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There is no definition of a “blockchain patent”. In fact, there isn’t even a widely accepted definition of a software patent. Government patent offices all over the world, like the USPTO (US Patent and Trademark Office), rely on a classification system for patents. Internationally, this classification system is known as the IPC (International Patent Classification). The US also has a separate patent classification system, known as the CPC (Cooperative Patent Classification) system.

Yet these systems don’t work very well for the newest technologies.

Why do these systems struggle to cope with modern technology? The first patent classification system was created back in 1829, when the steam engine was the latest and greatest technology - and the industrial revolution was just getting started. Its modern US update was created in 1899 - more than 120 years ago. The term “robot” didn’t even exist then! And forget about software. So the current patent classification system has a hard time with new technology - with new being defined as anything developed in the past 50 years.

The patent classification system really struggles when new technology, like blockchain, becomes part of our tech space. It isn’t flexible enough to be easily expanded, so blockchain patents end up in a variety of classes. Spreading out blockchain patents means that even simple questions - like how many blockchain patents or applications are there? - become difficult to answer.

We recently wrote an article in which we compared various existing methods for determining the number of blockchain patents and applications. The results were all over the place, depending on which method you used. We decided to compare three different methods for finding blockchain patents. The first two methods were based on our own NLP (natural language processing) analysis and technology. The third method is a simple keyword search, to compare with our methods. We did the search on published US blockchain patent applications specifically, because these applications are published much more quickly than blockchain patents, due to the time required for examination.

What did we find?

Well, the blockchain patent juggernaut is picking up speed really fast - nearly as many patent applications were published through the end of June this year as in all of 2019! And 2019 had nearly three times as many blockchain patent applications as 2018. All methods show similar results in terms of the rate of growth of blockchain patent applications.

Alibaba and IBM were the top two applicants for US blockchain patent applications - but Alibaba had between 8-10 times as many blockchain patent applications publish this year as IBM. At this rate, Alibaba will have more published blockchain patent applications than IBM by the end of this year.

And a lot of the blockchain patent applications were owned by a company located in the Cayman Islands - because that’s where the Alibaba subsidiary that owns all of its blockchain patents/applications is located.

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Keyword patent searches involve finding patents or applications that include certain words. Google patent search is based on this method - although with some extensions. Keyword searches are very general. If you pick the right words, then you’ll get a wide range of patents. It provides a bird’s eye view of patents related to your idea. But you can still miss results that may not have those exact words. And you’ll get a lot of garbage, unrelated patents.

Our methods, using NLP, give lower absolute numbers but more accurate, curated results. For example, we can find companies that have patents similar to your idea - a look alike search that can help you find your competitors. And our NLP patent search can act as a magnifying glass, to find those patents that are really similar to your idea.

A significant part of the problem is that keywords can be imprecise. For example, a patent application may only include blockchain as an example, without focusing on blockchain technology. About 15% of patent applications that contain the word “blockchain” do so only once in the entire application, while another 7% only mention it twice. So are these blockchain patent applications? We would argue that they are not. They just mention the word ‘blockchain’ without context

You can see a sharp drop off in the number of times that the word “blockchain” is mentioned throughout the application.

We can compare the number of blockchain applications mentioning the word “blockchain” in the claims as opposed to the entire application. Using the word blockchain in the claims means that the patent application is more likely to be blockchain related (of course, other keywords could be used as well, but we just used blockchain to simplify the results).

What about false positive results? The word “blockchain” doesn’t really appear before May 2010, which is when the earliest blockchain patent applications would have been expected to publish. But there are different ways to spell “blockchain” - like “block chain”. Or what about “DLT”, which stands for “distributed ledger technology”? 

So there are over 500 patent applications that were published in the US alone, that mention “block chain”, before May 2010. And “DLT”? Nearly 1700 published patent applications before 2010, in the US alone. Clearly, keyword searches can produce impossible results (unless Satoshi Nakamoto has a time machine).

Our methods, on the other hand, only produced 201 false positives - not perfect, but definitely better than either of the above keyword searches. And if you added more keywords for a broader search, you’d get even more false positives - so our method can really cut down on the noise from bad results.

