Source-linked AI summary
Patents and intellectual property assets as non-fungible tokens: key technologies and challenges
Seyed Mojtaba Hosseini Bamakan, Nasim Nezhadsistani, Omid Bodaghi, Qiang Qu
TL;DR
The paper addresses limited research on applying NFTs to intellectual property, especially the costly and lengthy process of patenting and related ownership management. It proposes a layered conceptual framework for NFT-based patents and discusses applications, standards, and open challenges. The framework is presented as a transparent and potentially scalable approach for patent processes, while important technical, legal, and governance issues remain unresolved.
Problem
Research has rarely examined NFTs for intellectual property, despite patent registration being costly and lengthy and NFT metadata and ownership verification presenting unresolved concerns.
Method
The paper proposes a five-layer conceptual framework covering storage, authentication, verification, blockchain, and application components for minting NFT-based patents.
Results
The framework is presented as administratively feasible, step-wise, scalable, and public, with potential to improve patent information sharing and reduce process bottlenecks.
Takeaways & Limitations
NFT-based patents could support transparent patent management, global access, licensing, funding, and other patent-related applications.
Takeaways & Limitations
The approach has not been tested, and questions remain about validator organizations, jurisdictional conflicts, and the ownership rights attached to NFT-based patents.
Abstract
from arXiv · showhide
With the explosive development of decentralized finance, we witness a phenomenal growth in tokenization of all kinds of assets, including equity, funds, debt, and real estate. By taking advantage of blockchain technology, digital assets are broadly grouped into fungible and non-fungible tokens (NFT). Here non-fungible tokens refer to those with unique and non-substitutable properties. NFT has widely attracted attention, and its protocols, standards, and applications are developing exponentially. It has been successfully applied to digital fantasy artwork, games, collectibles, etc. However, there is a lack of research in utilizing NFT in issues such as Intellectual Property. Applying for a patent and trademark is not only a time-consuming and lengthy process but also costly. NFT has considerable potential in the intellectual property domain. It can promote transparency and liquidity and open the market to innovators who aim to commercialize their inventions efficiently. The main objective of this paper is to examine the requirements of presenting intellectual property assets, specifically patents, as NFTs. Hence, we offer a layered conceptual NFT-based patent framework. Furthermore, a series of open challenges about NFT-based patents and the possible future directions are highlighted. The proposed framework provides fundamental elements and guidance for businesses in taking advantage of NFTs in real-world problems such as grant patents, funding, biotechnology, and so forth.
Background
NFTs are unique blockchain-based assets distinguished from fungible and semi-fungible tokens, with standards and platforms evolving across multiple blockchains. Their ownership, transfer, transparency, and token-management properties support applications including intellectual property.
- NFT history: Colored Coins were early Bitcoin-based NFT precursors that marked fungible bitcoins to represent distinguishable real-world assets and transfer ownership.Their limited functionality resulted from Bitcoin script limitations.
- NFT history: CryptoPunks introduced 10,000 randomly generated Ethereum-based characters whose official ownership was recorded in a smart contract.The project inspired CryptoKitties.
- NFT history: CryptoKitties pioneered blockchain games and the ERC-721 token standard, helping bring NFTs to wider attention.It enabled users to collect and trade characters with unique features.
- Token types: Fungible assets are replicable and divisible, whereas non-fungible assets are unique, distinguishable, non-divisible, and not replaceable by identical items.Semi-fungible tokens combine fungibility within a class or period with non-fungibility across classes or periods.
- NFT properties: NFTs use unique identifiers and blockchain records to provide ownership proof, transparency, and traceable transactions.Blockchain systems also support ownership transfer and complete NFT management.
NFT‑based patent framework
The proposed NFT-based patent framework organizes patent tokenization into layered storage, authentication, verification, blockchain, and application components. Its storage design addresses metadata cost, immutability, and URL-change risks through decentralized systems and content-addressed references.
- Architecture: The proposed framework contains five layers: Storage, Authentication, Verification, Blockchain, and Application.It is presented as a distributed and trustworthy framework for minting NFT-based patents.
