{ "episodeId": "SLP249", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "stephan_livera": { "name": "Stephan Livera", "role": "guest", "tag": "STEPHAN" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.19, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, for episode two hundred and forty-nine, we are exploring the topic of Bitcoin patents and how to defend Bitcoin against these potential kinds of attacks from patent trolls. Joining me today are Stephan Kinsella, past guest on the show, and Jed Grant. brand of Open Crypto Alliance. This show brought to you by Swan Bitcoin, the fastest way from zero to Bitcoin. They've got easy sign up, they've got no altcoins, it's really cheap, they're available in all states in the US. 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For years, we have all heard that mining is only profitable if you're investing tons of money, but now with Compass, everyone is able to tap into economies of scale and access reasonably priced hardware and cheap industrial power rates. And if you're unsure about how to get started with mining Bitcoin Compass offers hardware and hosting bundles which, which eliminates the need for advanced technical knowledge and allows you to quickly get started mining Bitcoin with hardware you own. Visit them at minewithcompass dot com and start mining Bitcoin today. Stefan and Jed, welcome to the show." }, { "speaker": "stephan_livera", "time": "02:46", "start": 166.09, "text": "Thank you, thanks for having us. Thanks, Stefan." }, { "speaker": "stephan", "time": "02:49", "start": 168.51, "text": "So today we're gonna talk a little bit about intellectual property and what it means in terms of Bitcoin and property rights as well, as I think many listeners of the show are libertarians themselves, but not all All of them. And so I think it might be good, well, firstly, let's talk, let's hear a little bit about, from each of you, just a little bit on your background. Jed, if you wanted to start." }, { "speaker": "stephan_livera", "time": "03:09", "start": 188.63, "text": "Sure. Yeah. I'm, I'm a technologist. I've been in tech, well, since the '80s when I got my hands on an Apple II and, and started writing code. I've, I've always been interested by cryptography, somewhat of a cypher punk, ended up" }, { "speaker": "stephan_livera", "time": "03:30", "start": 210.02, "text": "Two years, more or less, and focused on, on security and, and crypto and technology in that space. So, so Bitcoin's something that I've been following since basically when, when the white paper came out as a novelty, and, really liked the tech and wanna see it change the world. So that's sort of my focus. For my professional side, I run a company called KYC3, and I, I set out to change the way we do KYC because it's fundamentally broken. So Somewhat similar to, to what Stephan's gonna say, I'm not a lawyer, but, but I'm a KYC guy, but I'm anti-KYC. So, there you have it." }, { "speaker": "stephan", "time": "04:08", "start": 247.79, "text": "Interesting. And, Stephan, just for listeners who maybe they haven't heard you before, can you tell us a little bit about yourself?" }, { "speaker": "guest_2", "time": "04:15", "start": 254.91, "text": "Sure. yeah, I'm a patent attorney in Houston and, Texas. I'm from Louisiana originally, and I'm a libertarian, and, been interested in libertarian theory and, and intellectual property stuff for a long time now" }, { "speaker": "guest_2", "time": "04:30", "start": 270.02, "text": "Came out and, started buying it when I lost a bet to Vijay Boyapati 'cause I thought in 2012 that the government would kill it. so I lost that bet, had to buy some bitcoins to pay him off, so I bought some for me at the same time. So, those bitcoins are now worth ninety thousand, or no, hundred and twenty thousand dollars that I gave him." }, { "speaker": "stephan", "time": "04:53", "start": 292.71, "text": "Yeah, that's great. Vijay, our, our mutual friend, he's a regular guest on my show, and for listeners who aren't familiar, Stephan is, really leading thinker in the libertarian world, especially in the areas of intellectual property and also just generally in terms of, private property theory, and, explaining some of the thought of, some of the leading lights of the Austrian libertarian world, such as Hans-Hofer and others. I think maybe we, we can start there as well, because I think for people, they might not be as familiar with the-- this way of thinking, and they might be thinking, \"Well, hang on, I thought, you know, these people put in work to create intellectual property, so why shouldn't that also be respected as a, quote-unquote, you know, private property right? Why is that not correct?\"" }, { "speaker": "guest_2", "time": "05:35", "start": 335.12, "text": "Right. And I guess I thought that too at first, like most people do. I mean, I come at it from a private property point of view, a favor of free markets and private property and individual liberty, capitalism" }, { "speaker": "guest_2", "time": "05:50", "start": 350.25, "text": "You hear about this thing called intellectual property, which includes mainly patent and copyright, which covers inventions and artistic works, and you just assume that, well, it's another type of property right, so it's part of capitalism. But the more I studied the issue and when I started practising, practising it in the early nineties as a lawyer, started looking into it more closely, understanding the legal system, and then understanding, libertarian and, and economic arguments about it more deeply, I came to the conclusion that, you know, the systems are completely Antithetical to private property and free markets and competition, and should be abolished. And, and, and I mean completely. I think the patent system and the copyright system are completely unjustified and do tons of harm in the world, especially the patent system. basically it gives people a monopoly from the government, which allows them to prevent people from competing with them, and that's anti-competitive and against the free market and violates their property right. in particular, the patent system, allows you to get a, a license from the government Government to sell your product that you, that you