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For example, our methods enable us to analyze blockchain patent applications by categories. The most popular category, not surprisingly, turns out to be fintech applications - about half of all blockchain patent applications. These include applications using cryptocurrencies, or supporting storage or exchange of cryptocurrencies, or supporting other financial transactions over blockchain. 

The second most popular category was decentralized business platforms and solutions deployed over blockchain, at a little more than 10% of all blockchain patent applications. Other popular categories include business services with a financial component, healthcare and traditional banking services that are grafted onto blockchain.  Some examples? In healthcare, you can get your prescriptions managed on blockchain (US20190198144A1, owned by Prescryptive Health Inc - a startup dedicated to reducing consumer prescription drug costs). Content licensing (US20190155997A1) and crowdsourced experts (US20190139032A1) are both examples of  decentralized business platforms on blockchain.

You may also find it surprising that we were able to differentiate between fintech and traditional banking services provided through blockchain. After all, aren’t all financial services on blockchain a form of fintech? Not exactly. Fintech companies and traditional banks do actually apply blockchain technology in different ways, to support their different business models. As a result, they use different words in different contexts to describe their services - which we’re able to detect. Think PayPal (fintech) vs Citigroup (traditional banking). 

One example that illustrates this difference is by comparing US20200104819A1 (traditional banking) to US20200193441A1 (fintech). The first patent application relates to handling credit for equipment purchases - a traditional banking function - on blockchain. The second one relates to fraud detection for blockchain-based financial transactions through payment gateways. Interestingly, the fintech application came from a large company - Visa - while the more traditional banking application came from a startup - UULALA. UULALA’s stated mission is to bring traditional banking to the underbanked, with non-traditional methods based on blockchain.

Now let’s try to do the same thing, using the traditional patent classification system, the IPC. Unsurprisingly, it doesn’t work. The most popular class for US blockchain applications is H04L 9/06, with 1316 applications published since 2014. But during that time period, 2660 non-blockchain patent applications were published - meaning that there are far more non-blockchain than blockchain applications in that class. And this class relates to encryption - accurate but not particularly useful in distinguishing one blockchain patent from another. 

We obtained the above numbers from our NLP analysis method - but equally dismal numbers can be found from an analysis of blockchain keyword search results. For example, for the above class, about half of the patent applications contained the word “blockchain” and half didn’t. You might as well flip a coin if you wondered whether a patent application in that class was blockchain related.

Similar results can be obtained for other patent classes. For example, G06Q 20/38 was the third most popular blockchain patent class using our methods, and was the fourth most popular using a simple keyword search. This class relates to computational payment protocols and processes. Using both our method and the keyword search method, about a fourth of patent applications in that class were related to blockchain. 

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We mentioned at the beginning that currently IBM owns the most blockchain patent applications - but that Alibaba is catching up fast and should overtake IBM this year. This metric is important because the company that owns the most blockchain patents will probably have the most legal patent power - and companies need to own blockchain patent applications in order to get blockchain patents.

Looking at the list above, only Bank of America is represented as a significant blockchain player from the traditional banking world. Other publications, such as the keyword search analysis by TNW, did not show BOA as a major blockchain patent owner. However, as we’ve shown above, blockchain keyword searches often turn up patents that only give blockchain as an example, and which aren’t blockchain related. Furthermore, these publications were produced more than one year ago, which can also affect the numbers. Finally, we’re focusing on US patent applications, rather than globally. 

The only pure blockchain company that’s represented is Nchain. They’ve openly declared their interest in patents. In fact, they announced a major investment in December for the purpose of filing more patents. In that press release, Nchain claimed that they had over 900 filed patents - but that could include many that haven’t published yet, plus they may be counting international applications filed in multiple countries as separate patent application filings. 

Why aren’t more pure blockchain companies represented? Well, Vitalik Buterin, the Ethereum founder, represents a widely held view in the blockchain community when he tweeted:

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Chinese companies are often represented in various “top 10” blockchain patent lists, although they aren’t pure blockchain companies - they’re typically focused on blockchain applications as part of their technology portfolio. Why are they filing so many patents? They’ve learned from the example of Xiaomi, the “Chinese Apple”, which was blocked from selling its smartphones in its foray out of China - because the Swedish Ericsson held so many patents. 

