In an article published here in January we addressed some
of the more significant Internet of Things (IoT) -specific standards and
initiatives and emphasized the importance of interoperability as central to the
growth and success of the products and services that leverage the IoT. In
this follow-up piece, we provide a detailed update regarding one of
the leading efforts around standardization, the Open Connectivity Forum
(OCF).
We also cover three additional industry standards that have
particular potential when used in IoT: Bluetooth Low Energy, Wi-Fi
(including 5G) and Blockchain.
“Fragmentation is the Enemy”
On February
19, 2016, the Open Connectivity Forum (OCF), a new standards effort for the
IoT, was announced. Led by Intel, Qualcomm, ARRIS, CableLabs, Cisco,
Electrolux, GE Digital, Microsoft and Samsung, the OCF reportedly seeks
to merge the current efforts towards standards development in the IoT, uniting
the former Open Interconnect Consortium with companies at all levels, and is
“dedicated to providing this key interoperability element of an IoT
solution.”
The initiative hopes to circumvent the expenditure of time and
resources in building consensus between multiple standards approaches,
accelerating innovation and assisting developers create solutions that map to
one open IoT interoperability specification. Emphasizing this point,
Qualcomm recently published on its website that “fragmentation is the enemy of
IoT.” The OCF sponsors the IoTivity open source project (covered in Part 1 of this Alert)
which includes a reference implementation of the OCF specification licensed
under the open source Apache 2.0 license.
OCF Intellectual Property Policy
The Intellectual Property
Policy adopted
by the OCF shows a high level of attention to detail, thoroughness and
nuance. Those considering joining would be well-advised to get some help
in understanding how these terms will apply to their specific intellectual
property portfolio, products, components and services. We have chosen to
take a deeper dive into the intellectual property policy for this standard
because the details of the policy reveal a number of areas of focus of the
founding members.
While the policy imposes obligations on members as well as their
affiliates to grant licenses under copyrights and patents, the scope and cost
of those licenses will depend on a number of specifics that will vary depending
on the precise contours of the final specifications. Members are required
to represent that they are authorized to bind their affiliates to the terms of
the policy, including parent and sister companies.
1. Patent Claims Captured. The patent
claims captured by the policy are limited in a number of ways:
·
The only claims
captured are those that would be necessarily infringed by implementing the
mandatory portions of the specifications within the bounds of a tightly defined
scope that ties specifically to enabling the compliant portions of products to
interoperate, interconnect or communicate.
·
Necessary
infringement is defined as there being no “commercially reasonable”
non-infringing alternative for this enablement. The policy requires that any
transfer of these necessary patent claims to unaffiliated third parties must be
subject to the terms and conditions of the policy, and transfer or assignment
agreements must explicitly address the fact that the transfer or assignment is
subject to existing licenses and obligations imposed by standards bodies such
as OCF. Those who practice in the merger and acquisition arena will want to
take note of the potential issues for both sellers and acquirers in light of
these requirements.
2. Patent License Scope. The license
scope is also limited in similarly nuanced ways. The license under the
above patent claims extends to only those portions of products and services
that implement the protocols, functions, APIs and their adaptation layers,
input parameters, data structures, services and firmware descriptors that fall
within the mandatory portions of the final specification (including mandatory
portions of optional components of the specification). Moreover, the policy
goes to great lengths to ensure that, unless the final specification is
explicit and describes in detail these items where the description’s sole purpose is
to enable interoperability, interconnection or communication, no license will
apply. This would seem to place a heavy burden on the developers of the
specification taking this into account in developing the details of the
specifications.
3. Opt-Out is not true Opt-Out. Another
interesting aspect of the policy is that while the policy allows for members to
exclude specified patent claims from the royalty-free license, this opt-out
mechanism is constrained. Most importantly, members cannot opt out
entirely. The policy imposes a requirement to license those excluded patent
claims on reasonable and necessary non-discriminatory terms—again, this applies
even if patent claims are excluded in accordance with the opt-out
framework. The opt-out mechanism also only can be exercised 4 times in any
60 month period.