claim to have come up with on your own, for about seventeen years without anyone competing with you on that. so it, it delays innovation because other people don't bother to innovate if they can't sell a product that's like yours. So it slows down innovation and it lets you rest on your laurels and collect monopoly profits because you're the only guy who can sell this thing. So the standard arguments for it that you need it to incentivize innovation are all flawed. There's no empirical research for it, and in fact, that way of About it is confused because the purpose of law isn't to have the government come in and twiddle the levers in the market and optimize things that are broken, like that's the market failure idea of the Chicago School, which I don't believe in, and I don't think the government is really-- their goal is to do that, and they're not equipped to do it, and the patent law system won't do that anyway, all it does is help monopolies grow larger and help cartels and oligopolies form." }, { "speaker": "stephan", "time": "07:48", "start": 468.09, "text": "Right. And so some might- Believe that, oh, this business model, it requires intellectual property for it to be viable, and without that, these businesses would just not work, and maybe they would say, \"Oh, music or art or maybe writers.\" And but fundamentally, it comes back to, as you were saying, it's about private property rights and the need for private property rights to be granted or issued only in things that are scarce, like rare earths. And I guess as you're saying, if you-- or if the government grants somebody an intellectual property right, then in some way- Shape or form, they are giving some people the right to control what other people do with their own private property, whether that be their own piece of paper that they are writing down a poem or, whatever, or their own computer, right? And so that you are giving some people the right to control other people's computers, but we are just, in some sense, using the guns of the government to enforce that, and that is anti-private property rights." }, { "speaker": "guest_2", "time": "08:45", "start": 524.71, "text": "Yeah, and there are definitely some business models that, won't work without IP, such as the business model of being a An attorney. just like, just like without a tax system, there wouldn't be tax attorneys and, those types of CPAs, and without a drug war, there wouldn't be defense attorneys making money defending people, who are facing prison time for doing something that's a victimless crime. And there are probably some business models in, in, in, you know, the regular business world that would have a tough time making it without IP law. But by the same token, nothing is for free. So if you make something easier, you're taking it away from something else. And Other business models are, you know, the seen and the unseen by Bostian. We see that some companies claim to make profits from their copyrights and their patents, but that's at the expense of innovations and creativity that's suppressed in the hands of other people by, by virtue of these laws. So from the empirical point of view, people that just have this thing like you need it, well, we're just used to it. We're used to these laws, so it's hard to imagine what it's like, what it would be like to have a fully free market, just like in most countries outside Lesson is something the government provides, and they, they can't imagine what it would be like to live in a free market healthcare. but that doesn't mean that we shouldn't move in that direction. For anyone interested in looking into this further, there's a ton of resources on my site, C four, the number four, S I F dot org, and, you can find there, let's say, a link to Bolger and Levine's book, Against Intellectual Monopoly, which just goes in detail over the empirical arguments given in favor of patent and copyright and shows how each one of" }, { "speaker": "stephan", "time": "10:20", "start": 620.35, "text": "And for listeners, I would echo that, so definitely go and read Stephan Kinsella's, Against, Intellectual Property, and also that Michelle and, Baldwin book, where basically there are many examples of how society has been slowed down. The progress of society has been slowed down. Arguably, the Industrial Revolution was delayed by, I believe, eighteen years, and that's the example from the first chapter in that book. So it's a really great example. Actually, I'm curious if you guys have any other- Examples of where progress of society has been halted by these kinds of intellectual property rights or patents in one specific example." }, { "speaker": "stephan_livera", "time": "10:58", "start": 657.94, "text": "Well, Schnorr signatures in Bitcoin have been pre-prevented by IP right. The patent on that was, delayed the implementation of Schnorr signatures for seventeen years. So we're only now gonna get them in Taproot, but they should have been in Bitcoin from day one." }, { "speaker": "stephan", "time": "11:13", "start": 672.77, "text": "There you go. and, any other examples from your side, Stephan, in terms of, progress being delayed?" }, { "speaker": "guest_2", "time": "11:18", "start": 677.91, "text": "Well, there's" }, { "speaker": "stephan", "time": "11:18", "start": 678.21, "text": "lots of pharmaceutical," }, { "speaker": "guest_2", "time": "11:20", "start": 679.53, "text": "drugs for- For example, that, are in limited supply quite often, and, some people actually die because they can't get it, because it's only one manufacturer and they don't make enough and no one else can, can come in and compete. Lots of examples like that. Oh, I think one of the examples that Bolger and Levine give in, in, in their book is, because of the, all the patents on the airplane in the US from the Wright brothers and others, the entire, airplane industry was ground to a halt, and, when World War I Industry in the US for, for a good generation." }, { "speaker": "stephan", "time": "11:53", "start": 712.59, "text": "Yeah. And I think, I guess while we're still on this idea of intellectual property being anti-liberty, I think another interesting idea is just that we're, we're moving into a world where some of these things