Two Bitcoin related patents have got a lot of attention this week.
That’s Patently Spectacular!
Remember BitBills? You know, the Bitcoin you can hold in your hand? Well, the co-founder of that awesome product want to get himself a “cold storage” patent.
Douglas Feigelson’s patent application 20130166455, “Creating And Using Digital Currency” was published by the United States Patent and Trademark Office (USPTO) last Thursday, June 27th. Mr. Feigelson is the founder of BitBills. While the patent application has not been assigned to his company BitBills Inc., it is clearly for the BitBills cold storage concept.
Ericsson filed a patent for something they call Open Money.
Wait… how’s does that work? Simple. You tell people about this great idea called Open Money and then tell them everyone you own the concept (and you have Patent to prove it). So, they call it Open Money, but really this just amounts to a corporate trademark for a concept which is Bitcoin.
So, this Open Money is just another money making idea by an inventive for-profit company right? No, sir. In their press release and marketing material it is very clear, the driving force behind Ericsson’s new Bitcoin-related patent is the “good” of the human race. But wait, doesn’t Bitcoin already do what this so-called Open Money plans to do in the future? Okay, never mind that, this is “For the good of society…”
“For the good of society…” are the words the marketing guys at Ericsson came up with. Gotta love it. That slogan reminds me of the early days of Google, do you remember their 1st company slogan? Wasn’t it “don’t be evil” or some such nonsense? Yeah, whatever.
Stephanie Murphy, PhD and Let’s Talk Bitcoin! Co-Host commented had this to say…
“This is an interesting concept and technology, which has been shown to be viable by the many examples of local currencies like BerkShares, Ithaca Hours, etc. and the increasing desire of consumers to “buy local.” However, the patent on this concept is not for the good of society – it’s for the good of Ericsson at the expense of others. Patents are legally enforced monopolies that deter innovation and keep competitors out of the market. If Ericsson really wanted to help society in general, why not make Open Money open source?” 
Here is the Ericsson video:
Adam B. Levine of Let’s Talk Bitcoin (LTB) admits he is dubious of this Open Money and questions whether or not this is really “For the good of society…”
While the technology behind a “System And Method For Implementing A Context Based Payment System” appears to have purely humanitarian goals, LTB cannot help but wonder if this technology can be abused. As we move towards a cashless society, could this be used by governments to control how its citizenry spend their money? LTB is reminded of Aaron Russo’s documentary, America: Freedom to Facism where RFID (Radio Frequency Identification) chip implants are described. 
It would appear that Ericsson is attempting to monopolize a very broad product category. It’s not unusual for companies to file defensive patents to prevent others from filing first and blocking the use of their idea; and that appear to be what is happening here in both cases.
However, if BitBills co-founder is issued a patent on his method of cold storage, the enforcement of this patent could crush the nascent and growing open source ecosystem surrounding paper wallets.
Jan Hallberg, Head of Marketing, Ericsson M-Commerce stated “It is our vision that one day everyone with access to a mobile phone will be able to spend, send and receive money as easily as sending a text via SMS.” Ericsson’s Homepage recently had a splash screen dedicated to Open Money and stated “When money is open, the way we send, spend and receive money will change forever.”
In regards to Open Money, Mr. Hallberg wrote this: “As billions of people in the world don’t have a bank account, but do have a mobile phone, isn’t it time that money also went mobile? After all, we already live in a mobile world.”
While the patent application nor Open Money specifically mention “micropayments” Ashish Beri Senior Engineer, Ericsson GSC Operations, recently wrote in “Reaching Mobile Money Customers In Rural Areas” “For many Indian people, having a limit of 50,000 rupees (approximately 690 EUR) in a mobile wallet is as good as opening a bank account. It is evident that the large number of tiny and micro payments performed daily with mobile money in smaller towns and rural areas are popular…”
Mr. Beri further stated “With 600 million active subscribers and a 65% lower-middle income group lacking bank accounts, the possibility of financial inclusion in India is a real NEED.”
Yes, there is a huge need, and therefore a huge market. This is the kind of progressive step the big mobile providers should be moving towards instead of proprietary moves like iMoney or eCash. There is no doubt that Bitcoin is the future and it was inevitable that companies like Ericsson would position themselves for success by tapping into this emerging market.
What is going on with Bitbills?
Bitcoin cold storage is not a proprietary process.
Personally, I cannot understand how one could possibly patent such an idea. Printing a key and embedding it on a physical object isn’t really something that warrants a patent! So what is going on here?
Let’s Talk Bitcoin reports an instant message exchange between the Casascius coin creator, Mike Caldwell and one of the Bitbill co-founders, in which the Bitbill co-founder clearly states that they believe Casascius coins use Bitbill technology. However, the spokesperson would not be drawn on how the situation was to be dealt with.
While this patent may have been taken as a defensive measure, there has been no word from Bitbill to set minds at rest that litigation will not follow. In turn, the broad nature of the patent could have a potential chilling effect on other attempt to market similar products. Perhaps that was the intent.
Charles Hoskinson, Founder of the Bitcoin Education Project has dealt with intellectual property issues for years. He advised this is just the beginning of the journey, one that is inevitable and as it happens necessary.
“Typically when a patent is issued it isn’t a closed and shut case but rather the first step in solidifying a company’s IP. A company usually must litigate the patent and win prior to it being considered durable and also this scenario doesn’t eliminate the possibility of competing patents with both covering the same use cases.
He continued “Considering that cold storage has been used in the open domain for almost as long as Bitcoin has existed, I would suspect this patent will not survive significant scrutiny, but rather serve the purpose of both enhancing Doug’s ability to raise capital and to serve as a barrier to entry for small players unable to afford a patent lawsuit.”