IPChain President Andrey Krichevsky on the future of copyright

01.03.2018

On April 11-12, Kaliningrad will host an international strategic forum on intellectual property IPQuorum 2018. IPChain Association (National Coordination Center for Processing Transactions with Rights and Objects of Intellectual Property) was one of the event organizers. IPChain President Andrey Krichevsky described how the project will develop and what potential Russian intellectual property market has.
– What are the problems and challenges in the sphere of intellectual property? Are there any national peculiarities or are all problems global?

– National features, of course, bring certain color to global problems. In fact, Europe and Asia are facing the same difficulties. Speaking of Russia, it is primarily a crisis of confidence which has developed as a

post-traumatic syndrome after all the difficulties of the recent years. In order to overcome this crisis we need to increase transparency of the rights to results of intellectual activities turnover, to simplify procedures for disputes resolution, connected with creation and use of IP, to provide legal opportunities for monetization of rights to intellectual property in any form, at any stage, including pre-patent stage.

I would like to pay particular attention to patenting. Today the world is trying its best to improve the mechanism of patent examination and to decrease its time. In accordance with this global trend, Rospatent is also working on these tasks. Recently, the Federal Service for Intellectual Property and the IPChain Association signed a cooperation agreement on development of innovative practices and tools for rights management and means of individualization in the digital environment. It also includes improvement of accessibility and timing of intellectual property (IP) services. It is expected that the federal budget expenses will be reduced, and procedures for resolving IP disputes will be simplified.

It is vitally important for the country to increase patent activity in sectors, such as computer technologies, energy, engineering, medical technologies. At the moment patenting is actively developing in the field of food chemistry.

We need to “adjust” intellectual property system to the needs of science. Together with the Russian Ministry of Education and Science and Rospatent, we want to increase the patent activity of scientific institutions and universities. IPChain Association will do its bet to help us in it.

Summary: Global task of the industry today is to increase economic efficiency of the IP sphere and, in the foreseeable future, to make IP one of the key institutions in digital economy.

– Tell us briefly, what is IPChain?

– IPChain is a universal non-profit corporate infrastructure, which fixes rights for intellectual property objects and registers transactions with them. This is the first system-based approach to the national IP sphere, which uses decentralized distributed registries and blockchain technology.

Intellectual property is now becoming a completely new tool and is gaining much more weight and much more importance than ever. The change in the role of intellectual property has been repeatedly noted by the President of Russia, and also reflected in the program “Digital Economy” and the Strategy for Scientific and Technical Development of the Russian Federation.

Our IPChain project was launched at the end of 2016. It is designed to turn the sphere of intellectual property into one of the digital economy drivers.

This is a fundamentally new tool which will accumulate and systematize data on all possible objects of intellectual property, on their usage in digital environment, on transfer of rights. We are talking about works of science, literature and art, phonograms, computer programs, industrial designs, trademarks and much more.

IPChain allows you to record complex chains of rights and objects transactions in digital environment without any intermediaries.

At this stage implementation of the IPChain project does not require any amendments to legislative acts.

– Who designed IPChain?

– The project was created together with the Skolkovo Foundation, with direct participation of its chairman Igor Drozdov and Russian authors’ societies. Expert support of the project was provided by the

Higher School of Economics and the Saint Petersburg National Research University of Information Technology, Mechanics and Optics. We agreed that our key task in the sphere of intellectual property is to transfer creative product based on human capital into real economic turnover. But in order to make it come true, it is necessary to reboot the entire IP system. Today, the sphere mainly lives by old laws and is in fact poorly adapted to digital realities.

Existing services work according to rules of a ‘closed club’. They are nothing more but intermediaries, which are not transparent enough. Therefore, their work raises questions. I’m talking about activities of organizations for collective management of copyright (both commercial and public ones). It is important to understand the roots of the present problems and to strive for their solution. Today we see a positive trend of constructive strategic cooperation between key players in the field of IP – the state, business, scientific and creative communities.

Obviously, we need to create new services which will work differently. They have to be as open as possible. But this requires appropriate, primarily digital infrastructure. We decided to build that infrastructure for intellectual property.

Our project accumulates all key trends which exist today in the field of intellectual property. It changes the role of intellectual property in economy – increases importance of IP products, turns them into full-scale objects of economic circulation, avoids intermediaries, changes the role and format of collective management, leads to creation of platform economy, to the so-called ‘UBER-ization’ and transition to individual management of IP objects. The project also minimizes the human factor in operational processes through integration of advanced technologies.

– Who has already joined the project?

