Reflects on the Bitcoin Patent – only a Matter of Time?

Reflects on The Bitcoin Patent – Only A Matter Of Time? [1]

The article starts with the comment that “Bitcoin is a technological marvel that has revolutionized financial systems.”[2] It then moves to discuss the possibility of bitcoin patent.

It continues by talking about the start of Bitcoin. It all started with a paper in 2008 entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” by the pseudonymous Satoshi Nakamoto. [3] Since no person or entity has credibly claimed authorship of the paper, no patent based on the original work has appeared. But people never stopped imagining what a patent claim on the bitcoin method might have looked like.

Prior to 1998, it was understood that even though you could get a patent on a process, machine or manufacture, there was a "business method" exception. That exception would prevent you from patenting a method for performing a financial transaction. It was ineligible subject matter. However, in 1998 when the Court of Appeals for the Federal Circuit (the appellate court for patent cases) ruled in State Street Bank & Trust Co v Signature Financial Group that a claimed investment structure for use as an administrator/agent for mutual funds was, in fact, patentable.[4] Numerous business method patents were attempted, and not all of them were supported by law. But the Supreme Court made an exception on business models that include “technological” advances.

Then the article talks about the viability of a bitcoin patent. The basic ideas of bitcoin, including hashing, digitally signing, time-stamping and solving a proof-of-work were all known processes in 2008, but no precedent for the particular combination of these processes was cited. So, the bitcoin can be seen as an improved computer data structure which is patentable under US law.  “Satoshi Nakamoto” should have succeeded in obtaining a patent for the bitcoin method. That reality should give us a reason to be cautious, because one day Satoshi Nakamoto may reveal its identity along with holding a million bitcoins, and a handful of bitcoin patents as well.