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by Danny Bradbury, Jan 31, 2018

Financial Services Companies Are Rushing to Patent Blockchain Solutions


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Financial services companies are beating traditional technology firms in the race to file blockchain-related patents, according to a recent analysis.

Envision IP, a boutique law firm specializing in patent valuation, analyzed patent filings in the distributed ledger space in January of 2018 and found that Silicon Valley’s incumbents are lagging behind banks and other financial services companies.

The company identified 1,045 blockchain-related U.S. patents, including patents previously awarded and those pending. While blockchain-specific companies, such as the online cryptocurrency exchange Coinbase, predictably held most (59 percent) of the patents, approximately one in five patents was owned by a financial services company, making this the next-largest group.

Patent ownership was concentrated among a few financial companies that dominated the list of top-10 patent owners. Bank of America came out on top, with 43 patents — roughly 4 percent of all blockchain-related patents owned or applied for in the United States. The study revealed that Mastercard has filed for 27 patents, while Fidelity Investments and TD Bank also featured among the top-10 patent holders.

Financial services firms have been among blockchain technology’s most fervent supporters from the start. The International Monetary Fund cited distributed ledgers’ potential for providing faster, cheaper financial services in early 2016. A year later, research revealed that financial services executives saw huge potential in blockchain technology.

Bank of America has been enthusiastic about blockchain technology for several years. Bitcoin Magazine reported that the bank had filed for a patent for cryptocurrency-based wire transfers as early as 2015.

The bank had already filed 15 blockchain-related patents as of January 2016 and was planning another 20 at the time. At that time, Bank of America’s Chief Operations and Technology Officer Catherine Bessant said that it was important for the company to stake its claim in the blockchain space, even if it wasn’t sure of the commercial applications.

Many of the early use cases for financial institutions revolved around managing back-end processes. Speeding up transaction settlements was a common talking point in the early days as well. Bank of America has filed for at least one blockchain-related patent addressing process authorization and settlement.

Nevertheless, not all Bank of America’s patents focus purely on back-end processing. Others filed by the company include a blockchain-based system for person-to-person alias-based payments and a transparent, self-managing rewards program using blockchains and smart contracts.

Maulin V. Shah, managing attorney at Envision IP, who worked on the report, found one or two surprises in the data.

“We had heard a lot about traditional companies in the banking and financial services sector being interested in blockchain over the past couple of years, but I was still a bit surprised at the lack of publicly available patent applications by traditional technology companies,” he said.

Traditional technology firms had filed only 13 percent of the patents awarded or pending, according to Envision IP’s data. In other words, for every patent in this area owned by a traditional software or hardware firm, the financial services sector owned around 4.5.

One reason for the poor showing among tech firms is that they may have filed patents that Envision IP couldn’t yet see. Patent filings are not published until 18 months after their initial filing in the U.S., and many more are probably currently working their way through the system.

“If, for any reason over the last 12 to 18 months, technology companies had a surge in filing, we wouldn’t know that, and it wouldn’t show up in our findings,” reported Shah. “Conversely, it would show that these companies are somewhat late to the game in terms of filing their IP.”

One traditional tech firm bucked the trend. With 27 patents to its name, IBM was the joint second-largest holder of U.S. blockchain-related patents. That statistic is unsurprising, given the firm’s concentration on blockchain technology as a core strategy. IBM is a key member of the Linux Foundation’s Hyperledger project and contributed source code to its interoperable distributed ledger fabric.