December 19, 2016
From American Banker

by Tanaya Macheel

When the financial services industry started paying attention to blockchain technology, many companies, seemingly as a reflex, sought patent protection for their ideas.

It was ironic, since the original bitcoin blockchain was a breakthrough of open-source development, in which software code is made freely available for anyone to use or modify. As the industry has gained a clearer understanding of how distributed-ledger technology could change its business, it's begun to see the merits of such openness in supporting collaborative innovation, and the limitations of the traditional, you-can't-touch-this approach.

Wall Street is one of the largest holders of patents pending in the U.S., and there hasn't been a lack of technological innovation because of it in the last 20 years, said Richard Levin, chair of the fintech and regulation team at law firm Polsinelli. The patent activity in the blockchain space is just part of the natural competition system, he said at the Wall Street Blockchain Alliance conference in November.

"Patents are just a very aggressive form of intellectual property protection," Levin said. "One of the best things patents do is slow competitors down while a company has a patent pending, or one that's been approved. That may give a company six months to two years to get ahead of its competitors."

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