How patent blocks can create value for your company
Why issuing a patent block is easier than you may think and what makes it different from an ICO
Law firms around the world are facing the same daily dilemma: How to create a legal ICO for clients who want to issue coins and sell them to anyone online? Even one of the most prestigious ICO law firms has recently been reprimanded by regulators because their clients’ coin offerings violated securities laws, despite all the elaborate legal language.
Meet the new ICO:
THE PATENT BLOCK OFFERING
Yes, we call it a block and not a coin because most coins are not in compliance with securities laws.
Before we look at what a patent block is, we want to examine what it is not:
We differentiate between three types of patent blocks:
Next, the Ownership Block. While it may not be a security if it is properly structured, we feel it is advisable to restrict its use to qualified (accredited) investors or managing members, including board members who participate in any type of voting, including blockchain voting.
Finally, the Portfolio Block. This is a block that closely resembles a fund and its use should be restricted to qualified investors or managing members and board members.
While the Utility Block may seem most desirable to blockchain entrepreneurs, it can also be complemented with an Ownership Block and a Portfolio Block which provides buyers with ownership rights in many patents, thereby making them more attractive to buy.
The reason why making an investor a managing (board) member is desirable for an entrepreneur is not only due to the fact that they can allow anyone to contribute but also to limit their liability — if investors actually have an opportunity to vote on all important decisions, including budget decisions. It also builds confidence if investors are offered to participate in the allocation of THEIR funds.
The Utility Block is likely be the first choice for patent holders who want to license their invention to a large number of companies and consumers. It offers an entrepreneur the greatest freedom on how to spend the collected contributions.
Of course, the question that still needs to be answered is: Does an entrepreneur have a viable patent idea and can it be developed into claims that can be substantiated? The answer can often be found in a white paper or in a simple description of the idea.
While most ICOs give away all rights to the public in the form of a white paper, blockchain entrepreneurs may want to consider to initially keep the best ideas to themselves and try to develop a method that can be patented. Both, rights in patents AND patent applications, are suitable for Patent Blocks so there is no need to wait until a patent is actually awarded, provided that this fact is disclosed to block buyers.
You should not rely on this article as financial or legal advice. You should seek advice from your own counsel who is familiar with the particular facts and circumstances of what you intend and can give you tailored advice.