NFT (Non-Fungible Token) based product-related contract documentation

Abstract

NFT (Non-Fungible Token) blockchain-based product-related contract documentation, wherein: - For each product, an NFT is generated, which is linked to the product's identification number (e.g., GTIN) in such a way that only this one NFT can be used for this identification number; - The manufacturer's specified declarations of commitment and value codes are stored digitally on this NFT; - Participants involved in the production process / supply chain can agree to these value codes via an input form by providing their identification number (e.g. GLN); - For each product, an unalterable and tamper-proof digital record is generated of the - common - status of the contractual relationship between these manufacturing / production participants; - For each product, the - common - status of the contractual relationship between the manufacturing / production participants is publicly verifiable and accessible; - For each product, the - common - status of the contractual relationship between the manufacturing / production participants is automatically and electronically secured and accessible; - In the event of a participant's violation of the joint declarations, this will be automatically documented and automatically stored electronically along the entire subsequent production / supply chain;

Description

1. Technical field to which the invention relates

[0001] The present invention relates to the technical field of computer-aided information management and, in particular, to a method for the forgery-proof and publicly documented data processing of product-related and personal data in the field of supply chain control. 2. State-of-the-art information. Basic principles of the Supply Chain Act

[0002] In the EU, all member states agree that fundamental human rights standards such as the prohibition of child labor and forced labor as well as environmental standards must be observed along the entire value chain - thus worldwide.

[0003] In Germany, for example, the Supply Chain Act defines so-called due diligence obligations, which make companies in Germany responsible for ensuring that their suppliers comply with human rights.

[0004] However, the Supply Chain Due Diligence Act does not stipulate an obligation to achieve success in implementation; rather, companies are merely obliged to make appropriate efforts, in particular by establishing risk management, implementing due diligence obligations and providing the appropriate documentation.

[0005] In addition, the Supply Chain Act differentiates between the company's own business area, direct suppliers and indirect suppliers, for whom only an event-related due diligence obligation applies. b. Existing problems

[0006] In particular, the following technical, economic and global social problems exist: - Transparency

[0007] There is currently no way to transparently demonstrate compliance with specified core values ​​during the production of a specific product, making it immediately clear to every consumer whether a product complies with the codes of values ​​or not. While some companies have made commitments stating that they will do their best to comply with certain standards, these commitments are generally abstract and therefore do not apply to specific products. - Control depth

[0008] There is currently no way to establish a control or consent obligation beyond the first level of contracting parties—that is, the immediate contractual partners. This is due, on the one hand, to the logistical and administrative effort that would be required to contractually bind and control the suppliers of the suppliers of the suppliers. Above all, however, it is also due to the – legitimate – interest of each contractual partner not to disclose their own suppliers and contractual partners, as they would quickly become redundant in the chain. The interest in maintaining the confidentiality of their own suppliers and contractual partners is therefore essential for all participants. - Data security / forgery protection

[0009] Just as there is no requirement for specific measures to be fulfilled, the declarations and documentation provided are not final; everything can change: what was declared today can be changed tomorrow; what was documented today can be different tomorrow. For the production process of goods – which can sometimes extend over years – this means that it is impossible to determine whether and what was observed with regard to a specific product during the manufacturing process, and what was not. - Sanctionability (as a means of pressure)

[0010] Violations of the obligations, particularly the obligation to establish risk management, are subject to sanctions. Thus, a lack of control mechanisms is subject to sanctions, but the actual violation of the code of values ​​is not. However, the implementation of a shared system of values ​​can only be successful if the participation of every last link in the chain is ensured. If there is no sanction here, anything else is merely window dressing.

[0011] Example: Producer A manufactures mobile phones whose batteries contain lithium. A receives the batteries from supplier B, who receives them from supplier C, who receives the lithium from supplier D, who receives it from mining company E.

[0012] It becomes known and is reported in the news that underage children are mining lithium for E, 15 hours a day, 7 days a week. A, who has committed himself under the Supply Chain Act, does not know and cannot know that E does not comply with the Code of Values.