– We managed to unite the largest scientific and educational organizations, corporations and holdings, creative associations which produce music, audiovisual products, foundations for the support of scientific, technical and innovative activities, collective management organizations and public authorities.

We were the first to offer a comprehensive solution for the whole sphere, without any exceptions.

The Ministry of Education and Science of the Russian Federation, the Ministry of Culture of the Russian Federation, Rospatent, the Federal Institute of Industrial Property (FIIP), Kyrgyzpatent, the ‘Litres’ Company, the Russian Professors’ Council, the ‘Bank of Rights’ service, the ‘Quantorium’ network of kids’ technoparks, Russian copyright societies, the Common State System of Accounting for Research, Development and Technological Works of Civil Purpose (EGISU NIOKTR), as well as Eurasian authors’ societies – the Azerbaijan Authors’ Society and the Kazakhstan Society for Management of Intellectual Property Rights (KOUPIS).

We signed an agreement on partnership with the state corporation Rosatom, and also cooperate with Rusnano technical team.

We are signing agreements with organizations from different spheres, because we want to balance interests, and also to create universal standard of information storage for intellectual property objects. The network is designed for avalanche growth of object types and number, and for multiple amendments in approaches to their description.

– Does IPChain help to protect copyright?

– Of course. IPChain is a corporate infrastructure. Each participant records his rights for certain IP objects in the system and assumes the obligation to post only verified information. Each member of the network can determine his access to such information, including access to all participants of the

network without exception. The more participants we have in the network, the more reliable the system will be.

I said: “if the owner of the rights gives access to information,” because our network allows you to close individual information for general access. This is especially important for developers of know-how.

Our system allows you to obtain information about objects of intellectual property, including access on demand, with consent of the copyright holder. This is very important when it comes to trade secret.

The state has already recognized such systems. At the St. Petersburg Cultural Forum last year, it was stated that the Intellectual Property Court considered blockchain as a legitimate evidence, such as, for example, email. So if we provide the court with transaction data from IPChain, this data will be also considered as evidence.

At the same time, we pay great attention to expansion of the term ‘copyright’. Our long-term task is to protect ideas and concepts and learn how to commercialize them. Although right now the legislation states that ideas are not protected, in the nearest future we should strive for this. We are actively developing mechanisms which would allow to protect ideas and, most importantly, to bring these ideas to implementation as quickly and efficiently as possible.

– Do you consider foreign experience?

– So far no one in the world has created such an infrastructure for intellectual property. There are services with limited functions. We are “pleased” with attempts to steal the concept of IPChain by the Germans and the Chinese. Alas, they strongly distort the ideology of the project towards profane commercialization: some want to collect € 5 million on ICO, while others have already collected 2 million. I want to stress out that these services lack the foundation – infrastructure.

IPChain is an infrastructure for creating services. It’s a pre-condition for their appearance. Our project aims at creation of complete set of interrelated service structures or facilities that make up the basis for intellectual property system functioning.

– How will IPChain support transit from collective to individual management of rights?

– As I said, the project creates an infrastructure, designed for interaction without intermediaries. FONMIX B2B player has already become one of the IPChain nodes. It allows public performance of music and recording of transactions. Each performed track is a transaction, and IPChain records this information.

FONMIX is a service which will be able to function fully in the foreseeable future. Users and the rightholders will communicate directly, without participation of collective management organizations.

Our next project is IPEX – Intellectual Property Exchange, which will provide the opportunity to manage intellectual property rights individually and to commercialize all existing types of IP objects.

The idea is that anyone can place results of his intellectual activity on a digital platform, assign price for use and conclude a deal in digital form. Such an exchange will be able to work if there are huge arrays of verified information, and IPChain will be able to provide the exchange with verified information. Together with FIIP we are developing another project based on IPChain – service of automated technologies assembly.

Each individual patent is only a “preparation” or a prototype of a part which will be included in a more complex mechanism. Therefore, it is often problematic to capitalize a patent, and creation of patent exchange is doomed to failure. Many similar projects in the United States and Asian countries have

failed. The last example is the patent exchange in Chicago, which ceased to exist in 2013. We decided to go another way. If we talk about patents, we plan to integrate the service of automated technologies assembly with artificial intelligence into the exchange. Automated assembly service assumes it is necessary to find and compare variety of patents, analyze their formulas and descriptions, and offer opportunities for their refinement. In order to make it real, we need correct digitized information from archives of the patent office – not just scans of registration documents, but recognized and verified information about patent formulas, their descriptions, etc. All this will later be structured, enriched with metadata and stored in a repository, providing access to this data, using the latest technology. This is what our IPChain is about.

