Smart Contracts: The Future of Contracts, Brought To You By Blockchain – Above the Law

By Olga V. Mack      May 14, 2018

Smart contracts are a transformative new technology that can revolutionize the way businesses process deals.

If you’ve been following this series on blockchain, you now know blockchain’s disruption beyond bitcoin, how that disruption is affecting different industries, and how to get yourself ready for that cross-industry disruption. Now, it’s time to delve into another exciting application of blockchain: smart contracts. Smart contracts are a transformative new technology that can revolutionize the way businesses process deals.

So What’s Ethereum, Anyway?

Simply put, Ethereum is a cryptocurrency you can use to build “smart contracts.” You may be thinking, if contracts start getting smart, how long do I have my job as a lawyer? Spoiler alert: The term “smart contracts” is a mis-descriptive term, at least to some extent. Smart contracts are neither “smart,” nor really “contracts,” at least not in the classic sense of the word! First, we must explore the concept of “trust” and the related concept of “permanence.” Then, we will discuss the word “contract.” Understanding these terms is the secret to understanding “smart contracts” and harnessing their power.

More at: Smart Contracts: The Future of Contracts, Brought To You By Blockchain – Above the Law

The US Supreme Court Just Opened the Gates to Filing Crypto Class Actions in State Courts – Daily Business Review

By Justin Wales      March 22, 2018

This week’s U.S. Supreme Court decision in Cyan v. Beaver County Employees Retirement Fund could have a major impact on how and where we see class action securities claims brought against issuers of new cryptocurrencies.

By way of background, not even Satoshi Nakamoto, the pseudonymous developer credited with creating Bitcoin, could have predicted that the first truly transformative use of his innovative blockchain technology would be to disintermediate venture fundraising through the sale of proprietary virtual tokens. Unfortunately for the issuers of the more than 1,500 cryptocurrencies or tokens that have already been issued — many of which were promoted to inexperienced and unaccredited investors as nonsecurity “utility tokens” — the Securities and Exchange Commission has taken an increasingly hostile view of token sales. SEC head Jay Clayton has gone so far as stating that he has not seen a token sale that he does not consider the sale of securities.

The burgeoning crypto bar has been anticipating a wave of litigation around token sales instigated by the regulatory uncertainty over whether a token issuance necessarily constitutes the sale of a security, as well as by bad actors attracted to the space by the possibility of raising millions of dollars from an exuberant market that has not demanded the issuer first demonstrate that its technology is not mere vapor or that its claims are true. Thus far, however, there have only been a handful of class actions filed nationwide. As of the date of this publication, all of the class cases have been filed in federal court.

More at: The US Supreme Court Just Opened the Gates to Filing Crypto Class Actions in State Courts – Daily Business Review

Why blockchain challenges conventional thinking about intellectual property – TechXplore

By Alexandra Sims      February 27, 2018

Cryptocurrencies are getting a lot of attention, but finance is only one of many applications of the blockchain technology behind it.

Blockchain technology is poised to revolutionise almost everything from supply chains (including illegal fishing and human rights abuses), insurance and health.

It is flourishing in an open-source environment, which raises the question whether our current intellectual property laws are fit for purpose to foster innovation.

Intellectual property law’s incentive theory

Intellectual property laws, such as patents and copyright, are premised on the incentive theory. To incentivise people to create, they are given, in effect, a monopoly (with some exceptions) on their creations and can go to court and stop others from free-riding on their work.

The digital world has made the tension between innovators and free riders even more acute. In the pre-digital era, copying a book incurred considerable costs for the copier. Now, given that digital files can be copied indefinitely for near zero cost, one could argue that we need even stronger IP laws to prevent rampant and unfair copying.

More at: Why blockchain challenges conventional thinking about intellectual property – TechXplore

California Introduces Bill to Legally Recognize Blockchain Records – CryptoSlate

By Shiraz Jagati      February 26, 2018

With Arizona recently having passed a bill that allows citizens to pay their taxes via various cryptocurrencies, California has been the latest addition to the list of states that are now actively looking to incorporate blockchain technology into their daily mode of operation.

In a highly anticipated move, California lawmakers have introduced a new Assembly Bill on the 20th of Feb that pushes for the recognition of blockchain contracts, signatures and transactions for all legal purposes.

Jerry Brown CaliforniaJerry Brown is the current Governor of California, previously holding the position from 1975 to 1983, making him the state’s longest-serving Governor.

However, the tabled bill still needs to be approved by the state assembly and signed off by Governor Jerry Brown before it can take effect and become operational. The potential law reform is being championed by Ian Calderon —  one of the youngest members of the California state assembly.

More at: California Introduces Bill to Legally Recognize Blockchain Records – CryptoSlate

How Blockchain Technology Is Transforming the Legal Industry – Bloomberg Law

By Jasmine Ye Han      February 20, 2018

Blockchain is making its way in to the day-to-day legal practice of major law firms, such as K&L Gates.

It’s not just a technology that law firms are learning about for client matters. Blockchain could become a core way of how the modern legal practice operates.

“You don’t need to be doing initial coin offerings or issuing tokens to benefit from the blockchain,” Judith Rinearson, a partner in K&L Gates’ New York and London offices, told Bloomberg Law. Rinearson is leading an initiative at her firm that aims to eventually build an internal blockchain, which could be used in time-keeping, filing deeds, and handling merger and acquisition transactions, she said.

