As noted in a recent BBC article, the distributed ledger technology known as blockchain has been hyped for many years as the solution to countless transaction ills. However, to date, its principal purpose has been to support cryptocurrencies. That said, there are valuable, non-cryptocurrency uses for the technology, including to manage supply chains, to track inventory, and to establish and maintain verifiable transaction records. Businesses are increasingly considering and adopting blockchain – thus requiring their legal counsel to prepare to contract for this burgeoning technology.
As more fully discussed in a previous blog post, there are several key issues to consider when contracting for blockchain technology.
- Because many blockchain technologies are based on open source software, and users of technologies built using open source software can be subject to various restrictions and requirements, take care to identify and review all applicable open source license terms.
- Blockchain products are still new, which means that they may not be as well-tested or debugged as mature technologies. For blockchain vendors and customers, consider appropriate contract terms addressing support, maintenance, and performance warranties for early-stage products.
- Blockchain’s purported unparalleled ability to protect the integrity and confidentiality of data and records does not abrogate the needs to carefully examine how the technology treats data and records and to review applicable privacy and security obligations.
- Blockchain is technology – with a unique spin. Technology contracting expertise is wholly relevant when drafting, reviewing, and negotiating blockchain technology agreements, particularly terms regarding technology rights and obligations, intellectual property, representations and warranties, indemnities, and limitations of liability.