Fintech

Patent trolls are circling crypto. A Square lawyer wants to defend it.

Kirupa Pushparaj leads an industry group that's taken on controversial bitcoin figure Craig Wright.

​Square's Kirupa Pushparaj is defending the nascent cryptocurrency industry against patent trolls.

Square's Kirupa Pushparaj is defending the nascent cryptocurrency industry against patent trolls.

Image: Square, Executium/Unsplash

Square CEO Jack Dorsey's affinity for cryptocurrency is no secret: His Twitter bio reads just "#bitcoin," he's hired engineers to work on open-source crypto projects and Square's Cash App is making a mint on bitcoin trading.

But one of the most powerful figures working at Square to make cryptocurrency mainstream is a much lower-profile lawyer, Kirupa Pushparaj.

In his day job as deputy general counsel, he oversees Square's intellectual property portfolio and legal operations. He's also board chair of the Cryptocurrency Open Patent Alliance, an industry group Square formed in September. Coinbase, Kraken, Blockstack, SatoshiLabs and Okcoin are also members. It's an independent nonprofit with a board made up of six people from member companies and three from the crypto and open-source worlds.

There's more and more at stake every day. Square is worth nearly $100 billion, its value juiced in part by investors' hopes around its exposure to crypto. The company just reported that more than half of its quarterly revenue came from crypto trading. The next most valuable member, Coinbase, is worth almost $60 billion following its direct listing. And a growing economy of startups is similarly betting on cryptocurrency. Patent lawsuits and other intellectual property disputes threaten that momentum.

The companies in COPA have pledged to never proactively assert a patent in a case — a "first strike" — and to put all their patents together as a defensive shield against patent trolls.

The former move is to ensure that crypto companies don't sue each other over patents. And it effectively makes the technology protected by those patents free for anyone to use.

The latter pledge is designed to help smaller companies that don't have as many patents, letting them borrow the patents from this collective library to defend themselves against abusive patent claims.

"The best use of patents is not to even come to use them, but to avoid litigation in the first place," Pushparaj said.

Crypto enthusiasts also espouse decentralization, financial inclusion and opening up markets for all, and they're also generally supporters of open source, which undergirds most blockchain development. Those philosophies inform COPA, Pushparaj said.

Accordingly, the group's interests go beyond just patents. In April it filed a lawsuit against Craig Wright, a notorious figure in the crypto industry who has claimed to be Satoshi Nakamoto, the pseudonym of the inventor of Bitcoin. Many in the industry have questioned Wright's claims, and he hasn't provided proof.

Wright had sent cease-and-desist letters to companies and core developers for web hosting and using the original Bitcoin white paper written by Nakamoto. He has also attempted to copyright the white paper and Bitcoin code.

COPA argues that Wright isn't the author of the original Bitcoin paper and that Wright doesn't own the copyright to it. The group sees protecting anyone's ability to use the document as part of its mandate to protect the crypto industry.

Patents are a key issue for crypto because the industry is still at an early stage, and patent wars could hurt innovation among companies seeking to build new crypto products and technology, Pushparaj said.

Having patents locked up by a few entities could also stifle the industry and prevent mass adoption, which is what it really needs, he said, pointing to patent wars over 5G networks or cellular in previous tech generations as examples of legal battles that hurt development of innovation.

"The industry needs more adoption, so we don't want foundational technology locked up in patents in a way that only a select few have access to it," Pushparaj said. "We don't want to bring patent wars to tech that already has much farther to go in such an early stage."

Square deal

Pushparaj has a combination of technical and legal expertise that's been an asset in the complex world of tech IP law. He did his undergraduate engineering degree in India, then came to the U.S. in 2001 as a graduate student in computer science.

After starting out at Siemens and then Intel as an engineer, his interest in law drew him to enter law school while still working at Intel. After a stint at law firm Perkins Coie, he went to Amazon and worked in the unit that developed the Kindle.

At that point, a young company called Square poached him away. "I had heard about the company. The idea that you could use a mobile plug-in to reach the world of finance for just about anyone was fascinating to me," he said.

Pushparaj joined Square in 2013 when there were about five in-house attorneys and the company was growing quickly.

At Square, Pushparaj's team not only works on patents, but also is involved in product development. "Our team needs to be at the precursor part with engineering teams, helping them come up with ideas and brainstorming ideas, way earlier than at the product roadmaps," he said.

Intellectual property gets a bad rap for being used by patent trolls who don't bring products to market and just sue other companies, but IP can be used for innovation, Pushparaj said. "It's more about protecting what we do from a defensive perspective," he said. "Trying to protect our company from trolls and abusive litigation is where our primary role is on the IP side."

Square has been sued for patent infringement several times over the years. And it has more than 1,000 patents or patent applications, some of which are crypto-related and subject to COPA's pledges. Instead of paying off the trolls and settling, Square has fought the cases that it believes are invalid or too abstract, despite it costing much more than settling. That's because Square believes that's the only way to stop the problem.

Part of the problem comes from patent law in the 1990s and early 2000s, where such laws were written extremely broadly especially for financial technology, Pushparaj said. "One patent that was issued said, 'I'll look at the stock market and hedge my bets and see when I should buy stock from the market,'" he said. "That's so abstract an idea that it's something you can do in your head, and it's very fundamental to how you operate in the financial industry."

In the emerging world of crypto, patents are even more important, Pushparaj says. The worst thing that could happen is for crypto startups to be sued for patent infringement, Pushparaj says. "At this stage we want to make sure there's more innovation in cryptocurrency development."

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