Blockchains and related concepts like smart contracts and digital autonomous organizations (DAOs) have emerged from the computer networking and cryptography techniques popularized by cryptocurrencies like bitcoin. With bitcoin having some degree of commercial operational success, a number of folks have been keen to apply these technologies in other fields. One approach to valuation for the impact of technologies is to consider the size of the addressable market. With cryptocurrencies, the potentially addressable market is very large – almost everyone on the planet uses money in some form these days. Many other blockchain applications[1] (e.g. supply chain provenance) address narrower industrial rather than consumer markets. Healthcare blockchain applications may be one area with a large potentially addressable market (who doesn’t have health to worry about?)  depending on the specific use case.

A variety of healthcare applications have been proposed [2] including drug counterfeiting prevention, clinical trial, public healthcare management, longitudinal healthcare records, automated health claims adjudication, online patient access, sharing patients’ medical data, user-oriented medical research, precision medicine, and, smart contracts to improve the credibility of medical research. In some cases, these are moving beyond proposals into implementations based on open-source code bases such as Ethereum or Hyperledger. The designers of healthcare information systems may have a number of different requirements associated with the systems they are designing, and the criteria for applying blockchain are not always clear. Healthcare applications must balance patient care with information privacy, access, completeness, and cost. Rationales proposed for using blockchains in healthcare applications include: access control, non-repudiation, data versioning, logging, data provenance, data auditing, and data integrity, which is quite far from the double-spending problem solved by Nakamoto in his famous whitepaper. The data stored in and the actors operating on a healthcare blockchain also seem quite different from the actors and transactions of cryptocurrency blockchains.

Many of the healthcare application proposals do not address mass markets. Assuring drug provenance, for example, is an important social good given impetus with the DSCSA legislation in the USA. This, however, addresses and industrial market – the pharmaceutical supply chain, and while mass-market consumers benefit from this advancement, they do not directly interact with the blockchain in this use case. Use cases around medical records and adjudication of healthcare claims have a greater potential for impacting mass-market consumers. Work remains, however, to crystalize use cases that are viable – not just from a technological perspective, but also from commercial and legal perspectives as well as from the perspectives of the various actors in health care delivery.  

Technology issues can be seen as risks impeding design and deployment of healthcare blockchains. There is not one blockchain but a variety of implementations with different characteristics (even the original bitcoin has forked). With multiple (and uncertain) use cases and fragmented or customized technology approaches, it is only possible to talk of the technology and legal challenges in general terms. Identified[3] technology challenges to the development of healthcare blockchains include interoperability, security and privacy, scalability, speed, and patient engagement. Interoperability, scalability, and speed are characteristics of the software implementation of healthcare applications on the blockchain. The degree of patient engagement can be significantly impacted by the not just the implementation and trust issues, but also the usability of the system and the overall user experience with the healthcare blockchain. Security, privacy and trust issues reflect concerns about not just the implementation, but the processes for assuring the users can trust the blockchain and its associated software, as well as the organizational and legal context. Because of the use of blockchain technology in the financial industry, and the associated loss risks, the security of blockchains and related smart contracts have received significant attention. Financial losses can often be addressed through other means (e.g. insurance); privacy losses (e.g., disclosed medical records) may be harder to detect and redress.

Legal issues often arise with the introduction of new technologies.  Where the use cases involve sophisticated commercial entities and complement existing industry transactions, the legal issues can often be resolved with private law e.g. contracts between the parties. How existing regulations are applicable would depend on the specific industry and the use case. Where the use case involves mass-market consumers (generally assumed to not be sophisticated parties), public laws and regulations are more likely to be applicable, protective of the consumer, and were written prior to the possibilities of the new technology being envisioned. There are very few public laws explicitly mentioning blockchain, though there has been some incremental progress at the State level in the USA, most of this is targeted as fintech applications of blockchains. In this environment, the legal uncertainty often reduces to assessing how the technology use case would be classified under the existing regulations. DAOs are rather novel as legal entities, but such entities may prove useful to meet the privacy requirements of consumer-oriented healthcare blockchains. While DAOs may fit within some states’ LLC enabling legislation, additional legislative initiatives may be required for DAOs to be deployed more widely.

Smart contracts provide a computational mechanism built on top of a blockchain. These have a number of applications from enforcing legal requirements for transactions to implementing business process workflows. With industrial use cases, sophisticated parties may negotiate the smart contract before implementing it. With consumer use cases, the smart contract would more likely be an adhesion contract that the consumer would not be able to negotiate. Of particular concern with smart contracts is the source of data to trigger smart contract decisions. Oracles for financial data feeds are emerging, but medical data oracles are less widely available. Smart contracts have been proposed for dispute resolution in a manner similar to arbitration, but this has not yet received large scale adoption.

Open source blockchains like ethereum and hyperledger enable easier technology exploration. Building on these with privacy enhancement technologies like zero-knowledge proofs and privacy-preserving computation will help address the technical challenges in privacy that healthcare blockchain use cases bring.  The development of standards[4] to build industry consensus around the terminology and fundamental technical choices to be made will help reduce the fragmentation in the technology. The IEEE 2418.6 healthcare standards project can help, but will take some time to address all the use cases. Specific use case development to define the service requirements from the user point of view would also be very helpful. Automation of existing use cases may be more easily tractable; given increasing concerns for privacy, however, new paradigms to empower people to control their data footprint in cyberspace are emerging. Placing patients in control of their data and having others query for it would be a significant change from existing practices. For industrial markets, existing standards bodies may be well-positioned to develop these use cases. For consumer use cases these may emerge through private enterprise, or through discussion in more public forums (e.g., regulatory hearings, NGO activities etc.).