4. Copyright and Software. While we have
focused on patents here due to the policy’s emphasis on the patent rights
granted, the policy also imposes obligations to license copyrights. The
policy only addresses rights under copyright to contributions made by members
to the specification itself. The policy also includes a brief statement
permitting members to contribute OCF open source that OCF deems acceptable and
non-confidential as well as modifications and additions to such open source
software to open source projects. It is not clear what will be considered
acceptable and what software will be made non-confidential. It is also not
and does not appear to extend to software beyond acknowledging that members may
license their software source code that implements the specification under open
source licenses and may make contributions of such source code to open source
projects. No limitations on which open source projects are permitted
appear. This seems odd given that this could result in OCF open source
software ending up being contributed to projects that impose license terms that
conflict with one another. It seems that OCF may have decided to defer these
issues to the future once it has determined what is “acceptable” and what
software OCF itself will make available.
5. Rights on Termination. Termination
also raises issues for terminating as well as continuing members. Once members
join, they may not terminate the licenses they have previously granted to other
members prior to termination with respect to versions of the final
specification that existed while they were members or contributions to draft
specifications that they made which become part of subsequent versions of the
specification after their termination. Continuing members are also
required to provide more or less reciprocal grants.
Standards With IoT Applicability (And Beyond)
Bluetooth Low Energy
1. Technology. Bluetooth
is a short-range wireless connectivity standard that discovers and pairs
devices together for the exchange of data. The Bluetooth Low Energy (BLE)
Standard, also called Bluetooth Smart, is a subset of classic Bluetooth Basic
Rate/Enhanced Data Rate (or Bluetooth Classic) and was released as part of the
core Bluetooth Version 4.0 Specification. Bluetooth Classic is connection
orientated (i.e.,
when a device is connected, a link is maintained, even if there is no data
flowing). Like Bluetooth Classic, BLE operates in the 2.4 GHz ISM band,
but has a better range, lower power consumption requirements and lower data
rates due to the fact that data is communicated in chunks rather than
continuously. Bluetooth Classic faces significant challenges with fast
battery draining and frequent loss of connection, requiring frequent
repairing. Unlike Bluetooth Classic, which establishes a relatively
short-range, continuous wireless connection, BLE has a range of about 30 to 50
feet but remains in sleep mode unless a connection is initiated, and allows for
short bursts of long-range radio connection. Because BLE is designed for
sending small chunks of data; it does not support streaming and is not
optimized for file transfer. BLE’s key features also include an
industry-standard wireless protocol that facilitates multi-vendor
interoperability including connectivity with the large volume of Bluetooth
devices on the market; adaptive frequency hopping; fast connections; a
standardized application development architecture that leads to low development
and operational costs; and enhanced security with 128-bit AES data encryption.
With all of these benefits, BLE is inexpensive and developer-friendly,
allowing developers and OEMs to easily produce innovative new devices that are
readily interoperable with billions of Bluetooth-enabled devices on the market.
2. Standards. The Bluetooth
Specifications (including BLE), overseen by the Bluetooth Special Interest
Group (SIG), defines the technology architecture that developers use to create
Bluetooth-interoperable devices. According to the SIG website, the
Bluetooth Specifications enable interoperability between systems by defining
the protocol messages that are exchanged between equivalent layers.
3. Licensing Approach. The Bluetooth
SIG requires members to agree to a Patent and Copyright License Agreement that includes obligations to
license necessary patent claims on royalty-free terms. The scope is
similar to that imposed by the OCF, but there are some notable
differences. First, the scope of the patent claims that are captured is
somewhat different. The claims captured are those for which it is not
possible to
avoid infringement because there is no reasonable technical alternative for implementing those protocols,
data formats and electrical signaling characteristics within the Bluetooth
specifications that are disclosed with particularity and whose sole purpose is
to enable interoperability, inter-connectivity or communication. The
license is similarly scoped so that only those portions of products and
services that implement the above portions of the specification are
captured. There is no opt-out process, so all licenses are granted on
royalty-free terms, unlike the OCF policy. The agreement does not address
subsequent transfers or assignments of patents. And while rights granted
by members who terminate their membership survive, the specifics of
post-termination covenants and rights differ somewhat from the OCF policy.
The Bluetooth SIG also licenses software for its Smart Starter Kit under
a separate end user license that provides limited rights to sample code
and documentation behind BLE (the Software).