[0013] Even if it were aware of this and, in accordance with its obligations, required its suppliers to stop purchasing lithium from E, they would then purchase it from F, E's brother. For E, nothing would change with regard to sales to A, except that an intermediary would be involved; moreover, E would be able to continue to supply all its other customers unhindered. - Economic incentives

[0014] The companies' current measures are based on legal obligations and possible sanctions. An economic incentive is not possible; this can only be achieved through the consumer—subsidies excluded—which, however, is not achieved due to a lack of transparency. Consumers will not pay a cent more for a product simply because a company has implemented a risk management system.

[0015] There is therefore currently no economic incentive for a company to control its own supply chain and eliminate any potential irregularities. - Responsibility of entrepreneurs

[0016] There is currently no way to adequately hold producers accountable. Effective control of the supply chain is not yet technically possible, see the previous points. Imposing a requirement only on German or EU companies would also be a major global economic disadvantage, as it would place these companies at a significant disadvantage in international competition. Therefore, a requirement can only be implemented globally, which is currently technically and administratively impossible. - Consumer responsibility

[0017] There is currently no way to hold consumers themselves accountable. The main reason for this is the lack of transparency and certainty; consumers have no reason to buy a product just because the company is committed to certain values ​​and may have implemented risk management. The measures taken so far are intangible and, above all, do not offer sufficient assurance that even higher-level suppliers adhere to these values. However, the implementation of the desired reforms can only come from the consumer, from the consumer as an economic incentive through the company to the employees. c. Previous technical solutions

[0018] There is currently no technical contribution to solving these problems, and consequently there is no problem-specific state of the art.

[0019] There are software solutions that generally deal with the creation of risk management in the area of ​​supply chain control, there are software solutions that support individual steps in general risk management, but there is no technical solution that specifically processes the information on a product- and participant-specific basis and automatically makes it publicly accessible in a forgery-proof manner.

[0020] The use of blockchain-based technology, especially NFTs, has so far only been considered for supply chain control in the area of ​​track and trace (F. Chiacchio et al.: Non-Fungible Token Solution for the Track and Trace of Pharmaceutical Supply Chain. In: Applied Sciences. Vol. 12, No. 8, April 15, 2022, pp. 6-20, doi:10.3390 / app12084019.). The possibilities of product-related and participant-related traceability of the status of the production process were discussed, which represents at least one product- and participant-specific application of NFT. 3. Technical task to be solved

[0021] How can data from products and responsible market participants be processed automatically in order to: - To generate for each product an immutable and tamper-proof digital proof of the - common - status of the contractual commitment of the manufacturing / production participants; - To make the - common - status of the contractual commitment of the manufacturing / production participants publicly comprehensible and visible for each product; - To make the - common - status of the contractual commitment of the manufacturing / production participants automatically and electronically accessible for each product; - In the event of a participant's breach of the joint declarations, this must be documented automatically along the entire subsequent production / supply chain and made electronically accessible; - To create an incentive for manufacturers and sellers at all levels of production and distribution to join the contractual relationship; - To provide an appropriate means of pressure for violations by individual manufacturing / production participants of common values ​​and contractual declarations; 4. Disclosure of the invention

[0022] The prerequisite is that every product – including any intermediate product – has a globally unique identification number (e.g., GTIN) and every participant in the manufacturing process has a globally unique identification number (e.g., GLN). Both GTIN and GLN can be easily registered by any market participant for themselves and for each product and / or intermediate product. A. Definition of terms:- Blockchain

[0023] Blockchain technology is, at its core, a decentralized database technology. A blockchain is a distributed ledger that is stored, verified, and updated across many participating computers. The name "blockchain" refers to the type of data storage. On a blockchain, (transaction) data is stored in data blocks. Each data block is linked to the previous block by a hash generated according to specific principles. Because each hash refers to the previous hash, subsequent changes to the information in the blockchain are impossible. Any manipulation of data would be immediately apparent through a change in the hash.

[0024] Thanks to its structural and technical characteristics, blockchain allows the data generated during a communication or transaction to be recorded so securely that participants can trust the data without the need for an intermediary. Trust therefore lies in the technology, not the institution. - (Smart) Contracts

[0025] A distinction must be made here between “smart contracts” and the actual conclusion of a contract.

