Within the legal industry, blockchain is being evaluated as a mechanism for minimizing disputes regarding property rights. Property rights are a division of law that establish the responsibilities which come with owning an asset. Property ownership rights include the right to use or profit from an asset. They also include the right to profit from an asset, transfer the asset to someone else, and control who can use the asset. Tax liability for the asset, maintenance and repair costs, or payment for injuries caused by unsafe or defective conditions of the asset can also be applied.
Ownership for a particular asset may be transferred in whole, or in part. As a result, property rights or obligations attached to a particular asset may belong to several different entities at the same time. For example, if you purchase a plot of land, you have the right to use that land. However, the usage of the land is most likely limited by the government. The right to use the land may be taken away from you by foreclosure if you do not pay property taxes. Similarly, your right to use the land is limited to permitted uses per that areas’ zoning laws. It is unlikely that you will be allowed to operate a pesticide manufacturing plant in the middle of a residential neighborhood. If you lease out the plot of land, your right to use the property is transferred to the tenant, but you are still able to sell the plot of land to another landlord while the lease is active.
Companies may use blockchain technologies to record ownership rights and responsibilities. Specifically, governments have put land registry records on blockchain. Companies have also put intellectual property registration and ownership on blockchain. Intellectual property includes copyright, trademark, and patents. To legally protect ownership rights in these, one registers their production, or invention, or otherwise proves when the work was established, and that they are the origin of the work.
Companies with a strong brand value in particular, such as the fashion industry and luxury good providers, are interested in more efficient ways to protect their intellectual property. When data is added to a blockchain, it can provide an immutable, secure, timestamped record for the creation of intellectual property, and any changes to the data can be easily detected. Blockchains establish this in a variety of ways.
A blockchain may record a hash of a document. As an example, photographers could place a hash of their unique digital photographs on the blockchain. The hash of a digital photograph will be constant so long as the photograph file has not been altered. Therefore, the blockchain can control and track the distribution of the photograph, detect the introduction of counterfeit images, and be used to resolve disputes as to who first introduced the image. By placing a hash of intellectual property documents on the blockchain, a party can publicly demonstrate data ownership, and prove the existence of certain documents at a given moment in time, without revealing the actual data. In addition to the hash, you may also choose to store the location of the file in the blockchain, which could be used for retrieval.