“CreativitySafe”

Closing the IP Rights Divide with the Blockchain

Marcello Esposito
CreativitySafe, CEO[1]

 

Milano, Italy

November 3, 2018

Abstract

Thanks to the digital revolution, the dream of a Knowledge Economy (KE) is becoming a reality. Unfortunately, a widening Intellectual Property (IP) Rights divide is appearing, too. And this divide risks to transform a utopic dream in a dystopic nightmare for creative people. The CreativitySafe project aims at closing this divide and protecting IP rights with the help of the blockchain technology. This technology provides a decentralized, universal and cost-effective way to prove the authenticity and the existence of a digital asset at a certain point in time. The embedded cryptographic algorithms guarantee the confidentiality of the registration process and the integrity of the data. Moreover, the registration is written in the universal and immutable language of mathematics and can then be verified anywhere in time and space, independently of any institutions or certifying agents.

Introduction

The utopia of a global Digital Knowledge Economy (DKE) is becoming a reality. Huge opportunities of self-empowerment for creative people are unfolding. But a widening Intellectual Property Rights “divide” is appearing between competitive self-employed freelancers and monopolistic dominant firms.[2] CreativitySafe aims at building a blockchain[3] based architecture to keep the dream alive and stop the DKE becoming a dystopic nightmare.

 

The Opportunity: A Global Digital Knowledge Economy– The dream of a knowledge economy is becoming a reality. Ideas, creative works, scientific discoveries can spread around the World and shared by persons that the author does not even know. The costs of broadcasting a new idea over the Internet are zero and the advantages are enormous. Not only because an idea can reach the entire humanity in a matter of seconds. But also, because the author can receive a feedback or ask for a collaboration by his peer community around the World.

The Risk: A Widening “IP Rights” Divide– The traditional legal instruments to protect intellectual property (IP) rights – designed in an environment where mass communication was centralized and mostly limited by language and custom barriers- are clearly obsolete. A digital object can be reproduced at zero-cost and broadcasted across the Internet, which is a peer-to-peer network without centralized control or supervised gateways. Except for powerful multinationals, there is no way that an individual author or a small company can protect her copyrights around the World using traditional instruments such as the national, “physical” registries of trademarks or patents. Creators can’t either control how their work is used, manipulated or distributed. We are then seeing a rising and paradoxical result for the Digital Knowledge Economy: a widening “IP rights” divide among global and small players. This divide worsens the economies of scale impact, destroying the medium layer of media agencies, engineering companies, research institutes and reducing the share of the pie that goes to the pyramid’s base, i.e. freelancers and micro-companies.

The Problem: Adapting the Old Legal Framework for IP Rights’ Protection to the World Wide Web– There is no magical wand to solve the problem and there is no way to overcome the “physical” structure of national laws, public IP registries … for defending copyrights, trademarks and patents. Protection needs enforcement and policing, i.e. activities that can be executed only by national authorities or supranational institutions (backed in turn by national authorities agreeing to delegate part of their powers). Since the DKE is not limited by national borders, we have a gap between the national nature of the protection instruments and the global nature of the challenges. However, this gap can be closed with the new instruments that the advances in the technology are making possible, especially if these instruments are cheap, universal and easy to use also for the smallest agents of the DKE. We think that the “blockchain” technology is one of the best candidates to help shrinking the “rights divide” that is plaguing the DKE in which we live and work.

The General Solution: Notarizing via Blockchain– The Internet and the Blockchain share many structural principles. They are both based on a peer-to-peer network architecture, allowing for bilateral interactions without the need for a central authority to manage, supervise or control the interactions:

  • in the case of the TCP/IP protocol underlying the Internet network functioning, the original goal was to let user exchange e-mail without dedicated lines and/or the intervention of a central authority directing the traffic;
  • in the case of blockchain protocol, the original goal was to let users exchange a digital currency (the bitcoin), without the intervention of a central authority to guarantee, among other things, the integrity of the monetary transactions.