4. Applications.
Bluetooth Classic was originally designed for continuous, streaming data
applications that enabled the exchange of large amounts of data at a close
range (e.g.,
consumer products such as in wireless headsets, file transfers between devices,
wireless speakers, wireless keyboards and printers). In contrast, BLE’s
features make it ideal for the IoT applications that don’t require a continuous
connection but only need to exchange small amounts of data periodically and
depend on longer battery life, significantly reducing cost and extending
battery power. IoT devices with BLE are seen throughout the market in
wearable monitoring devices (e.g., fitness
devices, smart watches and medical devices), other sensing applications (e.g.,
thermometers, proximity sensors, weight scales and tire pressure sensors),
mobile operating systems (e.g., all major
mobile operating systems now offer Bluetooth Smart APIs) and numerous other
devices that use BLE to provide their smart functionality.
WI-FI
1. Technology. The
universal Wi-Fi standard is a networking technology that uses radio waves to
provide wireless high-speed Internet and network connections within a limited
range. Developed by the Wi-Fi Alliance, Wi-Fi is defined as any wireless
local area network (WLAN) product that adheres to the Institute of Electrical
and Electronics Engineers’ (IEEE) 802.11 standards. Distinct from the
newer Wi-Fi HaLow standard discussed in Part 1 of this Alert, the
traditional Wi-Fi standard is a WLAN technology that allows electronic devices
to connect to a network, and data exchange between devices generally occurs over
the 2.4 GHz UHF and 5 GHz SHF ISM radio bands. Most recently, the 2013
release of IEEE 802.11ac (employed in every major smartphone, laptop, and smart
television) improves speed and performance in these frequency
bands. However, proximity is key: Wi-Fi is limited insofar as range,
but offers advantages in terms of speed and bandwidth.
2. Standards. The
Wi-Fi Alliance lists Apple, Broadcom Ltd., Cisco Systems, Comcast, Dell Inc.,
Huawei Technologies Co. Ltd., Intel Corporation, LG Electronics, Microsoft Corporation,
Nokia Corporation, Qualcomm, Samsung Electronics, Sony Corporation, T-Mobile
USA Inc. and Texas Instruments as key sponsors. Under the Wi‑Fi Alliance’s
Intellectual Property Rights Policy, the stated purpose of the Wi-Fi Alliance
is to “promote the IEEE 802.11 wireless networking standard by encouraging
manufacturers of wireless networking products to achieve a high degree of
interoperability among all products employing the standard and by promoting
through a number of means the widespread adoption and use of products employing
the IEEE 802.11 standard.” The IEEE 802 Standard comprises a family of
networking standards that cover the physical layer specifications of
technologies from Ethernet to wireless.
3. Licensing Approach. Under the Wi-Fi Alliance’s Intellectual Property Rights Policy,
any member (or its affiliate) who makes a contribution to the Wi-Fi
specification or participates by downloading the specification, must grant the
other members (and their affiliates) and any implementers of the specification
under reasonable and non‑discriminatory terms (and on a royalty-free basis, if
the member has so elected under the license) a non-exclusive and nontransferable,
non-sublicensable, worldwide license under its affected patent claims to allow
such members (and their affiliates) and their implementers to make, have made,
use, use, import, offer to sell, lease, sell and otherwise distribute products
compliant with the specification. Members grant to the Wi-Fi Alliance a
worldwide, irrevocable, nonexclusive, nontransferable, sublicensable,
royalty-free copyright license to reproduce, create derivative works,
distribute, display and perform the member’s contributions for the purposes of
developing and distributing the specification and products based on
it. The Wi-Fi Alliance owns the copyright in draft and published
specifications.
The scope of
the patent claims captured by the Policy is again different from the OCF
policy. The claims captured are those disclosed with particularity in the
specification where the sole purpose of such disclosure is to define,
implement and utilize products and services to interoperate, interconnect or
communicate in wireless networking as defined within the
specification. Unlike OCF, there is an opt-out mechanism under which a
member may elect to not license its patents (but only if such patent claims are
included in the specification other than by that member’s own
contribution and
such member discloses its patent rights within a certain period). Any
transfer by a member or its affiliates of captured patent claims remains
subject to the Policy and the agreement to grant licenses by the transferors to
other members, their affiliates and implementers of the
specification. Like the OCF policy, dissolution of the Wi-Fi Alliance or a
member’s termination, expiration or withdrawal of its membership in the Wi-Fi
Alliance has no impact on licenses granted to other members, their affiliates
or implementers that existed prior to any such termination.
