Companies active in blockchain development have now over 500 patent applications pending approval. 10% of which have already been approved. And it's not only tech focused outfits but financial institutions who are eyeing efficiencies. But despite all the motion, there is still limited deployment of Blockchain applications.

Open source is ideologically rooted in the development of blockchain technologies. All of the major cryptocurrencies, digital assets and even blockchain enterprise software are developed as open source projects. Instead of being built as closed source by for-profit companies, blockchain projects are collaboratively created and transparently published, which allows anyone to propose modifications or fork to a new project altogether.

The for-profit software has traditionally been protected by copyright or patents depending on whether it is the code itself being protected or rather the idea itself. Most of the companies use the combination of both. Decentralized protocols developed by independent parties don’t have access to these protections by design. All open source software can be used for commercial purposes as well. Rather than the code or the idea itself, the strength of decentralized blockchain protocols lies in the network effect, which is then sustained by a strong development team as well as the community.

R3 and Digital Asset, companies that are developing enterprise DLT, have both filed patent applications in 2016. While R3’s software Corda is open source, the patent application and open source represent complementary strategies to R3. The Hedera hashgraph, a DLT platform developed by Swirlds, is also patented to prevent forking. Ripple has applied for 12 blockchain patents through 402 Technologies, a patent holding company based in Luxemburg.

Large non-blockchain companies are now rushing to patent different implementations of blockchain technologies. According to Diar’s research, there are now more than a thousand of blockchain-related patent filings worldwide with 54% coming from the United States and 21% from China. The leading sectors for filing blockchain patents are the technology and the financial sectors, which both file about 27%.

Bank of America currently has the most patent filings approaching its 50th (see table). Catherine Bessant, COO and CTO at Bank of America, clarified that the strategy is more of a hedge for the future developments. She said: “While we’ve not found large-scale opportunities, we want to be ahead of it we want to be prepared.” IBM, arguably the most active tradition company involved in blockchain development, holds the second place with 42 filed patents. Other large companies that filed for many patents are Dell, Mastercard, Intel and British Telecom.

Getting a blockchain patent granted is quite a time consuming process that takes 2-3 years on average. The largest patent holder is nChain, research and development firm, with 21 patents already under its belt. The company, whose chief scientist is Craig Wright, has been accused of patent hoarding and it is possible that some patents would be cancelled if their validity was challenged. IBM has already been granted four blockchain-related patents. Accenture trails with three, Bank of America and Mastercard with two and Dell, Coinbase, Ripple, Netspective and NASDAQ each have one patent granted (see table).

Patenting blockchain implementations is also problematic because of a Supreme Court ruling in 2014. The Supreme Court concluded that "merely requiring generic computer implementation fails to transform [an] abstract idea into a patent-eligible invention." In the EU, under the European Patent Convention, "programs for computers" are not regarded as inventions for the purpose of granting patents.