Today, both protocols evolved beyond the original boundaries. For our purposes, the break-through was the possibility of inserting non-monetary data into the transactions carried over the Bitcoin’s blockchain. This allows for notarizing digital information, because it is possible to prove “who” registered “what” and “when”. The proof is mathematical and as such is “universal” (i.e. independent of human languages, laws, or habits) and “eternal” (at least, until there will be a computer or a mind able to perform certain calculations). Since the database in the blockchain can only evolve by addition and the information stored in it can’t be changed, the registration in the blockchain is “immutable” and provides a native “timestamping”. Because of these characteristics and the fact that the blockchain is distributed and synchronized on every computer that accepts to host its protocol, one doesn’t need to trust a public institution, a national authority or a private company. This is another aspect of crucial importance, especially for those who live in parts of the World where the trust in the Institutions is low.

The Specific Solution: CreativitySafe for IP Rights– At CreativitySafe we decided to use the notarization potential of the blockchain technology for protecting IP rights. We do not pretend to be the first mover in this field and, for sure, we won’t be the last one.  But, in designing our architecture, we decided to fully respect the philosophical principles underlying the Nakamoto’s blockchain[4] because they are exactly what is needed for IP rights. And then it came as natural step to adopt the Bitcoin blockchain as our ledger.

First of all, the blockchain to be used as a ledger has to be public and distributed. We opted for the Bitcoin blockchain. A private blockchain, maintained by a group of banks or the institution of a specific nation, is for our purposes at best a useless complicated database at worst an oxymoron. In fact, if the goal is the one of protecting IP rights in the global DKE, the blockchain has to be de-nationalized and it has to be bullet-proof with respect to the possibility of a minority controlling its distribution, access and evolution.

Second, the webservice that we build around the blockchain’s registration has to facilitate the author in defining the digital asset to protect and the documents to be attached for proving its authenticity and/or its use and/or its publication. But the registration is and remains exclusively with the blockchain. In other words, the author has to be able to verify autonomously and independently the registration of his documentation on the blockchain, without any institution or company to guarantee or intermediate. CreativitySafe is a simple medium.

Third, the previous principle allows for a third party (a judge or another person) to verify the author’s claim without communicating with CreativitySafe. This can happen in any place of the World and in any time in the future.

Fourth, given the nature of IP rights and the fact that they last for decades, the solution has to be able to survive to the life of whatever private company or nation. If CreativitySafe disappears or lose the records or is not present to help the author, the author will always be able to verify the registration.

 

 

1.      IP rights protection

The need of protecting IP rights[5] is as old as human creativity, but it became of crucial importance with the industrial revolution. Remunerating the nascent industries for the huge investments they made in research and development was considered fundamental for economic and human progress. Unfortunately, the fact that the first international laws protecting IP rights were conceived more than 100 years ago makes them partially inadequate to nowadays economic and social systems.[6] Think for example of the distinction between industrial and artistic work and how this distinction is completely blurred by the growing importance of marketing and artistic techniques in the commercial success of a product.

What is sometimes misunderstood about IP rights is that, for certain types of works[7], they are born by the act of creation, not by the act of registration in an officially recognized registry. The first thing that one should know about IP rights is that the author of a poem, a song or whatever creation of his intellect is the owner of these creations independently of their registration in a public or private ledger. Public registries, where the authors could “deposit” a copy of their creation or a statement of ownership, were created in the past centuries only to make it easier for the judge to solve the controversies about the paternity of an invention or of an artwork.

It might seem counterintuitive that we, the proponents of a system of protection based on a distributed ledger, underline the fact that IP rights are born independently of any registration in any ledger, be it public or private, centralized or distributed. But it isn’t. It means in fact that IP rights are fundamental rights of the individual and that the law recognizes those rights independently of any form of “official” registration. The registration in an official ledger or in the blockchain does not mean that one can steal the creation of an artist, register it before him and then pretend to beneficiate from the economic fruits.

At CreativitySafe we believe that the blockchain can complement protection offered by the official and traditional instruments of Copyright’s protection also because there are many fields of human creativity that are simply out of the umbrella offered by those institutes created for a world that has dramatically changed in the last 100 years. To understand this point think about computer software, that had to be classified inside the literary work category to be accepted by a public ledger such as SIAE in Italy. Or think about gastronomy where, as far as we know, there has been only one case of registration of an original recipe at the SIAE.