- Storage Layer: Decentralized storage reduces costs, distributes copies across nodes, avoids central-server bottlenecks, and supplies infrastructure for NFT identification.NFT metadata may be stored on-chain in the smart contract or off-chain separately.
- Storage Layer: Blockchain storage is expensive and immutable, so NFT projects commonly keep metadata off-chain and use ERC-721 tokenURI to identify its location.The paper identifies IPFS, Pinata, and Filecoin as off-chain storage solutions.
- Storage Layer: IPFS provides peer-to-peer decentralized media storage and can be an affordable and efficient option for NFT-related media files.It uses distributed hash tables and related technologies to coordinate and maintain metadata.
- Storage Layer: Off-chain URLs can change, allowing an NFT describing a patent to be altered without users knowing and undermining the NFT’s purpose.Pinata addresses this issue using content-addressable hashes called Content-Identifiers.
Filecoin.
Filecoin extends decentralized NFT storage by building on IPFS, while NFT.Storage combines IPFS and Filecoin for secure content and metadata storage. Content Identifiers provide persistent references derived from the stored content.
- Filecoin: Filecoin is a decentralized storage network built on IPFS and designed to store important data such as media files.NFT.Storage uses IPFS and Filecoin to store NFT content and metadata.
- NFT.Storage: NFT.Storage assigns users a CID after upload, and the CID serves as an IPFS hash and unique fingerprint for the content.CIDs function as universal addresses regardless of where the data is stored.
- NFT.Storage: Content-derived CIDs help avoid weak links and rug pulls because they are generated from the referenced content itself.Retrieved data is checked against its CID through rehashing.
- Filecoin: Filecoin uses cryptographic proofs to support NFT data durability and persistence over time.The storage data can be fetched directly in a browser through a public interface.
Resilient retrieval.
The authentication layer uses decentralized identity and blockchain-backed credentials to validate users and support patent-related smart contracts. Registration establishes a blockchain-recorded identity key before login and later verification processes.
- Authentication Layer: Decentralized Identity lets users collect credentials from issuers, store them in digital wallets, and retain control of their identities.Verifiers use a blockchain-based ledger to support identity and access management.
- Authentication Layer: Self-sovereign identity uses public-key cryptography and public blockchains to provide persistent identities with private and selective information disclosure.It also supports publicly verifiable KYC without requiring a third party to verify information authenticity.
- Authentication Layer: The proposed platform generates unalterable patent smart contracts and mints an NFT as a verification certificate after thorough KYC approval.The framework uses decentralized authentication for patent NFTs.
- Authentication Layer: The authentication protocol uses registration and login processes to establish validated communication securely and decentrally through blockchain.The protocol is described as comprising two processes.
- Registration: During registration, the user’s public key becomes an identity key, is uploaded to the blockchain, and is recorded in an identity transaction.Other users can later verify transactions associated with the identity key.
Login.
The login process uses a service provider to retrieve identity information from blockchain records and complete authentication. The section situates this process within a broader patent framework involving authentication and verification layers.
- Login.: The service provider extracts a hash from a login request and queries the blockchain for identity information.
- Login.: The authentication request includes a timestamp, username, and signature to support user verification.
- Login.: The framework uses digital certificates and certification authorities to authenticate patent offices and connected blockchain nodes.
- Login.: The verification layer is conceptually organized as a permissioned distributed system in which identified patent-office nodes can receive different permissions.
- Login.: Patent information must be digitized before it can be published as an NFT through an application-layer input process.
Recording.
The recording process preserves patent existence and development history through hashes before publication. It emphasizes collision-resistant hashing and specialist validation for secure blockchain recording.
- Recording.: Inventors first record a patent document’s hash and timestamp privately as proof of existence before public publication.
- Recording.: Each patent-development phase can be linked through a sequence of hashes, allowing the inventor to prove the existence of successive stages.
- Recording.: Hash functions must provide pre-image resistance and collision resistance to protect recorded patent documents.
- Recording.: SHA-2 is recommended over collision-compromised MD and SHA predecessor families because recording is not highly time-sensitive.