[0026] So-called "smart contracts" are closely related to blockchain technology. "Smart" refers to the independent, automatic execution of pre-programmed conditions that occur automatically without any further intermediate steps. Within the framework of a smart contract, software (contract ware) translates contract content into program code structured as if-then conditions. The contract content is determined by the underlying program code in such a way that when the condition ("if") is met, an event ("then") is immediately triggered. A digitally programmed sequence of conditions is thus intended to occur eo ipso in reality. For the legal classification of smart contracts, a distinction must be made as to whether the decision-making process takes place via the blockchain or whether the smart contract merely serves to execute and fulfill the contract.

[0027] The term “smart contract” therefore refers to the automated execution of a contract, not to the conclusion of the contract (offer and acceptance) itself.

[0028] In most cases, smart contracts are used to execute and fulfill contracts concluded in the "traditional" way. Initial approaches to this type of contract execution using smart contracts can be found, for example, in the insurance sector, where insurance policies for flight delays are processed using smart contracts. If a flight delay occurs ("if"), the corresponding compensation amount is automatically transferred to the passenger ("then"). In this case, only the contract is processed directly on the blockchain using smart contracts. The parties' decision-making and thus the conclusion of the contract take place separately in the "traditional" way. Thus, in these cases, the contract is not concluded via the blockchain, but rather already in place.

[0029] However, the conclusion of the contract itself is also possible using a blockchain or a token.

[0030] In principle, a contract is concluded through the concurrent declarations of intent of at least two people, an offer and acceptance (§ 145 ff. BGB). Apart from a few exceptions (e.g. the requirement to have a notary public), the conclusion of the contract does not require any formalities, meaning that contracts can also be validly concluded verbally or electronically. This also makes a fully digitalized contract conclusion possible by mapping the offer and acceptance directly on the blockchain. The offer stored on the blockchain by a specific program code is to be regarded as a permissible offer to an unspecified group of addressees. The intention of one contracting party to conclude the contract is recorded in the program code and "cached" and thus represents a concrete offer that can be accepted by a user. Acceptance of the offer perfects the contract and makes it legally valid. - NFT

[0031] A non-fungible token (NFT) is a cryptographically unique, indivisible, irreplaceable, and verifiable token that represents a specific object, whether digital or physical, on a blockchain. It is a digital representation of non-fungible or non-exchangeable (economic) assets. While NFTs use the same blockchain technology as cryptocurrencies, unlike cryptocurrencies, they are unique and non-divisible (non-fungible). An NFT can only be purchased as a whole and exists only once. - GTIN

[0032] The GTIN (short for Global Trade Item Number) is a globally non-replaceable or non-interchangeable product-specific number, currently the 13-digit number below the barcode. It can be used to identify every item, product, or product variant worldwide without overlap. It is often also called an article number and serves as an access key to product information stored in databases, such as description, weight, container size, or product group.

[0033] The GTIN also forms the basis for the barcode (also known as a barcode). The barcode makes it machine-readable and can be automatically scanned using a scanner, for example, at the checkout in retail stores or during goods receipt in the warehouse. - GLN

[0034] The GLN (short for Global Location Number) is a globally non-replaceable or non-interchangeable company-specific number. The GLN uniquely and seamlessly identifies companies and company divisions, such as locations or warehouses, worldwide. Only 13 digits are required. These digits, in turn, can be used to access company information stored in databases. B. Implementation

[0035] I. The NFT is generated by the manufacturer of the product and linked to the product's identification number (e.g., GTIN) in such a way that only this one NFT can be used for this GTIN.

[0036] The NFT also digitally stores the manufacturer’s declarations of commitment and value codes.