aren't really enforceable anyway, in some cases, where it, maybe it's music, it's like how famously, you know, RIAA and MPA were going after, you know, the file sharing, but they weren't able-- ultimately, they weren't able to stop it, and so they had to adapt. And Became more about, we're living in this world of massive abundance, so there's so much music and so much writing out there. Now it's more about how do you get out of obscurity, wouldn't you say?" }, { "speaker": "guest_2", "time": "12:30", "start": 749.62, "text": "Yeah, and, I mean, of course, music has transformed as piracy and copying and streaming of music has risen to the fore with the internet. Old business models of selling CDs collapse, not just because of piracy, but because people don't really wanna own music anymore, they just wanna stream it. So yeah, a lot of musicians now make money by touring and selling Copyright and patent are both unnatural interventions into the free market, but luckily technology is emerging to help us get around those laws. So, I think the, the internet, which is a huge copying machine, along with encryption and torrenting and things like that, has basically made copyright almost unenforceable, so piracy is rampant, which is a good thing, I would, I would, I think. Patents, I think that, something like that may happen in the future when 3D printing matures, and I mean, a long time down the road when you can, you know, print your Sophisticated and expensive and, you know, advanced machines and things like that with printer in your basement, then the patent holders won't be able to stop that either. So the laws will never perish because the special interests are too entrenched and stop it and always try to ratchet the laws up and make them worse. But luckily technology is allowing us a way to evade those two regimes." }, { "speaker": "stephan_livera", "time": "13:39", "start": 819.44, "text": "And in other ways too." }, { "speaker": "stephan", "time": "13:41", "start": 820.57, "text": "Right. And that's a really good point." }, { "speaker": "stephan_livera", "time": "13:42", "start": 821.73, "text": "There's a project that, I believe is being done at MIT, I need to find the reference back, but a couple guys" }, { "speaker": "stephan_livera", "time": "13:50", "start": 830.43, "text": "Melody on the normal musical scale and to put that in the public domain so that musicians couldn't sue each other over a simple melody." }, { "speaker": "stephan", "time": "13:58", "start": 838.3, "text": "Yeah, that's really interesting. So how does the whole idea of things being in the public domain versus being, quote unquote, owned by certain people who have this, who have the right for it? Because as I understand, the other thing you hear is that some of these big companies like Disney or whatever will go out and keep trying to extend the time period so that their work doesn't go out into the open public domain. Could you just Just explain that dynamic for us." }, { "speaker": "guest_2", "time": "14:22", "start": 862.11, "text": "Yeah, so the original in the US, which sort of has the, the, the first modern set of copyright and patent laws, inspired by the British and, or the, the, the English system. So the patent system kind of emerged from the practice in England and in Europe of, of, of kings granting monopolies to their cronies, and it was, refined in England with the Statute of Monopolies in 1623. Copyright emerged from the attempt of the government to censor or control what could be printed through the Stationers' The Statute of Anne in seventeen o nine, and then the US, you know, adopted something similar to that in a more modern version in seventeen eighty nine with the country. The original terms were about fourteen years, and the idea was some artisan needs protection from his own apprentices for about two apprentice terms, which is seven years times two equals fourteen years randomly and arbitrarily. Over time, because of lobbying by owners of copyright that were about to expire and enter the public domain, the copyright term kept getting extended over and over and over again. The classic example is- Disney trying to keep Mickey Mouse from falling into the public domain, so twenty years keep getting added on here and there, to the point to where from fourteen years extendable once for fourteen years to twenty-eight years maximum, the copyright term is now the life of the author plus seventy years, which is well over a century in most cases, so a hundred thirty, a hundred forty years in a lot of cases, so it's just basically infinite at this point." }, { "speaker": "stephan", "time": "15:43", "start": 942.67, "text": "And in many cases, it-- depending on who you look at and what arguments you're reading, sometimes you'll see people who try to Oh, it should be moderated back or in some way it should be-- They, they, they're not in favor of fully abolishing government intellectual property, rather they try to moderate it back a little bit and they, they sort of treat it like it's something that where you have to try to balance the interests and so on. Why should we go the whole way? Why should we abolish government intellectual property rights? Hypothetically, if we, if we were able to do so, why should we do that?" }, { "speaker": "guest_2", "time": "16:12", "start": 972.03, "text": "Well, I mean, to me it's like saying, \"Uh, if poison" }, { "speaker": "guest_2", "time": "16:18", "start": 978.21, "text": "is bad It violates property rights. some people say don't throw the baby out with the bath water, but my retort is always, unless it's Rosemary's baby, you know? It's the spawn of Satan. so I-- It was a mistake. It didn't have as much of a negative effect before the internet, I believe, and for the modern technology age, because it was sort of a background thing, it, it probably impeded innovation to some degree, but with the internet, copyright censors speech a lot. I mean, it's used as an excuse to limit" }, { "speaker": "guest_2", "time": "16:50", "start": 1010.21, "text": "And with the speed of innovation now, a-and with, with digital technology, the patent system is posing a, a greater and greater threat to innovation as well. So it's an even bigger threat than it