4. Applications. Traditional
Wi-Fi is often not the first wireless networking technology to come to mind in
the context of IoT. However, based on IoT’s key requirements (i.e.,
low cost, low power, compact form factors, rapid connection setup times and
scalable deployments), some argue it should be. Advantages inherent in
the Wi-Fi standard underscore its potential for IoT applications. Wi-Fi is
a solution for long-range connected devices in the home. Wi-Fi connects to
a home router and has a broader wireless range than Bluetooth, offering power
and costs savings. IoT devices that utilize the Wi-Fi standard may be packaged
into smaller forms, are easily “on boarded” to a home network and are scalable. An
IP-based communication standard, Wi-Fi is suited to IP addressing; IoT always
requires such IP addressing to avoid the expense and complexity of implementing
a separate IP-conversant gateway. Wi-Fi includes security credentials in
the form of WPA2, which has allowed Wi-Fi system vendors to develop reliable,
mission-critical, large-scale infrastructure solutions for years. Wi-Fi is
cost-effective in the IoT space, as it has the ability to leverage existing
secure and reliable infrastructure. In addition, while most IoT devices do
not require both long-range or high throughput, the Wi-Fi standard has the
ability to scale to meet this need if IoT applications evolve to require such
factors.
5G
1. Technology. 5G,
the fifth generation of wireless communications technology, is a super-fast
wireless network and the predicted next phase of mobile telecommunications
standards. 5G network deployments are anticipated in the “low” frequency
band (below 6GHz, alongside legacy technologies, 2-3G and 4G (LTE)); and in the
“high” frequency band (above 6GHz, alongside Wi-Fi). 5G networks are
expected to facilitate faster data rates for tens of thousands of simultaneous
connections, enhanced coverage, spectral efficiency and signaling efficiency,
and reduced latency (compared to 4G (LTE)). The capabilities of 5G far
outstrip the previous standards: 2G networks were designed primarily for
voice capabilities; 3G was designed for voice and data capabilities; 4G (LTE)
was designed for improving capacity, user data rates, spectrum usage and
latency in broadband internet applications. It is anticipated that 5G will
be able to process 1000 times more mobile data than existing cellular
systems. 5G networks will also be smarter, fusing computing capabilities
with communications, allowing objects to connect independently from a specific
available network infrastructure
2. Applications. The applicability of high speed
and low bandwidth capabilities, already available across 4G (LTE) networks,
positions cellular solutions well for IoT. 4G (LTE) networks are already
deployed in many countries, offer low speed, low power and cost-efficient capabilities
that optimize 4G (LTE) networks for a range of IoT applications. However,
security has proven a challenge for existing 4G (LTE) technology in the IoT,
and the increasing demands of new IoT applications may exceed its capabilities
in the future. In contrast, 5G shows potential, expected to cover both
communications and broadcast-like services, and a range of new use cases (e.g. , across a variety of
applications, performance attributes and devices, such as in the IoT),
providing a platform to simultaneously connect a massive number of devices to
the Internet. 5G improves the data rate, coverage and reduces end-to-end
latencies, supporting faster, smarter mobile broadband use. Such small
latency is essential in emerging applications such as autonomous cars and
intelligent transportation technologies, trends that 4G (LTE) may struggle to
support.
3. Standards. Standardization
activities are underway in 2016, as a range of standards organizations,
industry players and academia work to identify the standards, licensing models
and techniques to apply to the new 5G technology. 5G is still some time
away from being commercially available, with commercial deployment of 5G widely
expected to occur by 2020, and its implementation will require large-scale investment. Despite
this, mobile network operators are already reporting trial implementations of
5G. In addition, on January 2016, Google announced its Project Skybender,
a plan to project 5G internet from a network of solar-powered drones. Undoubtedly,
there is enormous potential for 5G in the IoT, as well as in broader
applications.
4. Licensing Approach. The licensing approaches adopted
by standards organizations for this promising standard remain to be seen. The
range of patents and key underlying technologies for 5G networks is expected to
develop significantly in the next 5 years. Many companies are working to
stay apace with these developments to capitalize upon the patent licensing
opportunities. In the patent licensing space, revenues for 5G services are
expected to exceed $65 billion by 2025.
