B∆NK Exclusive: IP in the Age of AI

Intellectual Property Royalties: Patents, Trademarks, and Income Potential

As you watch The Social Network so many thoughts spring to mind.

The biggest for me: how much value are we creating per second now and how does that compare to the past?

Obviously its rapidly accelerating, but how much?

How can we best position ourselves to capture the value that is being created on the backs of

giants like the Internet and AI?

This article is going to explore IP in the Age of AI; we’re going to begin in the early days of ideas and rapidly march to modern trademarks and beyond.

Then we’ll discuss how to monetize this rapidly spreading surface area.

The Foundations: Early Concepts of Ownership and Reward

The concept of intellectual property can be traced back to ancient civilizations, where rudimentary notions of protecting creative works and inventions began to appear.

• Ancient Greece and Rome: In these societies, philosophers debated the rights of authors. While formal laws were scarce, there was a recognition of plagiarism and some potters marked their wares for identification. The idea that creators should benefit from their work was nascent.

• Medieval Europe: Guild systems and trade secrets were precursors to modern IP protection. Artisanal guilds held monopolies on certain crafts, ensuring quality but also controlling production and limiting innovation.

• Renaissance Venice: In 1474, Venice enacted one of the first patent statutes. It granted inventors exclusive rights for a limited time, encouraging the disclosure of new technologies for the betterment of society. This marked a major shift towards incentivizing innovation through legal protection.

Formalization of Intellectual Property Rights

The 17th and 18th centuries witnessed the codification of IP rights with the rise of nation-states and the Enlightenment's emphasis on individual rights:

• Statute of Anne (1710): England enacted this ground-breaking copyright law, providing authors with exclusive rights to reproduce and sell their works for a fixed period. It served as a model for many other countries, establishing the legal framework for protecting literary creations.

• Patent Act of 1790 (US): The United States created a patent system to promote invention and economic growth. This offered inventors a time-limited monopoly on their creations in exchange for public disclosure.

19th Century: Industrialization and Internationalization

The Industrial Revolution magnified the importance of IP as inventions fueled economic transformation, prompting international cooperation to standardize protection:

• Paris Convention for the Protection of Industrial Property (1883): A landmark treaty establishing priority rights (for patents and trademarks) among member states. This means an inventor filing in one country has a grace period to file in others, preserving rights across borders.

• Berne Convention for the Protection of Literary and Artistic Works (1886): Provided a similar framework for copyright protection, promoting uniform standards for creative works and eliminating the need for formal registration in every country.

20th Century: Expansion and Refinement of IP

The 20th century saw IP rights broadened to encompass a wider spectrum of intangible assets, while debates emerged over the balance between incentives and access:

• Trademarks: The value of brand recognition grew exponentially with mass production and advertising. Trademark laws evolved to protect logos, slogans, and other distinctive symbols of businesses.

• New Forms of Copyright: Copyright protection extended to new forms of expression like motion pictures, sound recordings, and eventually, software.

• Semiconductor Chip Protection Act (1984): This US law created a unique form of IP protection for the design of integrated circuits, responding to the burgeoning electronics industry.

IP Today

The Digital Age: Challenges and the Rise of Monetization

The rise of the internet in the late 20th and early 21st centuries dramatically transformed the production, distribution, and monetization of intellectual property:

• Digital Piracy and Enforcement: The ease of copying digital works led to widespread copyright infringement. Efforts to crack down on piracy have been met with limited success and debates over fair use in the digital context.

• Patent Strategy Evolves: Technology companies amassed massive patent portfolios, employing them both defensively (to avoid litigation) and offensively (to generate revenue or block competitors).

• Open Source and Creative Commons: Alternative models emerged, allowing creators to dedicate their works to the public or create flexible licensing systems to balance individual rights and wider access.

• Monetization Strategies: The digital age ushered in new opportunities to monetize IP:

  • Subscription models (streaming music and video)

  • Micro-transactions (within games and apps);

  • E-commerce (selling digital creations)

  • Patent Licensing and Sales

  • IP-Backed Financial Instruments

IP in the Age of AI

Artificial Intelligence is reshaping IP entirely. New questions and challenges continue to emerge: