The easy way to protect trade secrets with blockchain solutions such as timestamping
The nature of secrecy means that as soon as someone gets hold of sensitive information or comes up with the same idea, it’s suddenly out of your control. A major problem with taking action over a breach of commercially sensitive data is that you must be able to prove that you had a particular concept or information at a specific time.
Traditionally, companies can patent an idea but the procedure is slow and expensive, which puts it out of reach for most small-to-medium-sized enterprises (SMEs). Even though a patent grants you certain legal privileges, it also makes your confidential material available publicly, creating the risk of the product being ripped off with minor variations to get around your hard-earned intellectual property protections.
This article describes how to use MyDocSafe to protect secret information in a way that is cost effective for innovative small companies and individuals. It also explains why blockchain solutions such as timestamping enables you to prove ownership of a piece of data without having to reveal its contents.
For your eyes only
An attractive alternative to applying for a patent is to class your sensitive commercial information as a trade secret. Unlike applying for a patent, you will not have to go through complex formal procedures, and your details can stay undisclosed for an unlimited amount of time. To give a high-profile example, the Coca-Cola recipe is a trade secret. It applies to digital formulas too, such as the algorithm that powers Google’s search engine. Other information, including client lists or documents that describe your business processes, can also be treated as trade secrets.
Not everything can be defined as a trade secret. The information has to meet certain conditions, which vary from country to country. In the second quarter of 2016 the EU adopted a new directive to protect trade secrets against ‘unlawful acquisition, use and disclosure’. It aims to simplify and harmonise the protection of business information and innovative ideas across Europe by 2018. Under the legislation, victims of intellectual-property theft could be offered various legal remedies including injunctions, product withdrawal and compensation for losses.
As a general rule there are three criteria that trade secrets should fulfil:
- The information cannot be something that is generally available.
- It must be of commercial value because you keep it confidential.
- As an owner you must take reasonable steps to keep it private.
To carry out point 3 you need evidence that you had the information or concept at a certain time and that you took action to make it secure. This is where blockchain timestamping comes in, as we explain below.
How blockchain timestamping works
There are four straightforward stages to protecting your trade secrets using MyDocSafe.
1) First you put together a document containing your confidential information.
2) By storing it securely on MyDocSafe you also create what’s known as a hash. This process uses a mathematical algorithm to automatically produce a short string of data that is uniquely linked to the document (MyDocSafe actually makes two hashes of each document to virtually eliminate the chance of other hashes being the same and causing a conflict later).
3) Instead of making your secrets public, you publish the hashes of your document instead. Because hashing is designed as a one-way action, it is not like an encrypted data file that could be decrypted and revealed. With MyDocSafe the hashes are made available by placing them on a blockchain, which effectively timestamps the hash data to prove that you owned the documents they relate to and the time that they were registered.
You may wonder what a blockchain is. In short, blockchain is a way of structuring data and replicating it on a large number of computers (each one that participates is called a node). The information can only be added to, so once it is on the blockchain it is considered to be an unchangeable self-regulating database. This technology is a very attractive way to record snippets, such as the hashes mentioned above, for record keeping and free public access.
To date, blockchain software is best known and most widely deployed as the backbone of the cryptocurrency Bitcoin. MyDocSafe uses a newer alternative called Ethereum. This system enables participants such as MyDocSafe to create and run ‘smart contracts’, which are programs to perform certain actions that cannot be stopped once they are triggered.
We created a timestamping contract to place document hashes onto Ethereum. The public hash can be compared to the original to prove they are a match, which is done without releasing the contents of your document into the open.
4) After the transaction MyDocSafe issues you a certificate with the relevant data (your document hashes, smart contract information, your file name and email address). This data can be verified for free through any publicly accessible node of the Ethereum network. It means ownership can be authenticated by third parties such as a court of law.
Who is blockchain timestamping good for?
As we have shown, with blockchain timestamping you can publish proof of owning a piece of data in a simple way without telling the world what it is.
There are numerous uses for this system. For example, businesses can register their trade secrets, but besides that, it enables organisations to record that certain members of staff knew or created something that belonged to the company at a given time.
In creative industries such as publishing or film and TV production – where copyright disputes are common – writers can keep a timestamped record of their original manuscripts and screenplays.
For software creators, blockchain solutions such as timestamping can prove ownership of a particular piece of computer code.
For database managers, timestamping can create ‘anchors’ or snapshots of the state of the database to protect it against becoming corrupted. These blockchain solutions help determine if a given backup or a database has been compromised or corrupted.
Why is it better than what we have already?
Conventional methods of digital timestamping use centralised servers, which can malfunction or be altered. They are also often operated by expensive service providers who charge to timestamp and to verify.
In contrast, the blockchain platform is decentralised and Ethereum is based on free software. One may say ‘there is no such thing as a free lunch’, which is correct. Each node has a financial incentive to participate in the network because it’s rewarded with cryptocurrency for its ‘work’ (what constitutes work in this context and its relative price benefits are beyond the scope of this paper).
MyDocSafe makes a small charge for making a timestamp but our process lowers the overall price to create proof of ownership. In turn this makes trade-secret protection less daunting, especially for innovative small companies. It also means that ownership can be authenticated for free by any third party, which we believe opens a new market for law firms.
With the new EU directive mentioned earlier (http://data.consilium.europa.eu/doc/document/PE-76-2015-INIT/en/pdf), the coming months will see increased legal support for keeping valuable business know-how tightly under wraps. This significantly boosts the potential for using blockchain timestamping.
What should be your next steps? If you haven’t already done so, businesses are advised to identify any vital trade secrets that they own and make sure they have proper procedures to protect them.
If your secrets do get out, all is not lost. With the combination of advanced new technology, such as blockchain solutions developed by MyDocSafe, and an improving regulatory framework to back you up, keeping control of your intellectual property is getting cheaper, easier and more trustworthy.
Blockchain solutions are still quite a novelty and are usually thought of as a store of value or a way for large organisations to work with each other. Powerful services that use public blockchains such as Bitcoin or Ethereum are easier to access than one would think. MyDocSafe is a good example of that.