Andrey Krichevsky: “Blockchain is not yet being sufficiently used for its intended purpose”

IPChain Association President Andrey Krichevsky speaks about the results of the 2nd IPQuorum, the global assessment of Russian LegalTech and the popularity of blockchain among authors.

– What has changed in IPQuorum compared to last year?

– Last year, when organizing the 1st International Strategic Forum on Intellectual Property, we set ourselves an ambitious goal – to create a unique communication platform for all players of the intellectual property sphere, without exception. We took a chance to bring together the leading participants in the domestic and foreign core and related markets. I have to say, everything worked out for us. At the end of the forum, we received a lot of positive feedback, and it certainly gave us strength.

This year we decided to focus on the economy in relation to the field of intellectual property. Considering various segments of the economy and industry together with experts, we talked about the practical application of intellectual property. Moreover, we tried to embroider the tools of intellectual property to its “source code”, the original purpose in order to try as much as possible to adapt its use for current needs and solutions to specific industrial issues.

The significant difference between the 1st and the 2nd forums was that in 2018 the main result for us was the creation of the event itself, the provision of a platform for the exchange of views and, as a result, the adoption of a resolution based on the results of the forum. A year later, publicly discussing intellectual property issues with experts, we see the response of the audience and realize that the audience understands us better. Our colleagues are interested in cooperation: contracts are being concluded, agreements are being signed.

You know, almost every day after the events, I see my colleagues, intellectual property experts who lively discuss the sessions and exchange opinions.  They are really fascinated by the process. We have gathered like-minded people, and it is worth a lot.

– Can we say that now IPChain tries to connect to its network commercial companies rather than government agencies?

– I would not say ‘yes’ or ‘no’. The association is open for interaction with all organizations and companies that are interested in protecting their intellectual property.

We interact with the state through various programs, primarily on the platform for dialogue between business and the state Autonomous Non-Commercial Organization “Digital Economy”. The DE program stipulates that the IPChain platform should become a public-network platform, which will then be managed by a public and state organization. We work with all ministries and agencies that are somehow interested in the development of intellectual property: the Ministry of Science and Education of the Russian Federation, the Ministry of Culture of the Russian Federation, the Ministry of Digital Development, Telecommunications and Mass Communications of the Russian Federation, the Ministry of Industry and Trade of the Russian Federation and even the Ministry of Agriculture of the Russian Federation.

– Does the use of blockchain reduce the cost of copyright protection?

– Of course. In the picture of the world that we create, transaction costs in operations with intellectual property rights and objects will dramatically decrease compared to even the present moment. Even now we see that the function of the “communication bus”, which is embedded in the concept of the IPChain network, allows us to optimize the interaction among market participants. As the network fills with information, its usefulness will increase, and then we will see the real effect when making transactions with the use of smart contracts on online platforms.

Blockchain in this case is a basic element, since it is the technology that guarantees invariance of information about objects, which is laid in the basis of transactions. Simply put, it is impossible to build high-quality platforms for intellectual property without creating a trusted information environment beforehand, – a “data lake” with reliable information about the objects of such transactions.

– Is there an estimate of how many copyright transactions are made with the use of smart contracts?

– Today there are only a few such transactions, and basically they do not take place in Russian jurisdiction. We are looking forward to the certification of encryption of individual elements of blockchain platforms so that they can be used in FinTech services. This will allow you to fully implement the functionality of smart contracts: from monitoring the fulfillment of the terms of the contract to launching a trigger for cash transactions from shares

– Last year, you said that for the intellectual property market, blockchain technology “should become, and it is already obvious that it will become, a game-changer.” Can we say that IPChain has already significantly influenced the market?

— We have already seen that the advent of blockchain technology has become a turning point that drastically changed and continues to change the field of intellectual property. For example, the digital description of objects, “smart” contracts, identification of objects and assets, digital notary service and many more became reality, and their use is increasingly promotes the transition of relations of participants of the industry to a qualitatively new level. However, for individual tools, this is just the tip of the iceberg. We strive to create a full-fledged infrastructure for the formation of an advanced intellectual property market in the realities of the digital economy. The goal of IPChain Association was to create not a static project, but a developing organism that would not only adapt to the realities of the time, but also shape development trends.