- Recording.: Patent NFTs are validated by identified specialist miners or validators rather than inexperienced public participants.
- Recording.: X.509 certificates provide a standard public-key certificate format for identifying and authenticating network entities.
Certificate authority.
The certificate-authority and blockchain layers authenticate participating entities and manage patent records through controlled access and consensus. The proposed architecture connects verification with transparent, scalable IP management.
- Certificate authority.: Certification authorities issue certificates that authenticate patent offices, validators, and other blockchain participants.
- Certificate authority.: Patent-office certificates contain validator information and are encrypted with the office’s private key for verification using its public key.
- Certificate authority.: Miners reach consensus on patent NFTs and record approved requests with comments, while rejecting malicious requests.
- Certificate authority.: The blockchain layer serves as middleware between verification and application layers while providing IP management in a flexible, scalable, and transparent records system.
- Certificate authority.: Permissioned blockchains restrict ledger access to identified nodes with role-specific permissions, fitting patent-granting offices as participating nodes.
- Certificate authority.: Consensus protocols coordinate whether distributed network members accept or reject blocks, making consensus central to blockchain operation.
- Certificate authority.: The platform assigns IP-management roles to creators, patent consumers, and copyright-managing entities.
Creators sign up to the platform.
Creators register on the blockchain platform, upload intellectual-property information, and manage consumer access through smart contracts and payments.
- Creators sign up to the platform.: Creators sign up with identity information before patenting their creative work on the platform.
- Creators sign up to the platform.: Creators upload IP information to the blockchain, where traceability and auditability address duplication and manipulation.
- Creators sign up to the platform.: Consumers register, request access, and pay fees before creators authorize access to patented content through a smart contract.
Patent management entities leverage blockchain to protect copyrights and solve related disputes.
Blockchain-based patent systems can track ownership, support rights transfers, and enable decentralized patent commercialization through NFT marketplaces and smart contracts.
- Blockchain can help patent management entities address disputes involving confidential information, authorship, IP-right transfers, and defensive publications.
- A global patent marketplace could tokenize patents, store records on blockchain, and let holders sell or monetize them.
- Smart contracts can specify prices and terms for patent licenses or purchases.
- NFT-based patent transfers could let buyers unlock patent rights immediately after payment without direct interaction between the parties.
- Smart contracts attached to patent NFTs can outline ownership and usage terms, potentially reducing legal fees and helping SMEs leverage patent value for funding.
Discussion
The discussion presents NFT-based patents as a scalable administrative approach while identifying unresolved technical, economic, interoperability, governance, and legal challenges.
- Existing patent-system reforms may impose major administrative disruptions and continuing financial burdens, whereas NFT-based patents can be examined incrementally and publicly.
- NFT-based patents may improve information sharing among offices and patentees, reduce examiner burdens, and make patent processes more efficient without compromising granted-patent quality.
- The framework leaves consensus mechanisms and miner compensation unresolved, including how to value validation effort and set inventor payments.
- Different NFT standards create cross-platform transfer problems, while centralized marketplaces introduce additional governance concerns.
- The service remains untested, validator certification requires further consideration, and NFT purchases may leave the exact transferred patent rights unclear.
Conclusion
The paper proposes a conceptual, layered framework for NFT-based patents using blockchain capabilities to support decentralized and reliable patent trade and exchange.
- The framework covers background, model components, token standards, application areas, and research challenges for NFT-based patents.
- It contains five layers: Storage, Authentication, Verification, Blockchain, and Application.
- Blockchain contributes timestamping, smart contracts, proof-of-existence, transparency, distributed operation, auditability, and resilience to the proposed system.
Additional information
The supplied additional information contains correspondence, permissions, licensing, and publisher statements rather than substantive research findings.
- Materials-related correspondence should be addressed to Q.Q.
- Reprints and permissions information is available through the publisher’s website.
- The publisher states neutrality regarding jurisdictional claims in maps and institutional affiliations.
- The article is distributed under a Creative Commons Attribution 4.0 International License with attribution and change-notice requirements.