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Often our clients ask us about open source software and patents. Countless software economies have sprouted up atop a bed of open-source software. In this regard, blockchain is not all that different from many other niches in software. An example is Python programming language. According to the Python Foundation website, “Python is developed under an OSI-approved (Open Source Initiative) license, making it freely useable and distributable, even for commercial use.” YouTube, Quora, Spotify and Google are all built on Python. Many of the ideals, legalities, and strategies related to intellectual property we see in blockchain are ubiquitous with other areas of software development. (1)
(Video Transcript Below)
Tom, you mentioned where almost everything you’ve done so far has just been relying on open source, maybe not formally, but keeping things, you know, trade secret, never publishing them, and, what’s brought about, at least giving some thought towards, protecting some of the things that you’re developing. Is it because you guys are starting to offer a product? Is it that the phase of business development that you’re in requires you to take that next step? What is it that has you starting to think about these things?
You know I would say part of the reason that we’ve been spending a lot of time thinking about patents, and we’ve actually been thinking about it quite a bit more, if you think about a smart contract you could almost classify it as, like, a licensing agreement, right, and you have to pay money to a wallet to use it, right so if you think about just that in general, what does that mean for software? And how does that concept scale?
It’s interesting that maybe a lot of people from blockchain community don’t want to do that, but in order to use the virtual machine I have to basically agree, or follow a set of conditions, feed the machine money and then I can effectively use that machine, right, so it’s not technically a US-government-backed patent, but, I am basically paying to use a piece of software that I, in most cases, find it very difficult to reverse engineer, right, and so that I just want to put that out there for the broader community, right, part of the reason–
Well, it’s a big challenge of open source, there is no help desk to support you with these things, it’s kind of, just sift through it and navigate on your own.
Yeah, I think there’s going to be some really interesting innovations happening that will sidestep government, in that vein, but I would say that part of the reason that we’ve been looking at it is we walk into a lot of very large companies and we do a lot of prototyping projects for them and they want to invest significantly in this technology because at the end of the day it’s governance, business, process, automation, at its best, and for big companies like if you walk into a big company they’re basically a gigantic firm of lawyers who are really good at filling out paperwork, right, and it’s mostly process. It’s mostly governance, and, if you can automate that, that’s gonna fundamentally change the efficiencies of just about every major company on the planet. And big companies are beginning to understand that and I think that’s really interesting. Typically they’ve been hesitant, for the GPL reasons that, you know, you’re typically battling, you know, some sort of general counsel inside of a big company that says,
“Well hey, you know, we’ve spent forty billion dollars investing in our infrastructure, why would we give it away for free?” right, and a lot of that is just sort of old-school thinking because they’re not necessarily familiar with the new economic model that’s gonna come out of blockchain, in terms of value creation. They have to put on a completely different lens in terms of understanding how value is going to be created in the future. And so, as we’ve kind of “gone in the door”, we’ve had to help some of our clients navigate that, because their typical response is:
Let me just patent that.
Let me let me own that.
But, a lot of the benefits that you get from blockchain is competitors sitting on shared infrastructure, right, so you can gain the efficiencies of a monopoly without necessarily being a monopoly, right, and that’s kind of cool, in a sort of distributed and decentralized way. And so, you know, they see all this stuff and so they’re trying to figure out how to navigate it. At the same time, they’re beginning to build things where they’re gonna have to play with competitors, because that’s just simply gonna make infrastructure more efficient and their businesses more efficient. And then people are doing patents, at the same time, right, so you have the IBM’s of the world who are doing a lot of blockchain patents and people are getting scared because they’re very used to IBM walking in the door and saying you owe us money or some other company, right, you have to pay this licensing agreement because they did this and so in most cases, our conversations are rooted in:
How do we protect your future ability to operate?
And I’m not a patent attorney, at all, and so I called Keegan, and he’s been extremely helpful at helping us understand that particular dynamic, having released, you know, decentralized apps and things like that and then immediately, within a week, there’s some sort of coin desk article on an app that’s like pretty darn similar, and it’s a little disheartening. You’re like, you know, that’s an application for some future thing you want to build, and we actually just built it in three months, and so we’ve had to help our clients kind of navigate that, and think about that. We’re also kind of, we’ve built a lot of internal custom tools to work with our clients, and so we’ve also been exploring like–
I’ve never open sourced anything, but I’ve also not necessarily, like, needed to. We’ve used a lot of open source, nodejs, kubernetes, all that stuff. We’re exploring open sourcing something that we’ve built, and
“What does that process look like?”
“How can we get others to contribute to it?” …
“Is a patent the right process?”
“Is a dual approach better?”
So right now, it’s like, very early conversations for us. But, we definitely want to put out into the world some of the things that we built.
(inaudible) … weigh in on Tom’s point for a second,
… was the efficiency.
So, my partner and I just had a conversation yesterday, so we’re going to be developing our own internal products, so this was like, what’s our first product going to be? And we’ve got to narrow that down, but, his question to me was, “Is it going to be open sourced or closed source?”
And my answer was a little bit of both.
The reason for that being, you get a wealth of knowledge from having your code open source, there is no help desk, but, given that there are so many developers now in existence and there’s so many developers that are developing in the blockchain space because they want to, and even market cap also helps, you get a really interesting mix of actors.
So for this coin that we just made, at fork, normally when you fork a coin you have the entire old history of the blockchain, and that’s part of your new blockchain. We didn’t want that bloat. We wanted everyone to run a node and have, kind of, a fresh copy. So, we just brought in the UTXO “Unspent Transaction Outputs” from both chains and merge them together. The problem was/is, on the on the Zclassic chain, at the privacy point you have zkSNARKs. Meaning that, there isn’t anything really inside of those transactions. It’s very difficult to parse through it. So, we just had a Russian guy who saw the project and started to write some Python utility for it. We started to communicate with him. And this is all open source, he wasn’t getting paid for it, we weren’t paying him. But once we finished that,
…this is an open source Python utility to scrape through zkSNARKs UTXOs
I think it’s hard to imagine a world without open source, right, the internet wouldn’t exist in the form it does today. We woudn’t have the Google’s, the Facebook’s, the huge tech giants that we have today. We wouldn’t have most of the innovations that we have today if it wasn’t for that.
Open source software and patents can often work together.
Caldwell Intellectual Property Law