The United States is the number one country with blockchain patents.

But there’s something more interesting. Why would the Cayman Islands be the second country with the most blockchain patents?

In our research, we found out that a lot of blockchain applications were owned by a company located in the Cayman Islands. That is because Alibaba’s subsidiary that owns all of its blockchain patents/applications is located there.

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Alibaba Leads IBM as Blockchain US Patents Soar

New study by KISSPatent reveals more blockchain patents already published this year than in 2019, with Alibaba publishing 10 times more than nearest rival IBM in the US

EINDHOVEN, September 15 -- Chinese e-commerce giant Alibaba has published 10 times more blockchain-related patents than IBM in 2020, a year when blockchain patent numbers are generally skyrocketing, according to a new study published today by KISSPatent, a global IP consulting company, specialized in disruptive technologies. 

The multi-method study by a team of KISSPatent IP experts paints an unprecedented picture of blockchain patents filed in the US so far. 

Key highlights of the study include:

• Blockchain patents are skyrocketing. More blockchain-related patents were published in the first half of 2020 than in all of 2019, a year that had already seen 3 times more blockchain patents published than in 2018.

• Alibaba and IBM are the top two patent publishers. Alibaba has published 10 times more patents than IBM this year alone. 

• Blockchain-only companies are not filing for patents, Fortune500 companies are. 

“The current classification systems are not helpful to make precise searches for blockchain patents. But, even though the different methods we used showed different numbers, we can confidently state that blockchain is everywhere, and is picking up speed fast,” Dr. D'vorah Graeser founder, and CEO of KISSPatent said.

Proof of such speed is that within the first semester of 2020, the number of blockchain-related patents had already surpassed the number of those published in all of 2019, a year which had 3 times as many blockchain-related patents than in 2018. 

“Patent classification systems are not flexible enough to handle disruptive technologies like blockchain due to its complexity. Analyzing blockchain-related patents is, therefore, challenging. But, in our mission to help innovators, we decided to find an innovative way to analyze the current state of the blockchain patents,” Dr. Graeser commented. 

The current patent classification system makes it hard to classify different innovations as “blockchain,” so KISSPatent’s team of experts used multiple methods to successfully identify them. Most of these methods were based on a mixture of Natural Language Processing (NLP) and keyword searches. While NLP-based methods gave lower but more accurate results, keyword-based search provides larger but much broader ones. Although the methods produced different numbers, they showed the same trends. 

"With our unique search method, we were able to segment blockchain patents into different categories. The most popular one, not surprisingly, turned out to be fintech applications. About half of all blockchain-related patents we analyzed fell into the fintech category," said Dr. Graeser.

Fintech dominates blockchain patents with applications that either focus on cryptocurrencies and their exchanges or on supporting financial transactions with blockchain. The second most popular category is decentralized business solutions deployed over the blockchain. Other important categories are healthcare, traditional banking services, and general business services. 

There are two companies that clearly overshadow the rest in the blockchain patent space, IBM and Alibaba. Alibaba, however, is definitely running the show. It has filed 10 times as many patents than IBM this year alone. One remarkable find was that Alibaba has a subsidiary in the Cayman Islands, who, according to data from the United States Patent and Trademark Office (USPTO), owns most of Alibaba’s blockchain patents.

Companies that only focus on blockchain are keeping their distance from patents. 

Curiously, blockchain-only companies are keeping their distance from patents, very few are filing. It is mostly large companies that are dominating the patent world with their blockchain-related applications. The skeptic view on intellectual property from innovators in the blockchain space is deeply rooted in the essence of their business.

“Blockchain innovators need to reconsider the role of intellectual property within their companies. Blockchain is here to stay and it will very soon be a dominant force in tech disruption. Big companies will use this technology to innovate and they will do everything in their hands to protect and monetize their innovations,” stated Dr. Graeser.

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Dr. D’vorah Graeser, CEO