For a more detailed treatment of this topic refer to my paper presented at the 2019 ITU Kaleidoscope academic conference “ICT for Health: Networks, standards and innovation”.  

If you are looking for a book that provides a detailed overview of the legal implications of blockchain technology and smart contracts, then “Blockchains, Smart Contracts, and the Law” is the perfect choice for you. This book is written clearly and concisely, making it easy to understand even for those who are new to the topic.

[1] See e.g., F.Casino, et. al., “A Systematic literature review of blockchain based applications: Current Status, classification and open issues” Telematics and Informatics, vol. 36, pp 55-81, (2019).

[2] See e.g., S.Agraal, et. al, “Blockchain Technology: applications in Healthcare”, Circulation: Cardiovascular Quality and Outcomes 10.9 (2017)

[3] See, e.g., C. Agbo, et. al., “Blockchain Technology in Healthcare: A Systematic Review”, Healthcare, vol.7, no.56, (2019)

[4] See e.g., the work of ISO TC 307, IEEE, ITU

Patents grant to an inventor a property right issued by a governmental patent office. In the USA, the intellectual property right granted is “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. There are three types of patents:(1) utility patents – granted for new and useful processes, machines, etc., (2) design patents – granted for original ornamental designs for manufactured articles, and (3) plant patents- granted for new plant varieties. Most “high tech” inventions – semiconductors, software, would fall under utility patents. Similar patent regimes exist in other advanced economies that grant patent rights within their individual economies. The World Intellectual Property Organization (WIPO), a self-funding agency of the United Nations, helps to provide alignment of patent policies internationally. 

The government agencies granting patents charge fees for their services. Under the Patent Cooperation Treaty (PCT), a single application can be presented to obtain patent rights in multiple jurisdictions, though this will result in fees to the relevant agencies in those jurisdictions. While inventors can file patent applications on their own, it is generally advisable to retain competent patent counsel to file on their behalf in order to maximize the scope of patent coverage and avoid procedural missteps in the filing process.

Rational inventors with limited budgets must balance the costs of obtaining patents with the breadth of patents rights they seek. This balance is obviously affected by the business strategy of the inventor (or, in many cases, the corporate assignee) – e.g., is international exploitation of the patent planned? If so in which markets, and how valuable are those markets expected to be? The role of patents in the business strategy is a broader question – e.g. whether the invention is planned to be practiced directly or licensed to others. For startups and other early-stage innovators, patent rights may be useful assets to help establish corporate valuations.  Entities which do not practice their inventions, but rather only license them are referred to as Non-Practicing Entities (NPEs). There exists a broad range of NPEs from Universities to more specialized and speculative investors acquiring assets through bankruptcy[1].

As with the metes and bounds of real property, patent grants are delimited by the enumerated claims. Generally, existing patents only expire with time (20 years in USA) or through some other legal action to invalidate the patent. Some patent licensing obligations may be created by the assignee participating in Standards setting activities.  Patents are required to be novel; and, often build on existing well-known technologies and other patents to provide additional functionality. Granting of a new patent does not invalidate an existing patent. In some cases, this can result in the creation of a patent thicket[2] where the existence of many overlapping and underlying patents may complicate licensing arrangements and constrain the commercial utilization of new patents. The smartphone, for example, may have hundreds of thousands of applicable patents[3].

Entities intending to commercialize novel technologies should be aware of the existing patent landscape.  A patent landscape provides a snapshot of patenting activity in a particular technology area.  A competitive landscape is one tool for developing business strategy and Patent Landscape Reports can provide that perspective for competing intellectual property. The recent WIPO technology trends report on Artificial Intelligence is perhaps a good example of a patent landscape report on a currently popular area of technology innovation. 

While patent landscaping can help with broad strategic questions, more tactical decisions may require more targeted patent-related legal opinions to minimize legal risks and optimize commercial opportunities. These may include opinions of counsel on patentability, invalidity, infringement or freedom to operate.  Depending on the business need, intellectual property may play greater or lesser roles; in the commercialization of technology research, however, the intellectual property representation of that technology research likely needs to be central to the business strategy. While technology developers are primarily focused on the implementation of their technology, the commercial valuation often lies in the relative strength of the intellectual property position vs competitors. Traditional competitive analysis of market positioning looks at offers available in the marketplace. Evaluating the patent landscape can identify potential new entrants based on their patent portfolios, as well as potential weaknesses in the positions of other known competitors.

If you are interested to get started with patent landscaping, you could use the patent office search tools (e.g., USPTO, WIPO, Google Patents) to extract the list or relevant patents to analyze; and WIPO publishes a manual on open source tools that could be helpful for custom analytics on patents. While this may be a good way to learn the method, it may not always be the best use of your time. Lawyers and other intellectual property specialists can provide commercial-grade reports for a fee. There are some commercial tools (e.g., ip vision, patent insight pro, vantage point) and some free tools that may also be a useful place to start (Lens.org, PIUG, patent inspiration).

[1] Steven A. Wright, Preserving Patent Licensor’s SSO Commitments, Assn. of Insolvency & Restructuring Advisors J., (2012).

[2] Carl Shapiro, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting,” Innovation Policy and the Economy 1 (2000): 119-150. https://doi.org/10.1086/ipe.1.25056143

[3] Reidenberg, Joel R. and Russell, N. Cameron and Price, Maxim and Mohan, Anand, Patents and Small Participants in the Smartphone Industry (2014). WIPO Working Paper, IP and Competition Division, 2014; Fordham Law Legal Studies Research Paper No. 2674467. Available at SSRN: https://ssrn.com/abstract=2674467