The best way to explain what we mean by “complement” is through some examples.

1.1.   Proof of Existence: an extension to fields not covered by public registries

  1. Drafts protection. In many creations, the author produces “draft”, “blueprint”, “mock-up” …. Consider the design of a marketing campaign for a client. The first drafts of the payoffs, of the pictures, of the videos are sent to the client for his approval. Very rarely the verdict is at once positive. Many drafts must be produced before arriving to the final approval. And often the final approval is denied in favor of a competitor’s proposal. Obviously, it doesn’t make sense (from an economic point of view, too) to deposit the drafts of the work in a public registry, especially if you don’t know if it will ever be published. And for sure, this is not an economically viable protection’s strategy for freelancer or small agencies.
  2. Absence of specific registries. There are cases that are simply not contemplated by public registries. Think about the case of computer software that in Italy had to be classified among the literary artworks to be deposited in the SIAE public registry. This happened only in 2015. Another example are the cooking recipes or the cocktails that are not classifiable among the types of creations that can be deposited, unless they can be transformed in a brand or in an industrial product.
  3. Global protection. Nowadays a digital asset can be reproduced and sent to the other part of the World in matter of seconds. The strategy of registering the copyright in the major national registries is not economically viable if you are a freelancer or the owner of a small agencies. And one can’t use neither the cheap alternatives that one might adopt if one had to defend his rights inside the national boundaries. If you were a Chinese judge, would you first understand and second trust an Italian claimant bringing to the courtroom as the only evidence an envelope sent to himself through the Italian postal system? In terms of cost, registering on the blockchain can be considered the digital equivalent of a cheap envelope where you can enclose your asset. But there is a big, valuable difference: the timestamping and the sealing are performed in the universal language of mathematics. In whatever time and in whatever part of the Universe, the digital “envelope” can be opened only through the application of the cryptographic functions.

1.2.   Proof of Use or Publication

If a creation has been made public or a logo is used, it can be useful to collect the proofs of publication/use and record them too. So, if a logo has been published over the Internet or a song has been sung at a TV show, it might be useful to collect the pictures of the newspapers’ pages reporting the performance, or a copy of the distributed products’ catalogue ….

Obviously, different types of digital assets need different types of authorship dossier. Think about a logo. The artist taking part to a competition for designing a new logo might find useful to collect the commercial correspondence with the Client. In case of a dispute, he can prove that the logo was commissioned by the Client and the Client had access to the different drafts of the final proposal. On the contrary, the Client, once the logo is chosen and paid for, might want to register, as a proof of ownership, the invoices paid to the author.

1.3.   Complementing, not substituting official forms of protection

If a digital asset has already been registered in an official ledger such as the Italian SIAE, CreativitySafe can be an efficient complement for a comprehensive strategy of defense of your IP rights. Not only because earlier drafts of the final creation can be efficiently and cheaply deposited on the blockchain, before the final version is deposited on the official ledger. But also, because the CreativeSafe approach allows for building an extensive and digital authorship dossier to be produced alongside the official certificate of registration for an immediate and very cost-effective action against a potential threat.

2.      The choice of the Bitcoin blockchain for the IP rights’ protection

There is an ample set of valid blockchains to choose from to obtain a bullet-proof timestamping of your data. But we, at CreativitySafe, believe that Bitcoin is still the best solution for protecting Intellectual Property Rights.

One metrics for measuring the current and prospects of a specific blockchain is the relative success of its cryptocurrency. As a medium of exchange and as a store of value, a currency’s success depends from the degree of diffusion, acceptability, reputation and awareness. These characteristics could be considered a monetary network externality. Once a medium of exchange reaches the dominance, it is extremely difficult for another medium to usurp the status quo.  The attempts by other cryptocurrencies to alter the so-called Bitcoin dominance have failed and this has many advantages for our purposes:

  • Durability: Bitcoin still dominates the cryptocurrencies’ world: more than 50% of the total crypto-markets’ capitalization is accounted for by the Bitcoin. Bitcoin has the highest probability to remain the most diffused crypto-currency.
  • Credibility: The higher the diffusion, the higher the visibility and transparency of the mining process. This implies, among other things, not only that the probability of a group of miners manipulating the database is zero. But also, that it is minimal the probability of most of the miners to promote a fork against the minorities’ interests.
  • Acceptability: Bitcoin is well-known around the world and outside the tech-savvy communities. This is of crucial importance for assessing the acceptability of its associated blockchain in sensitive matters such as proving the infringement of IP rights in a courtroom.