I would even boast: Russian LegalTech has already received high praise at the international level. In the State of Legal Innovation Report 2019 (Asia Pacific), which was presented by Singapore Academy of Law (SAL), IPChain decentralized network (distributed registry), which automatically records transactions related to intellectual property rights and objects, was mentioned as one of the most well-known LegalTech projects. SAL specialists together with Baker McKenzie, after reviewing our project, noted that it has been created to facilitate the development and use of advanced technological solutions and ensures the development of intellectual property practices for the common prosperity. IPChain stores information on intellectual property rights and other intangible assets, as well as data on atomic transactions that are recorded in a distributed registry: they are the most significant for all participants in the IP field and reflect key facts and types of publicly available information.

– In February, IPChain announced a possible collaboration with Singapore. How easy is it to scale your technology?

– In February 2019, in Singapore, we really had a two-day business mission, and within the theme of the conference, together with our colleagues from the “Skolkovo” Foundation we met with representatives of IPOS, the national government agency for intellectual property and Singapore’s “Future Law Innovation Program”. FLIP is an industry-wide business incubator and legal innovation accelerator program designed to encourage technology adoption, stimulate innovation, and develop new business models for providing legal services in the future economy.

At the conference, we presented a vision of the architecture of the intellectual property sphere in the digital space and applied tools for innovative development, discussed the prospects of education in the digital economy, and also exchanged experience and practices in intellectual property management.

As for scaling, we consciously abandoned the format of expansion and are moving towards the formation of an international digital infrastructure for the sphere of intellectual property through the transfer to other countries of our organizational model and technologies.

At present, national associations are being created in several countries by analogy with Russian association IPChain, to which we will transfer our achievements, and then we will connect our transaction networks into a single infrastructure.

I’ll make a disclaimer here, that I don’t name specific countries deliberately, as some of our Russian colleagues from the relevant intellectual property agency are actively using the so called “telephone law” to block distribution of IPChain-like Russian LegalTech solutions, in particular, in the EAEU countries. I think that the reason for such actions is the misunderstood need to compete.

At the same time, the original ideology of IPChain implies that we are building a digital infrastructure common to the whole sphere, which allows any market participants to create new services, exchange reliable information, and reduce costs in transactions with intellectual property. IPChain, by definition, does not compete with anyone, except with the Bloomen project of the European Commission, which, however, is still at the R&D stage.

– Have IPChain data been already used for copyright litigation?

– In April 2018, IPChain and the Intellectual Property Rights Court signed a cooperation agreement. And in December 2018, the Intellectual Property Court published a number of transactions on the network; they concerned a court decision on the transfer of trademark rights.

Today, the trend in the judiciary is that blockchain is the same way of proof as fax or email. Even during the hearing, it is possible to request information about who is the copyright holder of the intellectual property, and read its entire history. The blockchain technology, on the basis of which IPChain network is built, is actively being introduced into the global judicial practice.

In December 2018, another case of recognition by a court of the legal force of evidence stored in a blockchain network became known. The precedent was recorded in China, where the Internet court first used data from the blockchain network to confirm authorship in the proceedings on piracy in the literary sphere.

This happened as part of a case, in which the plaintiff sued a technology firm for publishing plaintiff’s copyrighted materials on its official website. The plaintiff saved screen shots of the defendant’s web page, as well as its source code, and uploaded them to the blockchain.

After the investigation was completed, the Internet-court confirmed that this form of electronic data would now be used as evidence in cases of copyright infringement.

– How popular is independent authorship of rights through blockchain among authors today?

– It is worth immediately clarifying that the blockchain itself is an instrumental level that determines the ways and means of implementing information technologies. End users can “touch” the blockchain only through the implementation of an object level, which is reflected in specialized information technologies – in specific platforms and services. Such services for authors, which include poets, directors, and inventors, are already functioning today, however, the blockchain itself has not yet been sufficiently used for its intended purpose.

However, slowly but surely goes digital transformation of society, business, government, and relationship between them. All of these processes occur among the participants of the creative economy, which, incidentally, is much more receptive to new technologies.