BlockHash Live 2020 is the Third Annual Blockchain Summit hosted by Kerala Blockchain Academy – a unique initiative of IIITM-K and the Govt. of Kerala to leverage Blockchain Technology for the public good.
The session of particular interest to the legal industry was a panel discussion that included Justice Pratibha M. Singh, Judge, Delhi High Court, on Legal Framework Around Blockchain Technology Applications.
Here are 5 takeaways from the thoughts put forward by Justice Pratibha Singh on “Legal Aspects around Blockchain Technology" :-
1) Integration of BT in governance
Blockchain Technology is not only being used in various banking and finance related applications, but BT is also being explored/used/developed for purposes of various applications and implementations such as issuance of birth certificates, tracking of convicts, maintenance of land records, streamlining of transactions relating to vehicles, and even for the purposes of maintenance and growth of tree saplings.
Several states such as Andhra Pradesh, Delhi, Karnataka, Jharkhand, Maharashtra, Telangana, Tamilnadu and Kerala have announced policies for integrating BT in governance.
A defining moment for BT in India was the judgment of the Supreme Court in Internet and Mobile Association of India v. RBI [Writ Petition (Civil) No.528 of 2018, decided on 4th March, 2020] which set aside the ban imposed by the Reserve Bank of India ("RBI") on bitcoins and other cryptocurrencies. A perusal of this judgment would show that the Court was mindful of various aspects including the fundamental rights of persons involved in dealing with bitcoins. The Court clearly held that while regulation of this trade would be within the domain of the RBI, banning of the same would be violative of fundamental rights.
(2) Prescribing Standards - An important aspect of BT
Another important aspect of BT is the prescribing of standards. There are no globally acceptable standards, either governmental or non-governmental, for the purpose of creating BT applications.
All players and stakeholders ought to be consulted at an international level to lay down the said standards. Unregulated BT can pose enormous risks, especially in the banking and finance sector.
Hence, for BT to be a technologically viable, acceptable and easily usable technology, various steps would need to be taken at an international and national level for creation of global standards for the creation, use and implementation of BT.
(3) Legal Applicability of BT
BT can also have various applications in the legal field, especially in the streamlining and simplification of transactional work.
Smart contracts, for instance, could be used to automate payment in transactions involving delivery of goods, upon satisfaction of certain conditions. Lawyers could also use BT to store confidential data instead of emailing sensitive personal data back and forth.
But on the other hand, blockchain transactions have no borders and hence, jurisdiction is a vexed issue.
Though verification and authentication is the fulcrum of this technology, there is no means of enforcing a transaction in a court of law. Mistakes cannot be corrected and hence, the jurisprudence under the Indian Contract Act, 1847 relating to mistake of fact or law is wholly alien to these transactions.
(4) Whether Blockchain Technology applications are even patentable?
Blockchains, which are a large conglomeration of data, could be construed as literary works under the Copyrights Act, 1957. The foundation of this technology being computer software, various jurisdictions in the world also grant patents for most of the innovative implementations of BT.
Internationally, the law that has developed in different jurisdictions including UK, USA and EU is that if software programmes have a technical effect or technical contribution or when used in combination with hardware, produce an innovative result, patents can be granted.
In India, patent applications based on blockchain implementations could be faced with objections under Section 3(k) of the Indian Patents Act, 1960.
In the judgment of Ferid Allani v. UOI & Ors. [W.P.(C) 7/2014, decided on 12th December, 2019], the Delhi High Court had the opportunity to consider computer programme based inventions and it was observed that the bar of 3(k) is not on all inventions based on computer programs. Innovation in the field of artificial intelligence, blockchain technologies and other digital products would be based on computer programs, however the same would not become nonpatentable inventions – simply for that reason. Thus, the effect that such programs produce including in digital and electronic products is crucial in determining the test of patentability.
The High Court further added, "In the new proposed clause (k) the words "per se" have been inserted. This change has been proposed because sometime the computer programme may include certain other things, ancillary thereto or developed thereon. The intention here is not to reject them for grant of patent if they are inventions. However, the computer programmes `as such' are not intended to be granted patent. The amendment has been proposed to clarify the purpose."
(5) BT - Question of Policy
There are other dimensions of blockchain technology which may be covered under the recent data protection legislation - Personal Data Protection Bill, 2019, which is in the pipeline. The IT Act, 2000defines 'data' and related terminologies. The susceptibility of hacking, tampering or misuse would fall in the domain of the IT Act, 2000.
Various countries around the world such as Japan and Australia have legalized bitcoins and other digital currencies. However, regulatory agencies keep a watch over such currency exchanges. The path that India is to take is a question of policy.
However, the positive implementations and applications of blockchain technology cannot be ignored and ought to be recognised and used.
The technology is here to stay and in the legal world, we have to only learn to deal with it and use it for the benefit of the people.
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