These advantages come at a cost. Bitcoin’s protocol has limitations as far as the amount of data that can be stored in a single transaction or the things that can be done with its programming language. The hashing power needed to add a block to the chain is huge and the average time for doing this is 10 minutes. The success of the associated crypto-currency means that transactions’ costs are higher with respect to other blockchains. It is, then, a “slow” and “expensive” mining process, if compared to other blockchains. But, as we will see, this is not necessarily a problem for our purpose:

  • The confirmation “velocity” is in fact not really material for most if not all the applications that we have in mind when we think about intellectual property.
  • The transaction costs can be abated with intermediate hashing aggregation, as we will do by adopting the Opentimestamp
  • On the contrary, the fact that costs and velocity keep blockchain’s size at bay can be an advantage for a ledger that has to be truly public and truly decentralized.[8]

Moreover, all those “problems” are limited to the “registration” phase. If we focus on the “verification” phase, confirmation is immediate and transaction costs are zero.

3.      Proof of Existence and timestamping on the Bitcoin blockchain

Bitcoin is a digital currency and its database (the blockchain) was specifically designed to manage monetary transactions. The protocol is open-source, the database is distributed and can be replicated by whoever has a computer connected to the web. It is enough to have space on the hard disk to host 200GB of data and to download the synchronization software. Running a mining node is another story, especially now that there are farms of GPU-powered “rigs” competing around the World for the prize.

In order support a crypto-currency, a distributed database:

  • must be immutable;
  • must be able to timestamp the transactions;
  • must be able to record and identify the counterparties.

Without any of these characteristics, everyone owning the database could steal the digital currency or double spend it or claim to be the owner of the goods sold.

As one can see, these characteristics of the blockchain are particularly appealing for the notarization of documents too. With the timestamping function, one can assess if a certain document existed at certain date (Proof of Existence) and who owned that document at that date (Proof of Ownership)[9]. Finally, the embedded cryptographic functions guarantee that the database can’t be altered, allowing for a proof of perfect correspondence between the document presented and the document registered on the Blockchain (Proof of Authenticity).

To use the “notarization” potential of the blockchain, version 0.9.0 (2014) of Bitcoin introduced a new opcode: OP_RETURN. With this opcode, a transaction can embed arbitrary data without having an exchange of digital currency as a goal. For example, the hash[10] of a digital asset can be inserted in a transaction.

Why the hash of a file and not the entire file? In order to minimize the block size (and then the entire blockchain), the maximum length for a single OP_RETURN instruction is 80 bytes[11]. With the application of the SHA-256 algorithms, one of the most diffused and reliable hashing algorithms, whatever file can be univocally identified with a hexadecimal number, the hash, of just 32 bytes. This number fits into a single bitcoin transaction.

The blockchain timestamping of a file happens when the hash of the file is inserted in a transaction recorded on the blockchain. It has to be noted that the blockchain timestamping has a margin of error with respect to the exact time at which the transaction has been broadcasted. Apart from the latency of the computer and the mining nodes, one needs to consider that the bitcoin network handles less than 7 transactions per second. Unless one pays a very high amount of money[12] to have the transaction immediately processed, it is more likely that the transaction be processed in one of the next blocks. Since a block is added every 10 minutes, the timestamping might occur with a certain delay with respect to the exact moment in which the transaction was broadcasted. However, for most or all the applications in the field of the intellectual property protection, this delay and imprecision in the timestamping is not material as far as the Proof of Existence or the Proof of Ownership are concerned.

Table 1: Average block time of the most popular blockchains

Bitcoin10 minutes
Ethereum17 seconds
Ripple4 seconds

More serious is the problem of the transaction costs. The average transaction fee (2018q3) is around 0.45 euro, but in certain moments it reached peak-levels of 50 euro.

