Through decentralization, blockchain technology is gradually transforming industries like finance, supply chain management, and healthcare by enhancing security, streamlining processes, reducing fraud, and lowering costs. However, as blockchain continues to disrupt traditional systems and gain momentum, it has also attracted the attention of patent trolls. Also known as Non-Practicing Entities (NPEs), patent trolls do not acquire patents for developing new products. Instead, they exist to profit from patent-related lawsuits, by exploiting the legal system to extract settlements from companies and developers.

NPEs often buy vague, overly broad, or outdated patents from the estates of bankrupt companies. These patents often describe concepts in general terms, which allows NPEs to claim that a wide variety of innovations infringe on their patents. Because of how ambiguous these are, NPEs can claim that many different companies or developers have violated their patents. Then they typically send cease-and-desist letters, demanding licensing fees or settlements in exchange for not taking the issue to court. 

Whether the claim would hold up in court is often irrelevant, and this strategy often works because legal battles can be quite expensive. Startups and smaller companies are particularly vulnerable since they lack the financial resources to fight a patent lawsuit. The average cost of defending against a patent troll can reach up to $2 or $3 million. Faced with the choice between a costly court case and paying a settlement, many companies choose to settle, even if the patent claims are baseless. If innovators and developers are constantly forced to defend themselves against baseless claims, it stifles the innovation that is critical to growth.

In 2023, NPEs were responsible for 58% of all patent lawsuits, and 95% of their targets were tech companies. They often target sectors where new ideas are constantly emerging and the legal framework around new technologies is still developing, and blockchain is no exception. 

Still, patent trolling is not a new phenomenon. Other industries, such as the wireless sector, faced similar challenges in the 1990s with the rise of technologies like Bluetooth, cellular, and WiFi. As blockchain becomes more popular and more funds flow into the space, we can expect patent trolls to ramp up their efforts to exploit this growing market.

In response to this growing threat, Today, the Cryptocurrency Open Patent Alliance (COPA), a non-profit community dedicated to promoting the adoption and development of cryptocurrency technologies, joined forces with Unified Patents, a member-based organization focused on reducing bad patent assertions in key technology sectors, to establish the Blockchain Zone. This specialized initiative aims to fight the growing threat of patent trolls that target blockchain and related technologies. 

Members of the Blockchain Zone receive pass-through protection for free. If a patent troll attempts to target a member company, the collective resources of COPA and Unified Patents can be used to cover the financial and legal risks faced by individual developers. By pooling resources and expertise, they are able to challenge weak or invalid patents before they reach trial, reducing the financial burden on individual companies. This way, blockchain developers can focus on building new technologies without the constant fear of being targeted by NPEs.

So far, Unified Patents' Transactions Zone has successfully challenged hundreds of patents that posed threats to electronic transactions, online bill payments, authentication, and similar technologies, helping to keep these systems open and free from unwarranted claims. The newly established Blockchain Zone aims to bring the same level of protection to blockchain technologies.

COPA has joined forces with over 300 companies dedicated to preventing the assertion of invalid patents by non-practicing entities (NPEs), ensuring innovation in the blockchain space is safeguarded. Ultimately, these efforts to combat patent trolling will help create a more open, collaborative, and innovation-friendly blockchain ecosystem that will allow blockchain technology to reach its full potential.

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