used to be, I believe." }, { "speaker": "stephan", "time": "17:00", "start": 1020.32, "text": "All right. So let's bring it to the Bitcoin world, and OCA. So, perhaps Jed, do you wanna just give us a bit of an overview, what is OCA?" }, { "speaker": "stephan_livera", "time": "17:10", "start": 1029.87, "text": "Sure. Open Crypto Alliance is a nonprofit effort, a few of us have, have started in the last, two months. the objective Blockchain in general, open and free as much as possible, and to prevent, patents from being granted on, on the technology, especially patents that are pirating, so they're taking existing open source technology and applying for patents on it. People are doing this, trying to patent ideas that aren't original, not their own, this type of thing. So there are a number of efforts to prevent patent abuse and patents from hindering innovation in the space. there's COPA, which actually as of today, I believe we're in touch with, and there's a lot Network which is licensed on transfer, those are both organizations that help patent holders not to sue each other or to be sued. but our approach is a bit different. We don't wanna hold any patents, we're not trying to create a patent pool or anything like that. Our objective is to raise funds and use those funds to simply fight against patents that are in the filing process in order to keep that technology in the public domain as much as possible." }, { "speaker": "stephan", "time": "18:14", "start": 1094.01, "text": "Right. And so that's probably the key difference there where, so now listeners from my prior episode with Steve Lee from- Square Crypto, we spoke about COPA, and so as I understand you guys, Jed and Stephan, it's, it's sort of like COPA is a way of pooling some resources and putting them into a, if you will, a defensive pool, such that the members don't go after each other or that if members have contributed any of their pat, their IP into COPA, then it's kind of, it's kind of accepted that you're not gonna be attacked for using that, it's a defensive thing, whereas what OCA is doing different is more like essentially trying to- Stop the creation of these kind of maliciously, people who are trying to apply for these patents and essentially there's kind of this gears turning of bureaucracy and the cost associated with defending yourself, can be quite high. And so that's why you're trying to, in some sense, nip it in the bud before it, before the cost gets high." }, { "speaker": "stephan_livera", "time": "19:08", "start": 1147.68, "text": "Absolutely. that is, that is a core element. I mean, the cost to stop a patent from being granted is significantly lower than the damage that patent could cause once granted. And, and, the people that are gonna use These patents to attack businesses are going to, you know, try to attack multiple businesses with them. They're gonna wait until businesses are somewhat successful, and they're gonna try to milk that business for a long time. So if we can, with a small one-time effort, stop some of these patents, and it's also a timing effort in that respect, because, you know, in the last two years, we've had over ten thousand patents per year filed on blockchain and, and crypto technology. Up, up to that point, there were a few hundred per year. I think there were teens when it really went kaboom, and a lot of these patents are now just winding through the system, and so now is the time to stand up and go through these and, and hopefully stop the most egregious ones so that we can prevent them from doing damage in the future. And if you, if you wanna," }, { "speaker": "guest_2", "time": "20:05", "start": 1204.84, "text": "yeah, maybe, I was gonna say maybe I can explain a little bit about how the, how the patent system kind of works in this regard and distinguish patent trolls and these other things in our model from what the other, groups are trying to do. Like as you said, Jed These groups don't sue each other, right? And maybe amass patents that each other can borrow and use for defensive purposes. One problem with that is that once you're in that pool, you have less of an incentive to acquire pat in the first place, 'cause you're not gonna use it offensively. So the, the number of patents produced, which you could use later for defensive reasons, would be diminished. But also, one reason companies acquire patents, even if they don't wanna use them aggressively or to shake down other people, is they acquire them as defensive weapons to use as a threat to keep them. So if my competitor sues me for patent infringement and they know I have a lot of patents on the same space, I could countersue them and they might not sue me in the first place, they might go after some, some smaller company, some startup. One problem with this is that a lot of patents are held not by competitors who are practicing or making products covered by their patents and maybe by their competitors' patents, but they're called patent trolls, and these are people that-- or, or they're called non-practicing entities. So they just buy up patents from someone else or they just product is covered by their patents or by anyone's patents. So if they sue you, they want a cut of your action, and you can't countersue them because they're not doing anything that you can sue them for. So you're sort of defenseless against patent trolls. So the biggest, defense against those types of threats is to try to invalidate their patents from the get-go, to, to basically show that their patents are toothless or to have them thrown out or not even granted in the first place. And so the way the process works is you file a patent application, and it has to Patent office, and that usually takes a year or two or three. And during that process, at a certain point in time, it becomes public and other people can submit prior art and try to tell the examiner or the patent office, \"Hey, consider this prior art before you grant this patent, you probably shouldn't grant the patent because this, this patent application is obvious in view of what was already known or it was already being used, right? So it's, it's not a new innovation.