Fig.1 The average transaction fee on the Bitcoin blockchain (11/2017 – 11/2018)

Source: BitInfoCharts.com

Notwithstanding the levels reached in January 2018, the total cost can become a problem to be solved if an author has, for example, to timestamp the different versions of the same creation. This is the reason why CreativitySafe decided to embrace the solution devised by the Opentimestamp standard, i.e. hashes’ aggregation. To perform hash aggregation, Bitcoin’s blockchain relies on Merkle Tree[13]  and the Opentimestamp standard, too.

The Merkle Tree is an algorithm that allows for aggregating many single hashes (the “leaves” of the tree) in a unique hash (the “root” of the tree). Merkle tree has become one of the most popular tools of modern cryptography and the blockchains of Bitcoin, Ethereum, … rely on this smart algorithm for gathering together transactions into every block of the chain. There is only one path that can take from one of the leaves to the root of the Merkle Tree. If you know the path, you can prove in an irrefutable way that a certain hash belongs to that Merkle Tree. This path is called the “Merkle proof”.

The idea of Opentimestamp is quite simple to understand: if you want to save cost and space, you can (i) hash the relevant files, (ii) aggregate them inside a Merkle Tree, and (iii) broadcast on the blockchain only the root of the Merkle Tree. This procedure, in fact, allows for a reduction in the blockchain timestamping costs with a solution that is:

  • Scalable (potentially able to handle thousands of files per transaction);
  • Generating irrefutable Proof of Existence;
  • Verifiable by any person in the World, independently of the life and existence of Opentimestamp or of any other institution or company (like CreativitySafe) adopting such a standard.

The intermediate aggregation process is realized by the servers adhering to the Opentimestamp standard. These servers are called the “calendar servers” because they supply not only the aggregation of the data in a Merkle tree and their root broadcasting to the blockchain but also a series of instruments useful to prove that the timestamping is valid and effective. These instruments are summarized by what they call an “.ots” file. This file can be executed via browser with an app that makes all the calculation necessary to prove that the hash of the original file (contained inside the .ots file, together with all the path followed to arrive to the blockchain) was effectively deposited on the blockchain at a certain date/time.

Those calculations can be reproduced manually: the only pre-requisite is to have a software able to perform SHA-256 hashing and a blockchain explorer able to lookup the blockchain database. In fact, you can obtain a mathematical Proof of Existence if you know:

  • the hash of the original data;
  • the Merkle Tree where the hash has been inserted as a leaf
  • The Path leading from this leaf to the root
  • The Identification Number of the transaction with which the root of the Merkle Tree has been inserted in the blockchain
  • The number of the block where the transaction is recorded

If the file gets modified, the hash will change. If the hash was never used as a leaf in the Merkle Tree, the re-calculated root will be quite different with respect to the original one. If the Merkle Tree was manipulated or simply it was not deposited on the blockchain, the Merkle root will not match the data payload in the transaction. If the block number is manipulated, with a blockchain explorer you will never be able to match the block number with the transaction’s id. In simple words, all passages from the original file to the blockchain transaction are a series of univocally determined steps. If you miss one, you will mess up the entire path.

References

Aráoz M., “What is proof of existence?” 2014. https://proofofexistence.com/about.

Charlon F., “Change the default maximum op_return size to 80 bytes.” https://github.com/ bitcoin/bitcoin/pull/5286.

Economist, (2018), “The Next Capitalist Revolution”, The Economist, November 17th, 2018

Merkle R.C., 1987, A Digital Signature Based on a Conventional Encryption Function. CRYPTO ’87. Lecture Notes in Computer Science. 293. p. 396.

Nakamoto S., 2009, “Bitcoin: A peer-to-peer electronic cash system,” 2009. https://bitcoin.org/ bitcoin.pdf.

Todd Peter, Ricardo Casatta, Luca Vaccaro, Andrew Poelstra, et. al., “Open timestamps: A timestamping proof standard.,” 2017. https://opentimestamps.org/

U.S. National Institute of Standards and Technology, “Secure Hash Standard (SHS)”, Federal Information Processing Standards Publication no. 180-4, 2015. https://nvlpubs.nist.gov/nistpubs/FIPS/NIST.FIPS.180-4.pdf

U.S. National Institute of Standards and Technology, “Sha-3 standard: Permutation-based hash and extendable-output functions.” Federal Information Processing Standards Publication no. 202, 2015. https://dx.doi.org/10.6028/NIST.FIPS.202.

