IT lawyer: Bright future ahead for distributed ledgers, but beware of legal matters

As a technology lawyer focusing on outsourcing, IT contracts, digital transformation and the application of new technology, like blockchain, AI, robotics and DLT, Toby Crick has particular expertise on deals involving the use and exploitation of technology and intellectual property.

After the conference we had a chance to ask him a few questions:

There’s a lot of hype concerning DLT. In your opinion, what are the cons for applying this technology?

The technology is very interesting and it’s also quite complicated, so when you come to applying a complex technology that might be very expensive, one of the big cons is: why would you do it? What’s the point of investing in this kind of technology when you might be able to have a ledger that isn’t distributed that does the same thing at minimal additional cost?

If you do justify the cost, then you got to find a decent reason to use it, which is what they call the use case. If you find a use case for it, then you’re looking at: If I make it distributed, I lose control and is it worth the benefits of having a distributed ledger? Is it worth losing control of that data, so other people can play with my data? So that’s another downside of moving to DLT.

Finding a reason that justify the cost, finding a reason that justify giving away control and then beyond that, there’s the sort of legal concerns that people might have once you got a distributed ledger up and running or in putting one up.

DLT is also meeting a lot of skepticism especially concerning legal matters. Which concerns do you have regarding DLT?

On the legal side, I think one of the first legal concerns is that if distributed ledger is holding itself out as being this immutable source of information, you really need to make sure that the underline assets of the data on the ledger relates to, are what they purport to be.

So, the biggest legal concern is proving en provenance of the asset that are recorded in the ledger. I think once you established a ledger there are real concerns around competition law. Who can join the ledger and who is not allowed to join the ledger?

There are concerns about the data protection law, because if personal data is on the ledger and the ledger is immutable, in other words, you cannot change it. How do you square that with the requirement under the GDPR and the right to be forgotten? And that’s a real legal tension between the nature of DLT and the nature of GDPR.

And beyond that there’s just the usual legal issues you have with anything which is licenses technology, managing the IP rights that arise and the rules of membership, that takes us back to competition law.

How do you see the future for DLT?

I think that distributed ledger technology is a really cool technology. It’s really interesting. It really is a secure way of managing data in an opened and shared way and I think, there’re probably use cases that haven’t occurred to any of us yet, least of all lawyers. But they will come along and they will be used and I think we’re already seeing this, particularly in the field of determining provenance of assets in an open way, so there will be use cases.

I don’t think everyone’s going to junk their data bases and switch to distributed ledgers, but equally I think there will be sometimes and some occasions, where they will use it and it will add value.