\" Or once it's granted, there's a limited time window you can still oppose it. So it's important" }, { "speaker": "guest_2", "time": "22:20", "start": 1340.19, "text": "Take them out of the armory of the potential patent troll and patent pirate threats to the Bitcoin" }, { "speaker": "stephan", "time": "22:26", "start": 1345.82, "text": "ecosystem. Back to the show in a moment after a word for the sponsors. Lend at HodlHodl is a global Bitcoin backed lending platform so you can lend and borrow anonymously on your own terms. So this is a peer to peer lending solution using multi sig escrow. So if you have Bitcoin and you need liquidity, or if you would like to purchase more Bitcoin using a loan, this is one possible way to do that without selling your bitcoins. Incurring a capital gains event. 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There's all sorts of features like PSBT support and address explorer, you can use passphrase's, anti-fishing words, and it is Bitcoin only. Go get yours at coinkite dot com and use the code LIVERA for a discount. Back to the show. I see, and so in some sense, we could say it's like by showing prior art, you're able to help stop the creation of these overly broad patents that can be used by these more malicious patent troll or non-practicing entities, right?" }, { "speaker": "guest_2", "time": "24:57", "start": 1496.77, "text": "That's" }, { "speaker": "stephan_livera", "time": "24:57", "start": 1496.95, "text": "exactly what we wanted to" }, { "speaker": "guest_2", "time": "24:58", "start": 1497.95, "text": "do. To get a patent, you're supposed to have four things. You have to have utility or usefulness, so you're not supposed to be able to get a patent on something that can't work like a perpetual motion machine or something that's totally destructive. Like if you came up with a bomb that would destroy the earth I haven't done that because that's not useful, that's destructive. But usually utility is easy to show. and the fact that it functions is taken for granted. You don't have to prove that because you don't have to come up with a working model, but it's assumed. The other one is you have to be the inventor of it. That is, you have to be the one that came up with the idea. You couldn't have copied it from someone else. And then the other two criteria are non-obviousness and novelty. Novelty means that" }, { "speaker": "guest_2", "time": "25:38", "start": 1538.42, "text": "it's new, no one's Yellow cars and you come up with a red car, it's obvious just, just to change the color, so you couldn't get a patent on a red car. That, that change wouldn't be non-obvious enough. Or in Europe, it's called the inventive step. So basically, if you can prior art, previous working devices that are publicly known or publications like articles or journals or scientific papers or patents themselves which are published, these serve as a record that someone else already knew about this idea and it was publicly known, and your invention is obvious in view of that, shouldn't be granted. So if The patent office prior art that, and you come up with an argument why this new patent application is obvious in view of that prior art, then the patent office can be persuaded not to grant it or to invalidate one that was already granted." }, { "speaker": "stephan", "time": "26:25", "start": 1584.67, "text": "I see. And in terms of defending against these kinds of patent troll organizations, is there some kind of asymmetry here where basically they only have to slip through one time in terms of a patent, because then they can just go after some Bitcoin business and basically hold 'em by the balls, basically, because they've got- Got this one patent that they're gonna try to nail you on and try to extract some, rents out of you for it, right? Yeah, for two reasons, and for three" }, { "speaker": "guest_2", "time": "26:50", "start": 1610.05, "text": "in the case of patent trolls. So one reason is extremely expensive to defend against such a suit. Okay? So if you're sued by someone, it's, it's gonna take hundreds of thousands of dollars, or maybe even more to defend it. And in the case of patent trolls, they have nothing to lose by suing you because you can't sue them back. And then the other reason is, once a patent is Talks with technical so called experts and they know this field, and if they say it's novel and non-obvious, then it really must be. So the patent is presumed to be valid, which means the burden is on the defendant now to invalidate the patent. So even if the patent shouldn't have been granted and it really is obvious, and you could prove it with, millions of dollars of defense attorneys proving it at a trial, you still have to overcome the burden of proof, which gives another advantage to the patent holder once it's granted and it's past the window where you could challenge it. So that is, that is why it's stacked against the defendants who are like sitting ducks and they can be victimized by the patent holders and the patent trolls." }, { "speaker": "stephan_livera", "time": "27:50", "start": 1670.43, "text": "And that's a, a major motivating factor for us. If you look at the cost benefit, I mean, it'll be somewhere between ten and thirty thousand dollars probably to, to nip some of these patents in the bud before they're granted, whereas if they are granted, one action could be, as, as Stephan just said, hundreds of thousands of dollars for the victim. So the cost benefit is a no-brainer at this On, on what you first said, Stephan, on how we're operating. I mean, crowdsourcing prior art is something that we'd like to do within the community, and that brings me to an important point. I mean, if you look at what's happening in the blockchain space and, and Bitcoin and crypto space right now, people are patenting stuff that would be like trying to file patents on TCP/IP in the nineties. there's n-- and this is because there's no organization behind Bitcoin, there's no company behind Bitcoin, there's nobody to defend it except us. and It was DARPA with TCP/IP making sure that all of this stuff was in, in the public domain, all these new protocols, and that's not happening here. So it's up to us to, to stop this right now and to make sure that the technology stays as public as it is and as" }, { "speaker": "guest_2", "time": "28:57", "start": 