Wikipedia, “Hash chain — wikipedia, the free encyclopedia.” https://en.wikipedia.org/w/ index.php?title=Hash_chain&oldid=731737984.

Wikipedia, “Length extension attack — wikipedia, the free encyclopedia.” https://en. wikipedia.org/w/index.php?title=Length_extension_attack&oldid=733680211.

Wikipedia, “Merkle tree — wikipedia, the free encyclopedia.” https://en.wikipedia.org/w/ index.php?title=Merkle_tree&oldid=734149217.

Wikipedia, “Opcode — wikipedia, the free encyclopedia.” https://en.wikipedia.org/w/ index.php?title=Opcode&oldid=728968013.

NOTE

[1] Via Vivaio 6, Milano –  master@creativitysafe.com

[2] “The Next Capitalist Revolution”, The Economist, November 17th, 2018

[3] “The most basic definition of blockchain is a shared, digitized ledger that cannot be changed once a transaction has been recorded and verified. All parties to the transaction, as well as a significant number of 3rd parties maintain a copy of the ledger (i.e. the blockchain), which means it would be practically impossible to amend every copy of the ledger globally to fake a transaction.” Cointelegraph

[4] Nakamoto S. (2008)

[5] IP rights can be of “moral” and “economic” nature. An example of the former is the right to the integrity of the copyrighted work. An example of the latter is the right for the author to being paid a certain amount of money every time that a copy of his song is broadcasted.  The economic rights vary in times and according to the nature of the object underlying the IP. In this respect, one can distinguish the form of protection accorded by laws in three main types:

  • Copyright: this is the most basic and “natural” form of protection accorded by law. It means that if you are the author of a song, of a novel, … you have the right to sell, distribute, display it. You are the owner also of some in-alienable rights. If you are the author of a novel, you can sell or donate the economic rights linked to its sale, but you can’t sell the authorship. Moral rights are eternals: Dante will always be the author of the Divina Commedia. Economic rights instead last for a certain amount of time.
  • Trademark: this form of protection concerns products’ name or companies’ logos. No one else can use the product’s name to market a similar product, until you use and renovate the trademark.
  • Patent: this is the strongest form of protection because nobody, except the owner of the patent, can produce or sell or use the patented invention. Since it is so strong, and it creates a monopoly rent (that remunerates the author for the work), it lasts only a limited amount of time without possibility of renovation.

[6] The two founding international Treaties are the Paris Convention for the Protection of Industrial Property (1883) and the Berne Convention for the Protection of Artistic and Literary Work (1886). The World Intellectual Property Organization (WIPO) that is now a specialized agency of the United Nation was borne in 1893 to administer those Treaties.

[7] Literary and artistic works have automatic protection. Inventions and products instead have to obtain a patent. Then there are mathematical formulas or data or commercial plans that can’t be copyrighted but could still represent extremely valuable assets when  translated in industrial products or programming code.

[8] The size of Bitcoin blockchain is 184GB (2018-Q3, source: statista.com), while the Ethereum’s size exceeds 1TB.

[9] The Proof of Ownership has to be intended more as a proof of temporary possession. The database does not know if the registered digital object was stolen or copied. The only thing that knows is that a certain person was in possession of the digital object at a certain date in the past.

[10] The hash is a digital fingerprint that is unique to a certain file. A minimal change in the file and the hash changes dramatically. As in the case of the fingerprint, the hash function can’t be inverted. As one can’t say the look of a person from her fingerprint, so it is mathematically impossible to reconstruct the original file from its hash. Later we will explain better what the hash is.

[11] Just to have an idea, a row of this doc measure approximately 100 bytes.

[12] BitInfoCharts.com

[13] Merkle Tree. Brilliant.org. Retrieved 16:31, December 2, 2018, from https://brilliant.org/wiki/merkle-tree/