More at: How Blockchain Technology Is Transforming the Legal Industry – Bloomberg Law

Blockchain Integration Proof of Concept for Legal Market – Database Trends and Applications

January 31, 2018

NetDocuments, a cloud platform for legal IT, says it has completed a proof of concept for the integration of NetDocuments’ cloud platform with blockchain technology, enabling firms to validate document existence, details, status, and metadata via a verified and distributed digital ledger.

Incorporating blockchain technology into NetDocuments’ governance platform enables sensitive and transactional documents to be verified by posting to an open-source digital ledger, validating document details such as canonization, approval, status, filing and other relevant document information. Verified documents will retain a blockchain ID, ensuring accuracy through a distributed digital trust network. The technology integration includes blockchain certification of content stored in NetDocuments as well as certification of contents in local device storage.

More at: Blockchain Integration Proof of Concept for Legal Market – Database Trends and Applications

3 Risks Every Lawyer Should Know About Blockchain Technology – Above the Law

By Tom Kulik      January 22, 2018

This technology is as ingenious as it is effective, but as with all technology, it can also be legally deceptive for the unwary.

By now, most of you have probably heard about blockchain technology.  At its essence, it is a distributed ledger technology (“DLT”) that leverages a decentralized computer system to create secure, verifiable and permanent records of transactions. Each block contains data not only about the transaction, but other data that “links” it to the previous block in the chain. Think of a log of transactions (blocks) linked together (chain) in an encrypted ledger without a centralized administrator, replicated and authenticated across a computer network and synchronized so that they all reflect the information as it is updated.  You have probably heard it most often in conjunction with cryptocurrencies, such as Bitcoin and Ethereum — examples of decentralized, digital currencies that use blockchain technology at their core to verify and record the exchange of currency directly between two parties, all without the involvement of a centralized banking structure. This technology is as ingenious as it is effective, but as with all technology, it can also be legally deceptive for the unwary.

More at: 3 Risks Every Lawyer Should Know About Blockchain Technology – Above the Law

Initial Coin Offerings Attract New Audience: Trial Lawyers – Bloomberg Big Law Business

By Jennifer Bennett    January 9, 2018

Federal and state regulators aren’t the only ones taking a closer look at initial coin offerings: so is the plaintiffs’ bar.

In the last month alone, class actions have targeted five ICOs, alleging they were unlawful sales of unregistered securities, and securities lawyers say more are sure to follow.

“The possibility of these types of lawsuits shouldn’t be a surprise to anyone in the industry at this point. The SEC has been very vocal recently that it will deem most tokens or coins issued through ICOs to be securities under U.S. law,” Benjamin J.A. Sauter, a securities litigator at Kobre & Kim LLP told Bloomberg Law. “Companies selling new tokens or coins through ICOs to U.S. investors are taking a calculated risk.”

No federal court has addressed whether ICOs implicate securities laws and the question is still up for debate, Joshua Ashley Klayman, of counsel at Morrison Foerster LLP, told Bloomberg Law.

More at: Initial Coin Offerings Attract New Audience: Trial Lawyers – Bloomberg Big Law Business

Blockchain: Health Care’s Next Great Disruptor? – National Law Review

By Lee A. Schneider    January 5, 2018

Blockchain is rapidly becoming the focus of conversations regarding health care disruption, and for good reason. What started out as a means for cryptocurrency is now making waves in a variety of industries, set to revolutionize how data is stored and shared.

The inability to easily and securely store and share data has long been a burden on the health system. Blockchain poses a solution to that through encryption and highly advanced technological assets which open the doors to health care innovation. Today we see blockchain being used with electronic health records (EHRs) so that a patient’s medical history is easily accessible to him/her, as well as his/her doctors, insurance providers, etc. It’s also providing the “how” in implementing value-based payment agreements, which link payment to performance of a drug or medical device. Blockchain is currently being used both in the private and public sectors, including the FDA and the CDC. While the full potential of this new technology is not yet known, the industry seems eager to find out.

Ahead of this year’s J.P. Morgan Healthcare Conference, we sat down with Lee Schneider, our top blockchain thought leader, to talk specifically about how this new technology is revolutionizing (or has the potential to revolutionize) the health care space.

Q: In layman’s terms, what is blockchain and why is it a topic of such great interest right now, particularly when it comes to the health care industry?

A: Blockchain is a ledger technology that allows people to track digital assets. This is important because a digital asset can be copied an endless number of times. People call this the “double spend” problem. But if you can track each one with certainty, then digital commerce becomes possible because when you move the digital asset on the blockchain ledger, you are certain of its provenance.

More at: Blockchain: Health Care’s Next Great Disruptor? – National Law Review

Blockchain & Patent Requirements – National Law Review

By Safraz W. Ishmael    January 5, 2018

Last year’s spike in the valuation of bitcoin has much of the technology world focused on blockchain, the distributed database ledger technology behind bitcoin and many other cryptocurrencies.  Lost behind the scenes, however, is a rush by some in the industry to patent inventions relating to the blockchain technology itself.  These moves come with controversy in an industry known for its culture of open-source practices.

Patenting blockchain technology is catching on.  According to a search of the Patent Office’s database, there have been over 50 U.S. patents issued relating to blockchain technology, almost all of them issuing over the last few years.  And there are many more such patents in the pipeline.  A search of U.S. patent applications shows that there are well over 500 published patent applications relating to the technology, and there are likely many more pending unpublished applications in the space.  While many of the patent filers appear to be smaller companies, interestingly, a significant number of the patent filers are from among the larger Fortune 500 companies, including from among the big banks.

More at: Blockchain & Patent Requirements – National Law Review