– Will authors set prices themselves?

– Of course. There will be mechanisms for offers, analysis and setting of average market price, chat bots and other help services.

– What are your plans for the project development?

– The primary plan is to expand the number of corporate network participants, to involve maximum number of large players, both rights holders and users. Let me remind you that IPChain is a corporate infrastructure, it is created for public and private corporations, which later become entry points for any other persons. We are about to sign 15 new partnership agreements.

We have established working contacts with Society of Composers, Authors and Music Publishers of Canada (SOCAN). This is a large potential partner – they represent more than 100 thousand authors. We also hope to establish partnership relations with Singapore, Scandinavia and Great Britain. These countries have interesting experience on application of new technologies in the field of IP.

Recently, we agreed on strategic partnership with the Kyrgyz Republic, where digital infrastructure is actively developing within the framework of the state project “Clean Society” (“Taza Coom”). This is a large-scale digitalization project, which, in my opinion, will allow Kyrgyzstan to make a sharp leap forward. Measures implemented by the team of the Prime Minister of Kyrgyzstan, Sapar Isakov, have already resulted in real economic effect for the country – official economic turnover is growing, the level of corruption is decreasing. The country provides safe harbour for foreign investments. Our cooperation with Kyrgyzstan includes pilot implementation at the state level of a project for digitization of the patent office archives and for subsequent data processing through artificial intelligence.

We are also working on a number of promising services which will be able to use the IPChain infrastructure. This is, in particular, the IPEX – Intellectual Property Exchange – an online platform for the IP market turnover and for automated technologies assembly service, which I have already mentioned, for services like “Patent landscapes”, “Digital notaries”, “Digital Mediation” and others.

– How many agreements do you plan to sign?

– It is difficult to say now. We have not yet started a full-scale promotion campaign. People have heard something about IPChain, but if they search Google, they discover foreign projects which have nothing to offer to the world. In order to promote our project, we hold the strategic forum on intellectual property IPQuorum 2018.

The forum brings together more than 500 participants from more than 30 countries. IPQuorum is a communication network that will connect market participants and industry representatives, industry innovators, national and international regulators and visionaries, large Russian and international venture investors.

At the forum we want to discuss the new role of intellectual property in global market and digital economy, strategies, trends in the industry, mutual influence of markets, etc. As for IPChain, our project is primarily created for the national sphere of IP. But it is universal at its core and can satisfy demand in Russia, but also internationally. Therefore we do not set any territorial boundaries. At the same time we understand that foreign colleagues are highly interested in our project.

In some aspects Russia is a world champion, sometimes due to ‘legal blindness’. In the Western countries there are many barriers and established patterns, yet we look at the world with unobstructed eyes. That’s why we managed to jump through a couple of steps. Now we need to protect our positions.

– Can we say that less favorable conditions for the existence of intellectual property allowed the market to develop?

– What does not kill us, makes us stronger.

Speaking seriously, it’s not true that we have low level of legal consciousness in the sphere of intellectual property. We simply do not regard ourselves as owners. So all the challenges which made us stronger in the past may easily damage us in the future. Therefore, one of our tasks is to educate people. At the moment we only have a foresight. But this foresight still lacks a scientific base, especially in organization of digital economy.

Not so long ago, Russian universities have begun to make attempts to provide MBA in digital economy, but who is going to teach there? We have good scientific base in economics, but in regard to digital economy there is a gap.

The Association is launching a number of programs to train students in the field of intellectual property. In particular, we will invite leading world experts and practitioners, involve young people from the EEU countries in studies. I am convinced that IP education can increase its quality only through large involvement of new teachers, who are experts in these questions and work in the sphere. It will give a cumulative effect.

Russia has a large market of intellectual property, from copyrights to literary and musical works, patents, trademarks and so on. All these objects complement each other and are often intertwined. One of the tasks of IPQuorum is to show diversity of the intellectual property market, and opportunities for their interaction. It contains huge economic potential.

– What kind of potential is it?

– So far digital market in Russia is not very large, although it is growing. The market of industrial property commercialization is also not large. We have small number of transactions, which do not constitute an organized market. At the same time, up to 90% of the Western companies capitalization depend on intellectual property. Today Russia is confidently moving to a progressive non-primary economic model of development. This gives all grounds for optimism and allows us to expect that soon our companies will sharply increase in price. Turnover of intellectual property proves new taxes and new economic activity which will affect GDP growth and will allow to increase the share of Russia in the world market.