In February 2016, Ericsson announced a virtual marketplace for patent licensing
across potential IoT verticals, with the goal of simplifying access to
standardized technology while expanding Ericsson’s market strategy around
intellectual property rights and 5G patent licensure. Handset makers are
also working on 5G IP development in order to minimize their intellectual
property licensing costs. The multiplicity of approaches reflects the familiar
divide in the industry: on the one hand, strong protections for the underlying
5G patents creates an patent monetization opportunity for licensors, but also can
create some barriers to broad implementation and adoption. On the other hand,
weaker protections lower incentives for innovators to make their intellectual
property available to competitors, creating the risk that high-quality
technologies necessary to improve the standard will not be shared.
Blockchain
1. Technology. The
significance of blockchain and other distributed ledger technologies (DLT) in
the IoT context is considerable. Recognized as the technology underpinning
the Bitcoin digital currency, blockchain has gained more and more attention as
various parties, including government authorities, financial institutions and
firms across industries, examine its potential applications in a range of
fields. Blockchain is emerging as a means to enable companies to make and
verify transactions on a network simultaneously without a central authority,
expediting transactions and cutting costs while lowering the risk of fraud.
Simply put, a blockchain is an append-only database that makes it
possible to create a digital ledger of transactions accessible to a distributed
network of computers running on the same network protocol. A blockchain
has three key elements: a network of computers, a network protocol and a
consensus mechanism.
·
Network of Computers. A blockchain’s network of computers may include everyone with a computer
(permissionless networks, such as the Bitcoin blockchain), permissioned or
private networks of entities that agree to participate (such as Hyperledger),
and traditional databases. Each computer in a particular network is called
a node.
·
Network Protocol. Via an establish network protocol, each node coordinates with other
nodes to maintain the integrity and consistency of the
ledger. Cryptography is used to verify transactions and keep information
on the blockchain private, allowing
each participant on the network to securely verify the ledger, approving a
transaction, without the need for a central authority to process, validate or
authenticate transactions. The linked transactions on the digital ledger
form an exact chain of title over time. Once recorded, a data entry is
extremely difficult to modify.
·
Consensus Mechanism. The consensus mechanism is a set of rules by which the distributed
computer network verifies each transaction and agrees on the current
composition of the digital ledger. Each transaction in the blockchain must
reference a balance in a digital ledger received from the previous
transaction. The consensus mechanism in the permissionless Bitcoin
blockchain is called “proof of work,” requiring participants to expend
resources using cryptography to verify the digital signatures attached to data
blocks in each transaction. In permissioned blockchain networks, the
consensus mechanism may be more flexible, as participants involved in the
transactions are known. There is currently no universally accepted
consensus mechanism. A range of blockchain configurations exist that use
different consensus mechanisms, determined by such factors as the type and size
of the network, transaction throughput capacity, privacy, resiliency, threat
model, vendor dependency and the ability to meet regulatory requirements.
2. Applications. Despite the
controversial reputation of Bitcoin due to its association with the contraband
website, Silk Road, many companies view the underlying technology—the
blockchain—as a significant opportunity. Various enterprises are
experimenting with applications for different DLTs, from the underlying
infrastructure to blockchain-based applications.
·
Internet of Things. Blockchain has tremendous potential in the IoT. The current
hub-and-spoke model, requiring a central authority, is expensive, less secure
and has scalability issues. Some have proposed that blockchain technology
as a solution to such issues. International Business Machines Corp. (IBM) and Samsung have announced
efforts to work on the
Autonomous Decentralized Peer-to-Peer Telemetry (ADEPT) platform, which
proposes to demonstrate the benefits applying the decentralized approach of
blockchain technology to the IoT. IBM’s researchers have proposed that, if
an IoT device is registered by manufacturer as a participant in the blockchain,
the digital ledger becomes a valuable database of information (e.g., device
history, product revisions, updates, and warranties). In a decentralized IoT,
the blockchain framework facilitates the coordination and processing of
transactions between interacting devices, eliminating the need for a central
authority or point of failure, enabling trustless peer-to-peer messaging,
securing distributed data sharing and a robust and scalable form of device
coordination.
