INTELLECTUAL

PROPERTY
TECHNOLOGY
LAW
PROJECT
SUBMITTED BY

AKHIL SAJEEV
 INTRODUCTION
– A block chain is a decentralized, distributed database that is used to maintain a
continuously growing list of records, called blocks. Each block contains a
timestamp and a link to a previous block.
– By design and by purpose block chains are inherently resistant to modification of
the data.
– A block chain serves as an open, distributed ledger that can record transactions
between two parties efficiently and in a verifiable and permanent way.
– Both block chain and Bitcoin are a creation of ‘Satoshi Nakamoto’. In Satoshi
Nakamoto’s whitepaper ‘Bitcoin: A Peer to Peer Electronic cash system’ released
in 2008, block chain technology made its public debut.
– When entrepreneurs understood the power of block chain, there was a surge of
investment and discovery to see how block chain could impact supply chains,
healthcare, insurance, transportation, voting, contract management and more.
– Block chain technology enables the creation of a decentralized environment,
where the cryptographically validated transactions and data are not under the
control of any third party organization.
– Any transaction ever completed is recorded in an immutable ledger in a
verifiable, secure, transparent and permanent way, with a timestamp and other
details. With Block chain a centralized third party is no longer needed.
– For example if ‘A’ wants to give $100 to ‘B’, without Block chain, A would send his bank a
request to send $100 of his account to his friends’ account. The bank would check a few things
like whether A actually has the $100. If everything checks out the bank will send A’s $100 to B’s
account. If Block chain technology is used A creates a transaction of $100 to B and sends this
transaction over the internet. This transaction is included in a block. All miners check whether
this is a valid transaction. If it is, B has the $100 of A.
 HISTORY OF BLOCKCHAIN
TECHNOLOGY
– It is important to note that the idea of cryptographically secured
block chains existed previously.
– This was devised by Stuart Haber and W. Scott Stornetta in 1991.
The idea was to create a system wherein timestamps on documents
could not be tampered with or altered or backdated.
– In 1992 merkle trees were incorporated into the design, making it
more efficient by allowing several documents to be collected into
one block. However, this technology went unused and the patent
lapsed in 2004, four years before the inception of bitcoin.
– . In 2004, computer scientist and cryptographic activist, Hal Finney introduced a
system called RPoW (reusable proof of work)
– The system worked by using a non-exchangeable or a non-fungible hash cash
based proof of work token and in return created an RSA signed token that could
then be transferred from person to person.
– RPoW solved the double spending problem by keeping ownership of tokens
registered on a trusted server that was designed to allow its users throughout the
world to verify its correctness and integrity in real time.
– RPoW can be considered as an early prototype and a significant early step in the
history of cryptocurrencies.
– In 2008, a white paper introducing a decentralized peer to peer cash system called bitcoin was
posted to a cryptography mailing list by a person or group using the pseudonym Satoshi Nakamoto
– The most important factor that was changed by Satoshi Nakamoto was using a hash cash method,
which is a proof of work system which was initially used to limit email spam and DOS attacks, to
timestamp the blocks without the requirement of a trusted party to sign. This also reduces the speed
in which blocks can be added to the chain.
– Bitcoin was different from previous block chain technology because, rather than using a hardware
trusted computing function like the RPoW, the double spending protection in bitcoin was provided
by a decentralized peer-to-peer protocol for tracking and verifying the transactions.
– In short, bitcoins are “mined” for a reward using the proof of work mechanism by individual
miners and then verified by the decentralized nodes in the network.
– It was on 3rd of January 2009 that bitcoin came in to existence when the first bitcoin block was
mined by Satoshi Nakamoto.
– In 2013, Vitalik Buterin, a programmer and a co-founder of the bitcoin magazine stated that
bitcoin needed a scripting language for building decentralized applications.
– Vitalik started the development of a new block chain based distributed computing platform called
ethereum, that featured a scripting functionality, called smart contracts.
 BLOCKCHAIN CERTIFICATES & LEGAL
ACCEPTANCE