[0037] Using an input mask (E1, attached), each contractual partner of the manufacturer (V1) can then add the following information, which will also be stored on the NFT: - Input 1: I agree to the commitments and value codes (Yes / No) - Input 2: I am the sole manufacturer of the component I use for the product (GTIN) (Yes / No) → If input 1 and input 2 = (YES): Data signal for the corresponding GTIN is sent, which confirms compliance with all conditions by all parties involved (“GREEN”) → If input 1 = (YES) and input 2 = (NO) Either a) The product / component manufactured by me is composed of products produced by second-degree contractual partners (V2): aa) GLN A bb) GLN B cc) GLN C ... add more GLNs → The same input mask (E1) with input request is sent to all holders of the specified GLN. → If all second-degree contracting parties (V2) indicate input 1 and input 2 with (YES): A data signal for the associated GTIN is sent, confirming compliance with all conditions by all parties involved (“GREEN”) → If second-degree contractual partner (V2) entry 1 = (YES) and entry 2 = (NO), then either continue with step a) “Specify the third-degree contractual partner (V3)” or enter step b) “Enter own GLN for product component” → Data signal for the associated GTIN, which confirms compliance with all conditions by all parties involved (“GREEN”), is only sent if all contracting parties of all levels have confirmed their agreement to the declarations of commitment or if their confirmation has been transmitted by the signal of a GLN belonging to the intermediate product (GLN-Z). OR b) The product / component I manufacture is composed of products that are grouped under the GTIN (enter GTIN Intermediate Product (GTIN-Z)). → Data signal of the NFT belonging to the specified GTIN-Z is obtained. → Data signal for the associated GTIN, which confirms compliance with all conditions by all parties involved (“GREEN”), is only sent if all contracting parties of all levels have confirmed their agreement to the declarations of commitment or if their confirmation has been transmitted by the signal of a GLN belonging to the intermediate product (GLN-Z). II. The if-then rule of the original NFT is:

[0038] If agreement to the declaration of commitment and value codes = (YES)

[0039] THEN: Data signal for the associated GTIN is sent, which confirms compliance with all conditions by all parties involved (“GREEN”)

[0040] This data signal (“GREEN”) is public and can be automatically retrieved by other databases.

[0041] III. The NFT automatically retrieves the data of the participating GLNs from a GLN database on a regular basis. The data of GLNs sanctioned for violations is recorded accordingly. If a GLN is blocked due to a violation, this leads to the expiration of the corresponding consent declarations and thus to the incompleteness of the NFT: The positive signal ("GREEN") is no longer sent. IV. Dual contractual function of the NFT

[0042] The NFT therefore not only functions as a "smart contract," triggering a signal (GREEN) when a condition is met and sending another signal (RED) until then or when the condition is no longer met. The NFT also serves to actually conclude the contract, with certain conditions being stored, to which the respective participant then agrees. 5. Description of at least one way of carrying out the invention

[0043] See Annex 1 - Design of the required input mask - Token diagram without sub-chain - Token diagram with 2 sub-chains 6. Resolved problems (see point 2 b)a. Transparency

[0044] Because the declarations of consent and core values ​​are stored in the NFT in a forgery-proof and publicly accessible manner, it is possible to automatically track and display for each individual product worldwide whether it was produced according to the quality standards right down to the last link in the supply chain. This information (as a "green" signal) can be retrieved automatically, for example, by suppliers and trading platforms; it can be updated in real time and displayed next to the product as a quality specification for everyone to see. b. Depth of control

[0045] As described above, the depth of control has so far failed due to the logistical and administrative effort as well as the participants' interest in confidentiality.

[0046] The logistical and administrative effort is limited by the NFT-based solution presented here, as the combination of GTIN, GLN, and blockchain-based technology (NFT) enables automated processing and communication (contract conclusion). Furthermore, every participant in the supply chain has a vested interest in completing the relevant NFT consent forms, as this is the only way to successfully distribute the final product—on which everyone in the supply chain depends.

[0047] Participants' interest in confidentiality is met by offering each individual the opportunity to generate their own NFT and aggregate their suppliers and partners into this NFT (subchain token). The consent declarations of these suppliers are then sent to the main token as a data signal from this subchain token, so that the identity of their suppliers is known only to the person who generated the subchain token; it is not shared with the main token. c. Data security / protection against forgery

[0048] As shown, subsequent changes to the information in the blockchain are not possible, i.e. neither the GTIN, nor the GLN nor the agreements / declarations / consents can be changed subsequently.

[0049] There is the greatest possible data security / protection against forgery and thus the greatest possible trust in the data. d. Sanctionability

[0050] Sanctions for any violations are automated and comprehensive, i.e. not limited to a product, a supply chain or country-specific.

[0051] Violations of the agreed-upon value codes will result in sanctions against the respective participant and will be stored in a database with their GLN. This data is automatically retrieved by the NFT on a recurring basis, so that blocking a GLN automatically results in the incompleteness not only of that one NFT, but also of all NFTs in which that GLN was involved.

