The Cryptocurrency Open Patent Alliance (COPA) has teamed up with Unified Patents to combat the growing issue of patent trolls in the blockchain and cryptocurrency sectors. This initiative, known as the “Blockchain Zone,” aims to address concerns regarding patents held by non-practicing entities (NPEs) that target various technologies including non-fungible tokens (NFTs), wallets, and smart contracts.
The primary objective of this collaboration is to shield blockchain companies and developers from excessive legal challenges posed by patent trolls. These entities often leverage the high costs associated with litigation to coerce settlements from companies that use similar technology without permission. Patent trolls typically do not practice the inventions associated with their patents, focusing instead on monetizing them through licensing or legal action.
Recent data indicates that patent trolls represented a significant portion of litigation in the United States, accounting for 58% of all patent-related lawsuits last year. Notably, 95% of these cases targeted technology firms. The leaders in the crypto space have voiced strong concerns about the negative impact of such practices on innovation and the ability of the industry to flourish.
The crypto sector has already experienced controversies involving patent trolls. For instance, the DeFi Education Fund recently acquired a patent related to linking off-chain data to blockchain technology from True Return Systems, who had previously initiated infringement claims against protocols like MakerDAO and Compound Finance. This acquisition was part of a settlement that effectively halted such claims.
In addition, the Ethereum Name Service (ENS) is currently disputing a patent granted to Unstoppable Domains. ENS argues that it was the true innovator behind the technology used for blockchain-based domains, further exemplifying the ongoing challenges within this evolving landscape.
