Today Circle announced the acquisition of a substantial proportion of IBM’s portfolio of blockchain patents, or as it described them, “the fundamental assets” from that portfolio. This covers 680 patent families and nearly 1,000 issued patents worldwide, with Circle claiming to become the leading blockchain patent holder in the United States.
There was massive momentum in blockchain patent registrations during the 2018/2019 period, but comparatively little offensive activity. The notable exception was Craig Wright’s claims about being Satoshi Nakamoto, which related to copyright and intellectual property rights over Bitcoin rather than patents. Yet last week JPMorgan faced two patent claims, one of which related directly to blockchain and the other indirectly. There’s a simple reason why patents are coming to the fore. Tokenization is taking off, so patent litigation is more financially worthwhile. We noted back in 2018 that the operators of permissioned blockchains are more likely to be targeted by patent trolls.
An obvious question is why Circle is making this acquisition. Is its intent offensive or defensive? Circle might lose some brownie points if it started threatening others with the patents. Other blockchain firms such as Blockstream have openly stated they would only use patents for defensive purposes, whereas that declaration was notably absent from Circle’s announcement. There’s also the Crypto Open Patent Alliance (COPA), whose members likewise pledge never to use their patents other than for defensive purposes. Its members include Block, Blockstream, Coinbase and Strategy, but not Circle. While the patents could serve both offensive and defensive purposes, the most compelling rationale may be neither in the traditional sense.
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