a transaction amount of virtual currency from a sender account to a recipient account, the sender account being associated with transaction receipts, the transaction request comprising (a) references to first copies of the transaction receipts, or (b) the first copies of the transaction receipts;

requesting, by the validation computing device, second copies of the transaction receipts associated with the sender account from at least two of the plurality of computing devices in the network;

receiving, by the validation computing device, the second copies of the transaction receipts from fewer than all of the plurality of computing devices in the network;

determining, by the validation computing device, whether the first copies have been tampered with by comparing the first copies and the second copies of the transaction receipts to one another;

when it is determined that the first copies have not been tampered with, generating, by the validation computing device, at least one new transaction receipt for the transaction request, the at least one new transaction receipt indicating the transaction amount of the virtual currency has been transferred from the sender account to the recipient account; and

forwarding, by the validation computing device, the at least one new transaction receipt to fewer than all of the plurality of computing devices in the network for storage thereby.

The Canadian Intellectual Property Office (CIPO) had found that the nChain Patent’s claims of a distributed network with a plurality of computers that is reliant upon “transaction receipts” to validate transactions is patentable.

In the nChain Patent claims a client node sends a request for a transaction, and attaches a reference to a previous transaction receipt(s). A validation computing device then requests the same transaction receipt from at least two other sources in the distributed network. Validation includes determining whether the transaction receipt, sent with the transaction request, matches the copy from the two other sources through the use of a hash of the transaction request and digital signatures.

Once a transaction request is validated by the protocol (i.e. the prior transaction receipts are consistent), the corresponding new transaction receipt (based on the transaction request) is sent to some, but not all of the distributed network.

Therefore, the nChain Patent is claiming a Blockchain system wherein the full distributed ledger is stored in a subset of nodes by design, and in order to validate transactions other nodes are forced to request “transaction receipts” from the subset of nodes.

In terms of guidance for Blockchain patents in the future, the above granted patents provide guidance that certain Blockchain related functions can be patentable. CIPO has demonstrated willingness to allow patents for Blockchain innovations.

For more information or for questions on how to patent blockchain technologies, please contact one of our high-tech professionals.

This article is for information purposes only and does not constitute legal or professional advice.

Author: Filip Boskovic


1 https://bitcoin.org/bitcoin.pdf
2 See the Nasdaq Patent, Figures 2A to 2D, which provide an easy to follow visual reference to the above.
3Ibid, para [0042]
4Ibid, claim 1
5Ibid, para [044]
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