Swirlds owns the patents to the hashgraph technology and licenses the hashgraph technology to Hedera for the purposes of running a general-purpose public ledger, while retaining the right for Swirlds to use or license the hashgraph technology for other purposes.
When drafting the license agreement, Swirlds and Hedera sought to come up with a definition of “general-purpose public ledger” that would ensure the boundaries of exclusivity would be clear and obvious even years from now and regardless of how the industry and applications develop. We were unable to do so at that time. As a result, the license was not written to be exclusive, but Swirlds has committed that Hedera will have the only license to use hashgraph technology for a general-purpose public ledger. To help ensure that the intent is realized, the license prohibits Swirlds from directly participating in the management or governance of another general-purpose public ledger. Other contractual relationships between Swirlds and Hedera, including Swirlds’ status as the original member and sole permanent member of Hedera, further underscore Swirlds’ interest in fulfilling its promise that Hedera will be the only licensee of hashgraph for that purpose. With all that said, there is a continued willingness to be contractually bound to exclusivity, if properly defined. As the industry develops, Swirlds and Hedera have continued – and will continue – to evaluate exclusivity and a definition of “general-purpose public ledger” that both accommodates the “path to permissionless” that we have described and that would only be infringed by a potentially competitive network.
The license to Hedera is not revocable by Swirlds at will. Swirlds may only revoke the license in limited circumstances, such as if Hedera fails to launch the network or distribute coins (both of which are now moot), or where the security or decentralized nature of the platform is in jeopardy, such as upon Hedera’s fraud, illegal activity, bankruptcy, impossibility of performance (e.g. due to regulatory prohibitions) or if Hedera breaks fundamental promises made to the market by it and Swirlds, such as creating additional hbars after promising a fixed supply of 50B.