CBP Releases Report on IPR Blockchain Test
CBP found “success and value” from its recent “proof of concept” that looked at the use of blockchain to track intellectual property license information, said Vincent Annunziato, director of CBP’s business transformation office, in an agency report on the test. This test, which was the second POC so far (see 1910080034), involved an increase in complexity over the previous POC, the report said. “The Business Transformation and Innovation Division (BTID) recommends moving forward with maturing these tests as we take on the mission of re-engineering the supply chain in a 21st century world,” he said.
The POC “successfully demonstrated increased efficiency and efficacy in the evaluation of imported products based on licensed intellectual property,” CBP said. “In addition, it demonstrated the value of emerging standards in Blockchain, Verifiable Credentials, Authorization Capabilities, Encrypted Data Vaults, Decentralized Identifiers and other emerging global open standards.” The standards “were used by trade participants to register a product’s physical features, e.g., trademark locations, stitching, logo placement, along with information related to organizations licensed to manufacture and import a product such as limits on quantity or country of manufacture.”
The test was structured to “address the most relevant use cases for the import of goods using licensed intellectual property," it said. “The initial focal use cases centered on the primary flow from a rights holder through manufacturing, import, and entry, including sublicensing and a stretch goal of authorizing another party to make a filing on behalf of a legitimate importer.”
Among other things, the test “showcased emerging global standards in blockchain technology, identity verification, and entity relationship security," the agency said. It also “enabled users to perform blockchain to blockchain communications without the use of standard Application Program Interfaces (API), an entirely new blockchain capability,” CBP said.
While largely positive, the report also lists some areas where improvement is needed. For example, “the legal authority to restrict import depends on whether or not IP is legally affixed to a particular product,” CBP said. “Although license holders may have restrictive contracts about the distribution of licensed goods, a violation of those contracts [is] not enforceable by CBP.” As a result, “what CBP needs to verify at import is not whether or not there is a license to 'import' but rather whether or not the IP was legitimately licensed at the time the IP was affixed to the product.”
Another issue emerged as part of an evaluation of "a public-facing web page where a consumer, at the point of making a purchase, can scan in a product code and get information about whether or not that specific product is a legitimate, licensed good,” CBP said. The problem was that "there was no mechanism to prevent bad actors from re-using valid serialized [Global Trade Identification Numbers] on invalid goods, leaving customers to believe they had a valid product when in fact it was a counterfeit.”
The use of standards to test the “interoperability between disparate systems running across a variety of independent organizations” was among the primary goals of the test, CBP said. “It is important to highlight that these specifications are currently going through various standardization processes and are being shaped by some of the participants in the PoC. Direct funding for these standards and organizations remains anaemic, slowing their progress, and endangering the completion of the work on a reasonable time frame.”