On the use of smart contracts to cope with Arrow’s Information Paradox on trade secrets exchange: method and prototype

Abstract

The state of the art contains systems for the transfer of intangible assets protected by intellectual property rights, consolidated by legal monopolies, be them attributive systems (such as patents and industrial designs) or reliant on automatic protection (such as copyright and neighboring rights). Some of these systems, or their respective methods, are described in the scientific literature. Of this set, some methods employ blockchain technology and a smaller subset also employs smart contracts technology, despite both technologies being mutually independent. Although trade secrets also constitute monopolies, computerized solutions or cryptographic environments used for other types of goods protected by other forms of intellectual property cannot be transferred to these assets, due to their sui generis nature, lacking of monopoly regardless of its non-disclosure. The need for maintenance of secrecy is due to Arrow Information Paradox, the phenomenon by which the disclosure of the secret constitutes by itself its transference. This phenomenon impairs the potential for transference of industrial secrets and prevents the adoption of the existing systems applicable to other types of intangible assets. Through this work a method for transferring industrial secrets is presented, using smart contracts embedded on a blockchain, for solving two of the three component elements of the Paradox, namely capability and reliability, and presupposes the third, relevance. The method is also validated through the development of a prototype, based on Ethereum blockchain.