Intellectual creations and blockchain

Last year we saw a real meltdown in the value of so-called “cryptocurrencies”. However, for the legal world, what really matters is the technology behind these “cryptos”, the famous chain of immutable blocks, or simply “blockchain”, with potential application for almost all areas of law.

Blockchain is a kind of digital database that continually grows and can be used to record or track transactions. At certain time intervals, the system produces a “block” of new transactions and this block of information is added to the previous chain of blocks.

The recording of creations in blockchain therefore provides robust proof of the time original works are created.

The blocks thus created are immutable, distributed in a decentralised manner in the network and interconnected with each other in an encrypted form. Once a particular transaction is recorded in a blockchain network, it is virtually impossible to delete or modify its content, whose history, incidentally, can be checked by anyone.

It is mainly these characteristics – immutability, decentralisation, and transparency – that has generated tremendous interest in this technology. In the intellectual property area, blockchain has the potential to offer quite interesting solutions that are alternative or complementary to the methods already used to protect intangible assets.

In Brazil, so-called “creations of the spirit”, for example, texts, films, music, photographs, drawings, scientific articles and slogans, etc., can be protected by copyright and are independent of registration.

However, proof of authorship, particularly of the date the intellectual work was created, becomes extremely important in dispute situations, or in cases where the work is used by third parties without the author’s permission.

Currently, it is possible to obtain registrations for such works at bodies such as the National Library, the School of Fine Arts and even in notary public offices. Such options, however, are often excessively bureaucratic, slow and/or expensive, making them unattractive to protect certain types of intellectual creations, for example clothing collections or advertising films.

It is in this scenario that blockchain technology can be used quite simply and effectively. As outlined above, in addition to being immutable, transactions recorded in blockchain are dated and thus gain a timestamp. The recording of creations in blockchain therefore allows robust proof of the time original works are created.

There are already countless tools offering this type of service on the internet or through applications.

To date, we are unaware of the existence of court decisions in Brazil recognising the admissibility of evidence recorded in blockchain, especially in the intellectual property area. Considering, however, the provisions of the Code of Civil Procedure (CPC), which determines the admissibility of all evidence in the Brazilian legal system, we do not see, in principle, any obstacle to the use of documents recorded in blockchain in our country.

There is already pioneering legislation in the state of Vermont in the United States that recognises the validity of electronically recorded data in blockchain.

Abroad, blockchain technology has already begun to be used as a means of evidence in judicial disputes, and an interesting decision was handed down in June 2018 by the Hangzhou Internet Court in a copyright infringement lawsuit related to the content of a newspaper article whose hash had been recorded in the Factom and Bitcoin blockchains (Hangzhou Huatai Yimei Culture Media Co., Ltd. vs. Shenzen Daotong Technology Development Co., Ltd.).

The Chinese Court deemed that such records were reliable evidence and sufficient to be legally accepted, judging the lawsuit based on such evidence. Then in September 2018, the Chinese Supreme Court ruled that so-called Internet Courts must recognise the legality of evidence recorded in blockchain, provided that the recording process took place regularly.

The recording of intellectual creations is just one example of the possibilities for applying blockchain to legal issues. Strictly speaking, such technology has the potential to be applied to practically all branches of law, although it remains to be known what the reaction of the Brazilian Judiciary will be with respect to its admissibility in court.

In our view, all legal operators, as well as companies and individuals, should already consider the use of blockchain technology to protect their creations and rights, above all when the existing traditional ways do not meet the needs of the market, either due to the costs, length of time or excessive formalities required during the procedure.