IPR in Smart Contracts & Intellectual Property (IP)

1. What is a Smart Contract (legally speaking)?

A smart contract is:

A computer program deployed on a blockchain

That automatically executes contractual obligations

Without human intervention once conditions are met

From an IP perspective, a smart contract may involve:

Copyright (source code, architecture)

Patents (novel technical solution)

Trade secrets (algorithms, logic)

Trademarks (platform branding, NFT marks)

Licensing issues (open-source vs proprietary code)

2. Core IPR Issues in Smart Contracts

(A) Copyright in Smart Contract Code

Smart contracts are software

Software is protected as literary work

Ownership depends on:

Authorship

Employment / work-for-hire

Licensing terms

(B) Patentability

Not all smart contracts are patentable

Only those with technical innovation, not mere automation of business logic

(C) Trade Secrets

Public blockchains expose code

Once deployed, secrecy is often lost

Private chains may retain trade secret protection

(D) Infringement & Forking

Copying smart contract code

Forking protocols without license compliance

NFT minting using copyrighted works

Now let’s move to case laws.

CASE LAWS (DETAILED)

⚠️ Note: Courts often apply traditional IP principles to new technologies. These cases are critical because they are used by analogy for smart contract disputes.

CASE 1: R.G. Anand v. Deluxe Films (1978, Supreme Court of India)

Issue:

Whether copying the core idea of a work amounts to copyright infringement.

Judgment:

The Supreme Court held:

Ideas are not protected

Expression of ideas is protected

Substantial similarity in expression, not concept, is required

Application to Smart Contracts:

The idea of an automated escrow smart contract is not protected

But:

Specific code structure

Logical flow

Unique implementation
can be protected

Importance:

This case is crucial when:

Developers copy smart contract logic

Claim “we only copied the idea”

➡ Courts will examine code expression, not abstract functionality.

CASE 2: Eastern Book Company v. D.B. Modak (2008, Supreme Court of India)

Issue:

Whether copied content involves sufficient originality to claim copyright.

Judgment:

The Court adopted the “modicum of creativity” standard:

Mere labor is not enough

Some creativity is required

Application to Smart Contracts:

Automatically generated smart contracts (AI-written code)

Template-based contracts

Boilerplate Solidity code

➡ Only contracts with creative choices in structure, logic, and optimization qualify for copyright.

Relevance:

Very important in:

DAO-generated contracts

AI-assisted coding disputes

CASE 3: Alice Corp. v. CLS Bank (2014, US Supreme Court)

Issue:

Whether implementing a business method through software is patentable.

Judgment:

The Court ruled:

Abstract ideas are not patentable

Merely using a computer to implement them does not qualify

There must be technical innovation

Application to Smart Contracts:

Many smart contracts fail patent tests because:

They automate existing contracts

They lack a technical solution

However:

Smart contracts that improve:

Consensus mechanisms

Gas optimization

Security protocols
may be patentable

Importance:

This case limits over-patenting of blockchain logic

CASE 4: Oracle America v. Google (2021, US Supreme Court)

Issue:

Whether copying software APIs constitutes copyright infringement.

Judgment:

API copying may fall under fair use

Functional interfaces get narrower protection

Application to Smart Contracts:

Reusing:

ERC-20

ERC-721

DeFi protocol interfaces

➡ Courts may allow interface-level reuse but not full contract copying

Relevance:

Vital for:

Open-source smart contract ecosystems

Standardization vs infringement

CASE 5: Computer Associates v. Altai (1992, US Court of Appeals)

Issue:

How to determine copyright infringement in software.

Judgment:

Introduced the Abstraction–Filtration–Comparison Test:

Abstract program layers

Filter unprotectable elements

Compare protectable expression

Application to Smart Contracts:

Used to assess:

Whether copied smart contract code is infringing

Distinguishing:

Functional elements

Standard security patterns

Custom logic

Importance:

This is the gold standard for software IP disputes involving smart contracts.

CASE 6: Nike v. StockX (2022–ongoing, US District Court)

Issue:

Whether NFTs using trademarked products infringe IP rights.

Judgment (Interim reasoning):

NFTs may constitute commercial use

Trademark infringement applies even in digital assets

Application to Smart Contracts:

NFT minting contracts

Brand usage in metadata

Unauthorized tokenization

➡ Smart contracts do not shield IP infringement

CASE 7: Zarya of the Dawn Copyright Office Decision (2023, US)

Issue:

Whether AI-generated content is copyrightable.

Decision:

Human authorship is mandatory

Machine-generated content lacks protection

Application to Smart Contracts:

AI-written smart contracts

Autonomous DAO-generated agreements

➡ Raises ownership issues in:

Fully autonomous smart contracts

AI-coded DeFi protocols

Key Legal Takeaways

Smart contract code = copyrightable software

Ideas & functions are free, expression is protected

Patentability is narrow and technical

Open-source licenses are binding

Blockchain transparency weakens trade secret claims

NFT & token contracts trigger trademark law

Conclusion

Even though few courts have ruled directly on smart contracts, existing IP jurisprudence applies squarely. Courts are:

Technology-neutral

Principle-driven

Increasingly comfortable with blockchain disputes

Smart contracts do not exist outside law — they exist inside IP law.