·
Smart Contracts. Firms cite blockchain as presenting the opportunity to securely track
assets through their supply chains or electronically initiate and enforce smart
contracts. A smart contract is an agreement that is automatically executed
by a node once pre-coded conditions are satisfied. The projected impact of
smart contracts on the global economy is considerable. In September 2015,
the World Economic Forum released a report that predicted that, by 2027, 10%
of global gross domestic product will be stored on blockchain
technology, largely through the shift to smart contracts secured in the
blockchain as “self-executing contractual states, which eliminate the risk of
relying on others to follow through on their commitments.” As an example, the
dynamics of the media industry could be transformed by the use of blockchain to
implement smart contracts. A smart contract could ensure that a song won’t play
unless payment has been transferred, preventing piracy by verifying the
legitimate chain of custody. The same model would apply to movies and other
digital content. An example is Artist Imogen Heap, who released a single
in October 2015 on Ujo, a music blockchain built on the Ethereum Protocol.
·
Financial Services. Financial services companies represent a first mover in the space:
blockchain is perceived as a means to address the shortcomings in the existing
financial infrastructure. The legacy system is expensive, inefficient and
vulnerable to operational failure and attack, based on a centralized,
unencrypted, hub-and-spoke database model that requires multiple participants
to maintain records to ensure consistency, making reconciliation processes
cumbersome. Regulatory demands for increased transparency and expedited
settlement times generate issues in the trade-processing and record-keeping
phases of a transaction, generating added costs and counterparty, operational,
and security risks. For example, in financial services, trades are often
verified by a central clearinghouse that maintains its own ledger, a process
that may require days and expense for a transaction to settle. In
contrast, blockchain technology eliminates the clearinghouse, banks maintain
their own copy of the ledger and participants may communicate with one another
via a common network protocol and consensus mechanism, allowing transactions to
be approved automatically within minutes, saving time and cost. In the
past year, more than 40 financial institutions reported that they were working with
blockchain, experimenting with different implementations of the technology to
settle trades, making cross-border payments and other transactions, and
reducing transaction time and risk. The Wall
Street Journal recently reported that the use of blockchain technology could cut $20 billion in annual
costs in global banking. Industry groups perceive the potential of DLT to address limitations of the post-trade process in the financial
industry by “modernizing, simplifying and streamlining the siloed design of the
financial industry with a shared fabric of common information.” The R3 CEV LTD
consortium (R3), a group of 42 banks working on blockchain standards, recently
conducted a pilot test among 11 banks on a private blockchain using a private
open-source blockchain from Ethereum. Nasdaq reported in December 2015
that it had conducted its first securities transaction on its blockchain-based
product, Nasdaq Linq.
·
Other Industries. In other industries, a range of startups and industry groups are
exploring the potential applications of DLT, from creating certification
mechanisms for the trade of precious goods to the media business.
3. Challenges. Despite the media coverage and
apparent potential of blockchain technology, key challenges need to be overcome
before it sees broad adoption. Notwithstanding the number of new partnerships,
new developments and new test cases underway, currently there is no
standardized DLT tools or interfaces and no large‑scale blockchain application
operating in production due, in part, to technology challenges related to
security, unproven scalability, latency, performance and uncertainties about
where regulators stand on the technology. Collaboration across all
interested parties, including regulators, is required. A recent report released
by Depository Trust & Clearing Corporation (DTCC) argued that “[a]
sustainable distributed ledger platform that is capable of serving markets
broadly should require central industry coordination and governance, whether
through industry associations, open consortia or industry utilities whose
mission is to serve the industry.”
These efforts remain in early
stages. In addition, a range of legal and regulatory issues remain to be
addressed, such as concerns around accountability, the enforceability of smart
contracts, consumer protection, privacy and security, competition and antitrust
and the regulation of decentralized organizations. It’s clear that
blockchain technology has significant potential in a range of sectors. However,
given the unresolved issues, while a useful new tool, the technology is not a
panacea. Some transactions may benefit from decentralization; others will
still require an intermediary and centralized database.
4. Industry Standards. What, then, is
the current state of play with respect to the standards governing blockchain
and DLT? Blockchain is not the subject of the kinds of industry standards
seen for IoT in general. The technical standard, ISO 20022, operates as an ISO
standard for electronic data interchange between financial institutions.