– A special block chain transaction that contains both a cryptographic fingerprint of

your IP assets and a proof of your ownership. This transaction is the root of the block
chain certificate.
– The software will chain together all certificates related to the same project, therefore
allowing users to create a digital trail of records proving the evolution of the project.
– Each certificate can potentially be independently verified by any third party.
– Block chain certificates are valid worldwide because they are not guaranteed by any
central authority, but by mathematics. Moreover, the explicit admissibility in court of
blockchain-based records and signatures is starting to appear in many jurisdictions
around the world.
– The convenience of the block chain as a public registry is clearly perceived and
encouraged by many nations (US, Sweden, Japan, Brazil, UK, Dubai …). The EU
is heading in the same direction, and the current eIDAS regulation already
prohibits courts from denying the legal admissibility of timestamps as evidence
on sole grounds that the timestamp does not meet the more stringent requirements
of an EU-qualified timestamp.
– Moreover with expert testimony, the purely mathematical strength of a block
chain certificate can be presented in court everywhere.
– From the perspective of information, the real innovation of distributed ledger technology
is that it ensures the integrity of the ledger by crowdsourcing oversight and removes the
need for a central authority.
– In other words, transactions are verified and validated by the multiple computers that
host the block chain.
– For this reason it is seen as “near unhackable,” because to change any of the information
on it, a cyber-attack would have to strike nearly all copies of the ledger simultaneously.
– While the traditional concept of block chain is an open and anonymous network, there
are also “private” block chains which pre-screen who is allowed to administer the ledger.
 WORKING OF BLOCK CHAIN
TECHNOLOGY

– A Block chain is characterized by censorship resistance, immutability and global

usability, and has a global network of validators called miners, who maintain it
through block rewards, named crypto tokens. Decentralization assures fault
tolerance, attack resistance and collusion resistance.
– Anyone has the autonomy to access a block chain, to download a copy and play
a role in maintaining the block chain, thus that computer becoming a node. The
copy will be actively updated along with every copy on every other node, edits
can only be made to the block chain with general consensus among the
individuals running a node.
– The process of adding a new block (containing thousands of transactions) to a
block chain, by hash verification procedures, is named mining. The new block is
linked to the last one in block chain.
– One of the building blocks of Blockchains is Database. Block chain is not a
‘normal’ database as it does not exist of tables with rows and columns.
– Rather it exists of a ledger of past transactions. Next important element is the
Block. Every block in a block chain consists of the same components namely a
block number, hash of the previous block, Nonce, a random number for Proof of
Work, Data: the transactions, Timestamp with the time the block is created /
found and the hash of the current block.
– Example: In the first block there is one transaction: some person 1 gets $100. If
person 1 gives $20 to person 2, the 2nd block will contain information of the
same. Now all the miners check whether person1 has $20.
Looking back at block 1, they all see person1 got $100 so he has the $20. If person
1 gives $50 to person 3 and person 2 gives $10 to person 4, the same will be stored
in the next block. all the miners check whether person 1 has $50: combining block 1
and 2 one can see that person1 still has $100−$20=$80. The second check would be
whether person 2 has $10 and that would be answered by checking block 2 alone.
– Another element of block chain is Digital Signature. Each user owns a pair of
private key and public key.
– The private key that shall be kept in confidentiality is used to sign the
transactions. The digital signed transactions are broadcasted throughout the
whole network.
– The typical digital signature is involved with two phases: signing phase and
verification phase.
 CHARACTERISTICS

DECENTRALIZATION
– In conventional centralized transaction systems, each transaction
needs to be validated through the central trusted agency (e.g., the
central bank), inevitably resulting to the cost and the performance
bottlenecks at the central servers.
– Contrast to the centralized mode, third party is no longer needed in
block chain. Consensus algorithms in block chain are used to
maintain data consistency in distributed network.
 CHARACTERISTICS

PERSISTENCY
– Transactions can be validated quickly and invalid
transactions would not be admitted by honest miners. It is
nearly impossible to delete or rollback transactions once
they are included in the block chain. Blocks that contain
invalid transactions could be discovered immediately.
 CHARACTERISTICS

ANONYMITY
– Each user can interact with the block chain with a
generated address, which does not reveal the real identity
of the user. Block chain cannot guarantee the perfect
privacy preservation due to the intrinsic constraint.
 CHARACTERISTICS
– AUDITABILITY

– Bitcoin block chain stores data about user balances based on the Unspent
Transaction Output.
– Any transaction has to refer to some previous unspent transactions. Once the
current transaction is recorded into the block chain, the state of those referred
unspent transactions switch from unspent to spent. So transactions could be
easily verified and tracked.
– Block chain systems are categorized roughly into three types: Public Block
chain, Private Block chain and Consortium Block chain.
– In public block chain, all records are visible to the public and
everyone could take part in the consensus process.
– Differently, only a group of pre-selected nodes would participate in
the consensus process of a consortium block chain.
– As for private block chain, only those nodes that come from one
specific organization would be allowed to join the consensus
process.