Cryptocurrency world must protect itself from 'low-quality patents' says Square lawyer as biz joins Open Invention Network

'I think the legislative framework around patents needs a deep examination, and I don’t think I'm alone in saying that'


Interview Square, which last year founded the Crypto Open Patent Alliance (COPA) to defend cryptocurrency technologies against patent trolls, has now joined the Open Invention Network (OIN) to further bolster its legal defenses.

Max Sills, counsel at Square and general manager at COPA, told The Register that the digital payment giant is "not anti-patent by any means. The point of a patent is to incentivize people to do really good creative work."

"What's actually happening in crypto is people are being creative regardless of government incentives," he said. "There's a ton of really fast, really open work on cryptocurrency exchanges, wallets, transmission mechanisms, and what we see is the people who are getting the patents aren't really any of the people who are contributing, usually, the core technology.

"So the system is a little skewed. What COPA wants to do is to make sure that crypto can be used by everyone."

The people who are getting the patents aren't really any of the people who are contributing, usually, the core technology

Now Square has joined OIN "for the same underlying reason we created COPA," Sills told us. "Square uses and contributes to many open-source projects and open technologies, and we only see ourselves doing that more in future. So joining OIN is natural for us because it's a commitment to the community that we're going to be a good actor."

The core of OIN is the agreement signed by all members that grants royalty-free access to Linux-related patents and cross-licenses Linux system patents between members. OIN was founded in 2005 by big names including IBM, Red Hat, and SUSE, in part to respond to the threat to Linux from Microsoft and its war chest of patents at that time. In 2018, Microsoft itself joined OIN.

Is Square aware of litigation threats from holders of cryptocurrency-related technology?

"If you look at the majority of patents being issued for crypto, they're very low quality," Sills told us.

"What people are doing is mostly copying publicly disclosed white papers or inventions that were disclosed in source code on GitHub and wrapping them up and trying to get patent protection on it.

"I'm not going to comment on existing matters, but there has already been litigation. There was a crypto-mining patent that was going around, and the entity that was holding it was threatening a lot of miners. It was just a single patent but that alone was enough to really disturb the ecosystem.

"The actual litigation threats we've seen have been very small in number so far but every single one has left an outsized impact on the developer community. We anticipate there to be a lot more in the future.

"We see the writing on the wall, and we love and depend on open source. So we're sending a signal to others in the industry that they should consider joining, too."

The actual litigation threats we've seen have been very small in number so far but every single one has left an outsized impact on the developer community

Sills said along with joining organisations like OIN and COPA, one of the best defenses against patent litigation is "if they threaten you over a specific library, keep open dialogue with other companies because there's power in numbers and often if there's a patent troll after you, they're also after a lot of other people."

Public disclosure of technology is also helpful. "You can't patent stuff that has been publicly disclosed so businesses should continue to post code and white papers and explain the techniques that are core to their business but do not use trade secrets," said Sills.

What does he think of the existing law around patents? "I think the legislative framework around patents needs a deep examination, and I don’t think I'm alone in saying that," he told us.

"Specifically with software and cryptocurrency technologies and open source, patents are becoming more of a block to innovation than something that incentivises. You can contrast that with, say, a drug that might take 10 years to develop, that makes sense to give someone a patent.

"It's also important to behave ethically," Sills added. For businesses that depend on open-source software, "it's really the minimal ethical thing you can do, to promise not to be aggressive over something you just found that someone else wrote, that's making you money." ®


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