1736.83, "text": "open. And let me just say one thing too, just as a disclaimer, not everyone in our group is a radical, anarcho-capitalist, IP abolitionist like I am, but all of us are against the patent abuse, right? The threat of, of Patent trolls and patent pirates that are gonna be shakedown artists. So, our, our narrow focus in this group is to, is-- we w-we wanna use crowdsourcing people in the community who know this technology to help identify patents that are harmful and emerging, and also to identify all the prior art, gradually build up a database of prior art that pertains to these different technology areas that we then can use donations and funding from these companies, pretty modest, right? Jed said the cost is pretty modest, but to hire patent attorneys in the key countries To challenge the patents that are really ripe for challenging, to start establishing some precedents and, you know, once a company has a bunch of patents, a lot of them are fluff, so you pick the juiciest ones that are the biggest threats and the ones you can easily, easily get stricken down, and that starts building up a case against their whole portfolio." }, { "speaker": "stephan", "time": "30:00", "start": 1799.86, "text": "I see, yeah. And so in terms of prior art, what is normally required to prove that? Is it could it, I mean, in the, in the Bitcoin world, it could be on some prior earlier concept that was disclosed on a mailing list or a forum post or, are the, are those examples of prior art?" }, { "speaker": "guest_2", "time": "30:19", "start": 1819.39, "text": "Anything that's a, a, a publication, right, that you can find that is, accessible to the general public. So it's, in the old days, it used to be, journals and articles and brochures even for products and the products themselves and the, the publicly revealed details and also patent applications that are published, and patents that are published. So anything published can serve as prior art." }, { "speaker": "stephan", "time": "30:40", "start": 1840.48, "text": "And is the focus here mainly In the US or are you looking internationally as well?" }, { "speaker": "stephan_livera", "time": "30:45", "start": 1845.29, "text": "Definitely internationally. I'm, I'm based in Europe and, about half the group is, is, European. We have both, US and European patent attorneys in the group. That's great." }, { "speaker": "guest_2", "time": "30:55", "start": 1855.21, "text": "yeah, and I, I, we have-- It'd be good if we had some examples at hand, and I'll try to, try to find one while we're talking, but we've already identified some patents to start looking at. And what you would do is you would look at the claim of the patent. So What you need to know to do it yourself later when the patent expires. But the heart of the patent is the claims. It's a, it's a numbered series of sentences, starting from number one to number twenty or whatever, and it'll say something like, you know, a method or an apparatus for doing the following, comprising the following elements, and it'll list them A, B, and C. And that is what is the property right being claimed by the patent. So if element one is, you know, a cryptocurrency system having a, a blockchain, number one, having element B, Feature, something like that, then what you would try to do is, like if someone tried to patent store signatures now, they wouldn't be able to because that was already patented and the patent has just expired or something like that. so you would, you could produce that as prior art. so you would tell, you would tell our, our, the people interested in this to help us look, help us find papers, help us find well-known practices, help us find examples that are similar to the elements that are being claimed in these, in these dangerous patents here and provide the, provide these So that the examiner would have to review them and compare them to what's being claimed in these patents." }, { "speaker": "stephan", "time": "32:17", "start": 1936.57, "text": "So in terms of identifying," }, { "speaker": "stephan_livera", "time": "32:18", "start": 1938.21, "text": "and prior art includes code, yeah, open source code, and I, I, I'm pretty convinced that the patent offices aren't conducting a, an exhaustive review of existing open source code before granting." }, { "speaker": "stephan", "time": "32:29", "start": 1949.32, "text": "Yeah, so there's all these areas that maybe they're not looking and they should be. so also, Stephan, you mentioned earlier about dangerous applications, if you will. So what are some of the ways that you're able to identify which, you know, which kinds Patent applications are more dangerous in that sense." }, { "speaker": "guest_2", "time": "32:46", "start": 1965.53, "text": "well, m-maybe Jed has some thoughts on this too, but, the ones that, the ones that would go to the heart of what existing crypto companies need to do, right? To improve, to improve, the blockchain or the code or the architecture or business, even business models around it. Jed, do you have any particular thoughts on that?" }, { "speaker": "stephan_livera", "time": "33:03", "start": 1983.38, "text": "No, it's pretty much the space. I mean, it's, it's, yeah, if anyone could, could get leverage on a core component or, for example to be developed that are quantum resistant, this kind of thing. It's also feasible that, that patents could render it impossible to protect the blockchain because the, the new cryptography is all patented." }, { "speaker": "stephan", "time": "33:23", "start": 2002.99, "text": "Yeah, so that's certainly, interesting, and, and things that people have to think about. And I think another point that might be good to cover is this idea that companies might be okay for now, but the factor or the risk comes in once they get bigger, because now they've got something to go after for, from the patent trolls' point of view." }, { "speaker": "stephan_livera", "time": "33:42", "start": 2022.38, "text": "Exactly, that's it. And I started thinking about this problem actually, several years ago, and it became painfully obvious to me when we had this, ICO boom in twenty seventeen. I mean, here you had a bunch of startups that were publishing