Hedera Hashgraph, A Blockchain Distributed Ledger Tech Rival, Wants Patent Law Protection


In 2015, Hedera Hashgraph was conceived as an algorithm that slow grew to a valuation of $6 billion, after raising $100 million with the investments from institutional and accredited investors. This whole system is protected with the use of patent, though there are many companies that have adapted at least part of their platform. Some of those companies have included Maidsafe, Tolar, Aleph, InterValue, CryptoNear, Monet and Trias. However, the question of legality arises, specifically due to the fact that these projects are not necessarily located within the United States.

Hedera Hashgraph comes from Swirlds, Inc, which is a software company. Swirlds wants to challenge the current laws, specifically regarding patent laws. Right now, there are no global laws established, but the company wants to extent the restrictions against other companies with patents, even if they are in another part of the world.

The algorithm helps to strengthen the safety for consumers when they exchange data and participate in transactions while they are online, using a decentralized server. There are nodes that record the information, linking it the blockchain. Rather than Swirlds heading up this platform, they have managed to establish a group of 39 organizations that work in different industries. The company does not use shares to manage the group, since every entity involved has equal power, though outside parties will not have a voice. To protect the platform, there is no open source protocol, and there are three patents protecting the privacy.

As far as the control of Hedera Hashgraph, there is still some debate in the air over whether Swirlds will be able to make themselves the patent-holder in every country that uses the algorithm. It could be beneficial for the other organizations to file for patents, but this option is largely unlikely, despite how strong of a foundation it would establish.

In a different turn of events, this plan could backfire entirely. The other organizations could bring up the idea that they want to hold patents too, considering their equal power. However, establishing a blanket contract on the management of this patent could completely eradicate any conflicts within the group.

If Swirlds wants to get patent protection in another country, they could use either the Paris Convention or the Patent Cooperation Treaty. The convention includes 177 member-countries, while the PCT only has 152. However, each one would required someone that has already received a patent I the United States to file the application. Every country will have individual costs and procedures that the applicant has to abide by.

When it comes down to the decisions, Swirlds has the power to say which entity is getting overly involve in the patent. They can even say that anyone not in their 39-member group is an infringer. However, it is unlikely that the United States would have any power to prosecute an entity that copied the algorithm in another country, since the procedures vary. Many countries would make the patent holder prove their violation again, which means that there would be multiple cases to pursue.

The only way that Swirlds would win a lawsuit is to exhibit financial damages and loss, and the court would probably order that amount to be paid. However, if this case was presented with no value, then the case would likely hear both sides. Patent infringement qualifies under civil law, and it is unlikely that a foreign government can and would shut down the infringers Main Net upon launch. Even though it has been proposed that Swirlds could get the infringer’s profits from an ICO, it is unlikely this would happen without a prior history. For instance, the SEC considers these types of coins a utility token, which has no inherent value. However, if they see it as a security, then there may be a more solid case.

Technology evolves quickly, surpassing the speed of releasing new patent laws. Inventors need to take on the roles of protecting the platforms and the algorithms that run them. There are some laws that already help an investor to protect their algorithm from being copied, but without taking power from the original inventor. Right now, it is no longer a matter of if lawmakers could protect inventors; it is a matter of if they should in these scenarios.

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