Territorial limitations and legal ambiguity over IP laws prevents widespread adoption of blockchain.

While Blockchain technology has promising applications in the field of intellectual property, its widespread adoption could be slowed by the lack of clear rules governing how it can be used and what should happen in the event of a dispute. This goes back to the perennial issue of technology far outpacing the development of the law. The big challenge to the use of Blockchain in the area of intellectual property rights is establishing the appropriate jurisdiction and law to apply when a dispute occurs.'® The issue arises because of Blockchain’s decentralized nature. In a Blockchain, information is stored in distributed ledgers across the world via a network of individual participants called “nodes”.!” As this is a decentralized database in which nodes can be physically located anywhere in the world, figuring out which court has the authority to adjudicate a dispute and what rules it should apply can be challenging.''® The risk is that Blockchain transactions could fall under the jurisdiction of all of the nodes, and thus under a multiplicity of legal regimes.'!!

Taking copyright law. While international treaties recognise copyright protection in multiple jurisdictions, there is no “international copyright”, and copyright works are protected under the copyright laws of each country.'’> National jurisdictions differ greatly in certain aspects of copyright law. For instance, under the interpretation of originality, there are four different families of standards, ranging from the strictest to most generous.' These include: the EU’s personal intellectual creation standard, the United States’ Feist standard, Canada’s CCH standard, and the United Kingdom’s skill and labor standard. Additionally, countries are free to apply different types of exhaustion doctrine: “national exhaustion” in countries such as Russia and Brazil, “regional exhaustion” in the EU and “international exhaustion”''* in the US. Moreover, the terms of copyright protection also vary in different countries. The Berne Convention,'> for instance, sets a minimum protection standard of only 50 years, and while some countries, including China, follow the international treaty, some other jurisdictions such as US and EU have moved to 70 years of protection.

Copyright is made up of a “bundle” of rights, and the elements making up the bundle in different jurisdictions can vary greatly in scope and duration. It’s therefore possible to imagine a situation where a smart contract permits the use of a copyrighted work in one jurisdiction, but that same use infringes the copyright of another legitimate holder in a different region.''” When a copyright owner tries to enforce their copyright on an inherently cross-jurisdictional Blockchain, the need for some form of coordination emerges.''® However, it is not yet clear whether and indeed how Blockchain platforms can address such jurisdictional issues.'" Tt is quite possible these problems will disrupt the efficiency of the distributed ledger or even render it completely useless.'*

Of course such jurisdictional issues may be less problematic in a private Blockchain than in a public Blockchain, because the creator of the former is able to establish clear contractual obligations and rules governing all the nodes on their chain.! For example. they could maintain distributed ledgers only on nodes located within the same jurisdiction.'”> However, with the inherently expansive nature of DLT, jurisdictional disputes are bound to emerge.'” We would argue that it will be necessary to establish a consistent procedure for determining the location of a distributed ledger, and that the parties concerned should reach agreement beforehand by means of smart contracts or offline agreements. Otherwise it is likely that issues concerning jurisdiction and governing law will become apparent and should not be underestimated.'**

As Blockchain begins to be applied to areas beyond intellectual property, the same concerns will arise. For example, where a Blockchain stores personal data across multiple jurisdictions, data protection compliance becomes more difficult, given that it would be impractical to obtain the requisite consent from data subjects.'® In addition, one of the very features making Blockchain secure — the immutability of the information stored on it —only serves to complicate data protection when that personal information needs to be erased or corrected.'*® There are also implications for compliance with data-protection law, including Europe’s GDPR.'?