[0052] Each participant therefore has a vested interest in adhering to the prescribed codes of values, since a violation not only leads to the loss of one customer, but automatically eliminates all customers and contractual partners at once. The sanction pressure is therefore many times higher, and all measures are automated and forgery-proof. e. Economic incentives

[0053] Economic incentives—apart from subsidies—can only be provided through consumers. The automated and visualized representation of the positive NFT, combined with the consumer trust generated by data / counterfeit security, leads to a greater willingness to consume. Positive NFTs thus directly generate increased sales and / or revenue figures. f. Responsibility of entrepreneurs

[0054] Through the equal treatment of all supply chain and market participants, regardless of country or market, coupled with the technical and administrative feasibility of NFT-based control, every single company can be held accountable. g. Consumer responsibility

[0055] The automated and visualized representation of the positive NFT, together with the trust generated by data / counterfeit security, leads to the consumer's assumption of responsibility.

[0056] If two items are on offer, one of which is more expensive than the other, and the additional cost is justified with ecological or social arguments, the main argument for most consumers in favor of the cheaper option has so far been that there is no guarantee that the advertised benefits actually apply. Consumers simply lack trust, precisely because there is no effective and in-depth control over the supply chain. They are not willing to pay more for a product without receiving security for the corresponding promises. This argument is now taken away from the consumer; there is a tamper-proof and publicly accessible security in the form of the NFT. This makes the consumer responsible, because it is now their decision whether they are willing to pay a higher price for the values ​​they represent. h. Additionally: Geopolitical / Migration

[0057] In the near future, one of the biggest problems facing economically successful countries will be migration from Third World countries, which are far more numerous. This migration is either due to climate change or poverty and a lack of prospects.

[0058] The only solution currently available is the construction of a wall—symbolically, this also includes pushbacks at the borders and the implementation of similar measures by transit countries. It has been mathematically proven that a wall will eventually no longer be sufficient.

[0059] The only solution that can be considered is to offer people prospects in their homeland so that they are not forced to leave. This can only be achieved if a local worker can earn the income they need to live on and their children are given the opportunity for education - which also depends on parental wages. Ultimately, this is only possible if the first-world consumer at the other end of the chain is willing to spend more money on a product, in other words to pay the higher costs. However, as has been shown, this is only the case if the consumer is also sure that the product has been produced according to standards, in other words that the extra money also reaches the worker at the other end of the supply chain.

[0060] Since control and coercion extending to businesses in economically poorer countries are currently impossible, the present token-based obligation and control represents the only way to enforce corresponding standards across countries. It is thus the only way to limit or even prevent one of humanity's imminent, greatest geopolitical problems: global mass migration. QUOTES CONTAINED IN THE DESCRIPTION

[0000] This list of documents submitted by the applicant was generated automatically and is included solely for the convenience of the reader. This list is not part of the German patent or utility model application. The DPMA assumes no liability for any errors or omissions. Cited non-patent literature

[0000] F. Chiacchio u. a.: Non-Fungible Token Solution for the Track and Trace of Pharmaceutical Supply Chain. In: Applied Sciences. Band 12, Nr. 8, 15. April 2022, S. 6-20, doi:10.3390 / app12084019

[0020]

Claims

[] NFT (Non-Fungible Token) blockchain-based product-linked contract documentation, where: - An NFT is generated for each product, which is linked to the product's identification number (e.g. GTIN) in such a way that only this one NFT can be used for this identification number; - The declarations of commitment and value codes specified by the manufacturer are digitally stored on this NFT; - The participants involved in the production process / supply chain can agree to these value codes via an input mask by specifying their identification number (e.g. GLN); - For each product, an unalterable and tamper-proof digital record of the - joint - status of the contractual commitment of these manufacturing / production participants is generated; - For each product, the - common - status of the contractual commitment of the manufacturing / production participants is secured in a publicly comprehensible and visible manner; - For each product, the - common - status of the contractual commitment of the manufacturing / production participants is automatically saved and electronically retrievable; - In the event of a participant's breach of the joint declarations, this is automatically documented and automatically stored electronically for retrieval along the entire subsequent production / supply chain;

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