white papers, of what they intended to do, and then were raising, you know, thirty, forty million dollars. It was like, I'm really surprised, I guess the patents just weren't granted yet, that none of them were trolled at that point because they were big, fat, juicy targets and, and they'd What they intended to do. So what I had expected to see more patent trolling then, but I think it's just that there were only a few hundred patents granted at that point on blockchain, related technologies." }, { "speaker": "stephan", "time": "34:22", "start": 2062.25, "text": "So when a patent troll goes after you, what's the normal process there? What does it look like when the patent troll is going after a, you know, normal Bitcoin or, entrepreneur?" }, { "speaker": "guest_2", "time": "34:32", "start": 2072.12, "text": "In the, say, for normal competitors, when, when someone has a patent and they go after you, what they-- unless they're ready to sue you right off the bat, what they," }, { "speaker": "guest_2", "time": "34:42", "start": 2082.48, "text": "Pick their jurisdiction, so they don't want to give you-- they don't wanna make a threat. If they make a threat, then you could sue first with a declaratory judgment action and choose the forum. So they try to word it nicely. They'll send you a letter saying, \"Hi, we see you're in this space. we thought you might like to be aware of these patents that we have rights to. If you're interested in discussing a negot-- a license, please let us know.\" So they're not threatening to sue you, but the threat is really there. Now, patent" }, { "speaker": "guest_2", "time": "35:12", "start": 2112.4, "text": "want to, so called wet their beak, like they just want a license, you know? They don't, they don't wanna shut you down like some of your competitors might, but again, they'll, they'll say, \"We have these patents, you might find it useful to have a license on them, \" and so they'll invite you to negotiate a license with them. That's how they usually do it." }, { "speaker": "stephan", "time": "35:27", "start": 2126.83, "text": "I see. And so I guess the difference as well is when it's competitors going after each other, they've got a war chest and they sort of are like nations at war," }, { "speaker": "stephan", "time": "35:42", "start": 2142.4, "text": "You don't sue me on this one, that kind of dynamic, right?" }, { "speaker": "guest_2", "time": "35:45", "start": 2144.93, "text": "Yeah, what happens is, they usually have a long drawn out lawsuit and they spend millions of dollars on attorneys, and then they finally settle, like, Apple and, Samsung, and of course, all they do is they pass the cost down to the consumers in terms of higher prices. But what happens is small companies can't enter that fray, so they, they're dissuaded from ever entering in the first place that field, which is why you have a small number of smartphone makers. So" }, { "speaker": "guest_2", "time": "36:12", "start": 2172.38, "text": "Basically, they're like, think of them like the tax man. They, they're coming at you, they want a little, they want a little cut. So the cost that Jed mentioned earlier, the cost of defending the suit, it's not just the cost of defending, that's even if you win. But if you lose, you've, you, you had to defend yourself and you might have to pay their attorneys' fees and then you have to pay a royalty for, you know, fifteen years or something like that, which will hurt your business model because they're not the only patent troll that's Increasingly" }, { "speaker": "stephan", "time": "36:43", "start": 2203.14, "text": "non-viable. So in terms of what can be done, what are the main ways that people can, counter this kind of thing? Oh, and actually one other point that, people might be thinking is, what about just open source licensing? Maybe if they just stay only to using things that are already out there in the open, does that protect them?" }, { "speaker": "stephan_livera", "time": "37:03", "start": 2223.26, "text": "It's pretty hard to innovate if you don't write any code, if you just use what's already there. So, yeah, you, you should definitely build on open source and you should definitely Source, there's no doubt about it. But, when you're, when you're innovating, you're gonna be writing new code and you're gonna be doing new things, and those are, are what are gonna get attacked, because someone will claim that they did it first and they have the rights." }, { "speaker": "guest_2", "time": "37:25", "start": 2245.17, "text": "Yeah, and as a practical matter, most patents that are so-called infringed, they're not really done because the infringer knocks off or rips off or copies what some other company did. They don't even know about these patents. They just happen to innovate something that" }, { "speaker": "guest_2", "time": "37:42", "start": 2262.5, "text": "has filed a patent on a similar enough idea that they stumble into this, this landmine." }, { "speaker": "stephan", "time": "37:48", "start": 2267.99, "text": "And, actually, Stephan, I'm also curious, you were calling out a point earlier around how, in some sense, the existence of these intellectual property laws drives a kind of centralization into large competitors, because they're the only ones who can afford to play this game and fight those battles. Would you say that's arguably happened in terms of social media as well?" }, { "speaker": "guest_2", "time": "38:08", "start": 2288.38, "text": "I think you could make an argument for there. I think in that case, it's probably more due to copy- Copyright than patent. So, I mean, Microsoft's, their vast wealth and holdings is due in part to their copyright over their code all these years and the operating system. Google as well to an extent. Facebook, I mean, if you could copy Facebook business model and the way their software works, then you could have-- it'd be easier to have a competitor to Facebook, which is blocked now, and also Facebook might not have as much money in the first place, to grow as large if they didn't have some monopoly rents coming in from patent. And, and primarily copyright." }, { "speaker": "stephan", "time": "38:44", "start": 2324.09, "text": "And so in terms of the different intellectual