Israel: Institute Sues Professor for Alleged Blockchain Intellectual Property Violation

The Technion Israel Institute of Technology has filed a civil suit against a faculty member for allegedly establishing of a zero knowledge proof technology company and making use of the knowledge developed by him while working at the institute. The news was published by local media outlet Calcalist on April 22.

The Technion has filed a suit against senior lecturer Prof. Eli Ben-Sasson with the Haifa District Court for allegedly violating the institute’s intellectual property rules. Per the lawsuit, Ben-Sasson founded a company dubbed Starkware with a doctoral student at the Technion, wherein "the intellectual property on which the company was founded was developed using grants received at the Technion."

Starkware is a company focused on the development of private solutions and encryption, that purportedly intends to improve the scalability of blockchains with zero knowledge proof technology. The zero knowledge protocol STARK developed by Ben-Sasson was allegedly created using resources, including millions of shekels granted to him by the Technion.

The institute claims that Ben-Sasson acted unilaterally to commercialize knowledge by establishing a company with the intention of dispossessing the Technion of its intellectual property rights. The institution is reportedly asking the court to transfer 50% of Ben Sasson's shares in the company to the Technion.

The defense reportedly argues that "Starkware Industries did not use or intend to use an invention belonging to the Technion. The company has raised millions of dollars and has recruited workers to develop the software and intellectual property it needs. The Technion has no right neither in the part of Prof. Sasson nor in the part of anyone else in the company.”

As reported last October, Starkware completed a $30 million financing round, generating funds from such industry players as Intel Capital, Sequoia, Atomico, DCVC, Wing, Consensys, Coinbase Ventures, Multicoin Capital, Collaborative Fund, Scalar Capital and Semantic Ventures.

The financing followed a $6 million seed funding round completed in May, with the reported participation of Ethereum’s Vitalik Buterin, Tezos’ Arthur Breitman, NEO’s Da Hongfei, and Bitmain among others.