Good contracts are sometimes talked about in blockchain-themed patent functions and recited in claims. Nonetheless, Examiners with no thorough understanding of this idea or unfamiliar with blockchain know-how usually equate good contracts with authorized or industrial contracts saved on blockchains. Consequently, the Examiners could discover claims directed to merely making use of the blockchain know-how to execute authorized or industrial contracts, for instance, as a part of a commerce system, like hedging. See, e.g., Alice Corp. Pty. Ltd. v. CLS Financial institution Int’l, 134 S.Ct. at 2356 (citing Bilski v. Kappas, 561, U.S. 593, 611 (2010)).
With out detailed explanations of “good contract” set forth within the specification, patent prosecutors could discover themselves in anuphill battle towards the summary thought discovering. What makes it worse is that a number of mainstream on-line sources usually clarify “good contract” in a slim sense or an incorrect manner, from the place Examiners could have appeared up and gathered an impression. For instance, Wikipedia tells its readers that “[a] good contract is a pc program or a transaction protocol which is meant to routinely execute, management or doc legally related occasions and actions in keeping with the phrases of a contract or an settlement” (emphasis added). See here. For one more instance, Investopedia gives that “A wise contract is a self-executing contract with the phrases of the settlement between purchaser and vendor being straight written into traces of code” (emphases added). See Investopedia.
Though good contracts have been discovered to revamp many conventional areas, narrowly decoding good contracts by the particular functions takes away the technical characteristic of this vital operate of blockchain. Thus, patent drafters ought to spare consideration to crucial phrases like “good contract” when getting ready the specification. Earlier than discussing the technique, a fast assessment of the patentable subject material guidelines within the U.S. could assist re-cap the vital hurdles to patent eligibility.
Underneath Step 2A Prong 1 of the USPTO’s 2019 Revised Patent Topic Matter Eligibility Steering (2019 PEG), Examiners could reject ineligible claims by figuring out whether or not the claims recite a judicial exception – together with legal guidelines of nature, pure phenomenon, and summary concepts. For summary concepts, 2019 PEG enumerated three fully-encompassing classes: (1) “mathematical ideas” (mathematical relationships, mathematical formulation or equations, mathematical calculations); (2) “sure strategies of organizing human exercise” (basic financial rules or practices, industrial or authorized interactions, managing private conduct or relationships or interactions between folks); and (3) “psychological processes” (ideas carried out within the human thoughts: encompassing acts folks can carry out utilizing their thoughts, or utilizing pen and paper). Due to this fact, if an Examiner equates a declare limitation “good contract” as a authorized or industrial contract, and the declare doesn’t in any other case seem to fall outdoors the judicial exception, the Examiner will probably conclude that the declare is directed to an summary thought and particularly a “sure technique of organizing human actions.”
Then, the subject material evaluation proceeds to Step 2A Prong 2, the place Examiners decide if the exception is built-in right into a sensible software. To this finish, the Examiners ought to (1) determine whether or not there are any extra components past the summary thought, and (2) consider these components to find out whether or not they combine the exception right into a sensible software. Two examples of sensible software supplied by the 2019 PEG are most related to blockchain patent functions: (i) an enchancment in laptop functionalities, and (ii) limiting the judicial exception in another significant manner past usually linking to a technological surroundings.
In view of the above, an correct description of “good contract” from the technical perspective could keep away from the summary thought lure underneath Step 2A Prong 1 and lead the claims straight to eligibility, or if proceeded to Step 2A Prong 2, assist construct a powerful argument for sensible software. Such descriptions could also be present in numerous scholarly publications corresponding to the next.
“A wise contract is a pc program which verifies and executes its phrases upon the prevalence of predetermined occasions.” See Mark Giancaspro, Is a ‘good contract’ actually a sensible thought? Insights from a authorized perspective, 33 Comput. Legislation & Sec. Rev. 6, 825 (2017).
As properly defined by the authors, the historical past of the good contract false impression dates again from when the title was created. “The time period good contract has been used through the years to explain all kinds of various issues. Within the Nineteen Nineties, cryptographer Nick Szabo coined the time period and outlined it as ‘a set of guarantees, laid out in digital type, together with protocols inside which the events carry out on the opposite guarantees.’ Since then, the idea of good contracts has developed, particularly after the introduction of decentralized blockchain platforms with the invention of Bitcoin in 2009. Within the context of Ethereum, the time period is definitely a little bit of a misnomer, provided that Ethereum good contracts are neither good nor authorized contracts, however the time period has caught. On this ebook, we use the time period ‘good contracts’ to seek advice from immutable laptop applications that run deterministically within the context of an Ethereum Digital Machine as a part of the Ethereum community protocol—i.e., on the decentralized Ethereum world laptop. … Pc applications Good contracts are merely laptop applications. The phrase “contract” has no authorized that means on this context.” See Andreas M. Antonopoulos & Gavin Wooden, Mastering Ethereum: Constructing Good Contracts and DApps, § 7 (1st ed. 2018).
One other option to strengthen the technical characteristic of good contracts can be by describing the Ethereum Digital Machine (EVM) that’s used to deploy and execute good contracts. The EVM creates a digital surroundings as an area occasion on each Ethereum node for dealing with good contracts. Since all cases of the EVM function from the identical preliminary state and produce the identical remaining state by consensus, the system of nodes as an entire operates like a single laptop. See Id.
In conclusion, to anticipate potential confusion, patent drafters ought to outline or describe the phrase good contract primarily based on the context of the applying to keep away from subject material rejections. If the invention improves any technical characteristic of good contract, extra effort must be dedicated to explaining the present technical surroundings and enchancment thereon.