property types, I presume then the focus here is mainly around patents, right? It's not around other types of intellectual property." }, { "speaker": "stephan_livera", "time": "38:54", "start": 2333.75, "text": "For COPA, that's, that's, Open Crypto Alliance and COPA and LoTNet are all focused on patents. That is really where the, the, the problem lies with innovation, copyright. I'll let Stephan answer that on the other types of IP." }, { "speaker": "guest_2", "time": "39:06", "start": 2346.28, "text": "Yeah. Although, of course, there's some, there's some copyright threats being bandied about right now IP type threat to certain players in the Bitcoin system, but yeah, our primary focus, our only focus is patents because this is the big threat right now." }, { "speaker": "stephan_livera", "time": "39:21", "start": 2360.53, "text": "yeah, I hadn't thought about that copyright threat that's being bandied around right now. if, if, a copyright is asserted on that paper, does that take it out of prior art?" }, { "speaker": "guest_2", "time": "39:30", "start": 2369.98, "text": "No. So, the prior art just means it's published and, and known, so it could be used as prior art as well. And by the way, other types of IP are at play here too," }, { "speaker": "guest_2", "time": "39:42", "start": 2382.42, "text": "But, in trademark, if you remember, there have been-- there, there were, there were threats to use trademark to say that the BTC guys couldn't call their, their chain Big Bitcoin because someone else claimed a trademark in that name. So there's lots of threats from IP to various aspects of the crypto space, but the biggest one by far, I think, is, is patent, especially, the emerging, the emerging number of patents that have been filed in the last couple of years, as you said." }, { "speaker": "stephan", "time": "40:07", "start": 2406.84, "text": "Yeah, so I guess to summarize then, some of the key impacts really are May impact the possibility for Bitcoin businesses because it might stop them offering certain features or it may stop development along certain lines of approach, whether that is the cryptography used or whether that is some other feature that a Bitcoin business is trying to offer. so I guess just bringing it to inter- what people can do about it in terms of, you know, trying to stop this essentially, what's the ask here in terms of OCA? Is it funding? Is it other kinds of support? What are You looking for?" }, { "speaker": "stephan_livera", "time": "40:44", "start": 2443.56, "text": "Funding is, is what we need to get going. I mean, that's, that's, the, the gas that's gonna make this car go. We need, visibility, we need people to understand. So we, we need, people to self-educate to come to us. We're, we're totally open, and, and to understand the risks. I mean, there, there are a lot of people in the space that are simply anti-patent, they're open source, and, and that's great, but as Stephan" }, { "speaker": "stephan_livera", "time": "41:13", "start": 2472.54, "text": "Now, and so raising awareness and getting the word out, but obviously in order for us to accomplish what we would like to accomplish, we can't do that without financial support." }, { "speaker": "guest_2", "time": "41:22", "start": 2481.85, "text": "And you could, you know, you, you could have, you could have also in adjunct to that, there is a streak among the Bitcoin community, we want this thing to work and to grow, and there's a strong streak of hostility towards this closed, mentality. You know, some companies have voluntarily stopped doing that, like, Tesla announced that, you know, they're not gonna assert their Car industry to grow, so they're a bigger slice of a huge pie. And I think Twitter, several years ago, did something where they made an agreement with all their employees, where, they tried to shackle, tie their own hands. Twitter said, \"We're not gonna be a, a patent threat to anyone. We're just gonna have our patents for defensive reasons.\" And the way they tied their hands was they made a, an agreement with their employees. Every employee who invents an invention that the company owns, the company would have to get that employee's permission to sue someone" }, { "speaker": "guest_2", "time": "42:12", "start": 2532.4, "text": "Patent threat. And I, I would think that some developers who are even working for some of the companies that are acquiring these patents aren't in favor of this kind of, aggressive use of patents and the threat of patents. Pressure could be used by them to put, to try to dissuade these companies from, from acquiring or using these patents in a threatening way." }, { "speaker": "stephan", "time": "42:30", "start": 2550.32, "text": "Okay, so, in terms of where listeners can, find you guys online, where can they find Open Crypto Alliance?" }, { "speaker": "stephan_livera", "time": "42:38", "start": 2557.52, "text": "Opencryptoalliance dot org, all one word, is the best place to find To find us on social, but the website's the best place to start." }, { "speaker": "stephan", "time": "42:46", "start": 2565.79, "text": "Excellent. and for anyone who wants to find you guys, where can they find you?" }, { "speaker": "stephan_livera", "time": "42:49", "start": 2569.31, "text": "You can find me on LinkedIn, or on my business, but, LinkedIn is easy enough. If you do wanna connect to me on LinkedIn, please do put a note and, say you heard me on this podcast, and I will accept your invitation." }, { "speaker": "stephan", "time": "43:02", "start": 2582.04, "text": "Excellent. And you, Stephan?" }, { "speaker": "guest_2", "time": "43:03", "start": 2583.38, "text": "Well, yeah, I'm, I'm at nsconsella on Twitter and Facebook, and I have a, my website" }, { "speaker": "stephan", "time": "43:12", "start": 2592.38, "text": "I think, I'm hopeful that, we see some, response from the community around, stop, stopping these, patent trolls before they get too big." }, { "speaker": "stephan_livera", "time": "43:21", "start": 2601.47, "text": "That would be great. Thanks so much. Thank you very much for having us." }, { "speaker": "stephan", "time": "43:25", "start": 2605.35, "text": "Get the show notes at stephanlivera.com/249 and I will see you in the citadel." } ] }