However, industry standards adopting the technical standard are in their
infancy, and the market is beginning to see the same kind of multiplicity of
initiatives evident in the IoT standards reviewed in Part 1. Presently, there are no
commonly accepted interoperability standards governing the operation of DLT
across enterprise. Recently, Saket Sharma, CIO of BNY Mellon’s Treasury Services
unit, emphasized that the lack of consensus on standards for blockchain
technology in the industry was hindering the industry, as without a standard
financial firms would not be able to interoperate.
Several
competing initiatives exist in the space including, without limitation, those
supported by R3 (an R3‑managed private peer-to-peer distributed ledger,
underpinned by Ethereum technology and hosted on a virtual private network in
Microsoft Azure, the public cloud platform offering Blockchain as a Service
(BaaS)), the SWIFT Consortium (SWIFT), the Stellar Development Foundation’s
open source Stellar Protocol, the Ethereum Foundation’s open source Ethereum
Core Protocol (licensed under the GNU Lesser General Public License) and
the Interledger Protocol promoted by Ripple and licensed under the
terms of a W3C Community Contributor License Agreement, among many
others. However, the Linux Foundation’s Hyperledger project is posed to
lead the definition of industry standards for blockchain technology. In December
2015, the Linux Foundation announced plans to collaborate with other technology
and banking players to create an enterprise-grade open-source distributed
ledger framework utilizing blockchain technology called “Hyperledger.”
According to a press release, ‘[t]he
project will develop an enterprise grade, open source distributed ledger
framework and free developers to focus on building robust, industry-specific
applications, platforms and hardware systems to support business
transactions.” Participants in the group reportedly include R3, SWIFT, Cisco
Systems, Inc., IBM, Intel Corporation, Accenture, ANZ Banking Group, CLS,
Deutsche Borse, Digital Asset Holdings, DTCC, Fujitsu, IC3, JP Morgan, the
London Stock Exchange Group, Mitsubishi UFJ Financial Group, State Street,
VMWare, Inc. and Wells Fargo. The group reports that it hopes that the
Hyperledger standard will become the de facto standard in the space. The
collaboration will seek to identify and address important features and
currently missing requirements for a cross-industry open standard for
distributed ledgers.
5. Licensing The Linux Foundation released the
Hyperledger source code under the open source Apache License (Version
2.0). Under that license, a contributor must grant to a licensee (e.g.,
someone accessing the Hyperledger standard) a royalty-free copyright license as
well as a royalty-free patent license of limited scope.
The scope of
the Apache license has been written about extensively elsewhere, so we focus
here on a few issues of particular import to IoT. The patent license grant
leaves open important questions as to scope, particularly in the
interoperability context. The scope of the license grant is broad, as it
extends to the manufacture, use, sale, offer for sale, import and other
transfer of the entire work that is licensed by Apache (this is defined as the
“Work”), not just the specific contribution that the licensor itself
made.
The patent claims captured under the license, however, are
narrower: The grant is only under those claims that are necessarily
infringed by the specific “contributions,” (works of authorship intentionally submitted
by the licensor for inclusion in the Work) or
their combination with the Work[emphasis added]. This
language is somewhat vague and may lead to questions of interpretation as to
whether the patent licenses capture particular claims of patents. By comparison,
the OCF and Bluetooth patent license grants, while arguably narrower, are more
specific and may be subject to clearer interpretive guidance.
Conclusions
The development of standards to govern technologies such as 5G and DLT
will undoubtedly have a significant influence in shaping how the IoT industry
evolves and the broader application of the technologies. The involvement
of companies other than financial institutions in the Hyperledger project
emphasizes blockchain technology’s broader relevance and
potential. However, as with the standards war seen in the IoT context,
resolution of the current multiplicity of efforts will require resources and
time.
The development of these technologies will undoubtedly be accompanied by
new regulatory hurdles requiring resolution. The treatment of intellectual
property within this process will merit careful consideration. As with the
IoT-specific context, the open source model underlying the original blockchain
model undoubtedly promotes a broad and cross-industry approach to
collaboration, but must be balanced with the range of interests inherent in the
landscape of proprietary vendor solutions.
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