This article is written by Akshay, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Aatima Bhatia (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).
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Cryptocurrency has sparked worldwide interest, with some referring to it as “the future of money.” Despite the fact that cryptocurrencies cannot be used in the same way as conventional money at this time, it is retained as an investment in the hopes that its value will grow as it gets more widespread. As a result, it is frequently referred to as a “crypto-asset” by financial institutions. Cryptocurrency is distinguished by its own financial market, with corporations such as Facebook and Samsung declaring plans to launch their own versions of cryptocurrency to participate in this market.
Following the triumph of ‘BITCOIN,’ the world’s most popular cryptocurrency, many people have been interested in this ground-breaking technology. Nike has registered a trademark in the United States for their cryptocurrency, dubbed “crypto sneakers.”
Blockchain technology facilitates cryptocurrency trades by allowing transactions to be carried out in a secure, protected ledger using a networked database structure secured by hashing power. Such transactions are permanent, irreversible, and anonymous, avoiding the use of middlemen while being transparent and unaffected. Cryptocurrencies were created to replace some of the existing currencies and fulfil similar financial tasks without requiring government approval or recognition as legal currency. A virtual corporation or a capital raising entity typically issues them. A virtual organisation is one that is represented by computer code and may be run on a distributed ledger or blockchain.
What is cryptocurrency?
Cryptocurrency is a type of virtual money that uses cryptography for security and a decentralised ledger for transaction recording. It only exists in a digital format, unlike a real note or coin issued by the government. It is represented by a computer code that may be configured to encompass a wide range of rights and duties in order to accomplish activities beyond operating just as a means of payment or exchange. It can be used to enable digital access to a product, an application, or a service, as well as to reflect real-world asset interests.
In addition, unlike traditional currencies, Bitcoin is not generated and distributed centrally. Instead, it is a network of computers that does computational work while keeping a digital record of transactions. As a result, the newly minted coin gets rewarded.
The debut of Bitcoin, which was originally described in a white paper in 2008 and subsequently implemented in 2009, was the first step forward in the cryptocurrency era. There have been almost 2500 cryptocurrencies since then. Ethereum, Litecoin, Ripple, Zcash, Dash, and Monero are a few well-known cryptocurrencies with distinguishing trademarks.
Is it possible to protect cryptocurrencies under trademark law?
BitFlyer, Inc. had sought for a trademark to register the word “BITCOIN” for use as “computer programmes employed in the field of electronic commerce transactions; computer programmes; electronic machines and apparatus; telecommunication machines and apparatus” in 2016, but the USPTO had denied it. The word was only descriptive of the subject matter and characteristics of the products submitted by the applicant, according to the USPTO. The USPTO also denied an application for registration of the word BITCOIN in 2018, claiming that the mark was merely descriptive of the subject matter and a characteristic of the applicant’s services.
Furthermore, in the United States, the mark ‘OMNICOIN’ was registered in Class 36 for “cryptocurrency, namely, providing a virtual currency for use by members of an online community via a global computer network; cryptocurrency, namely, a peer-to-peer digital currency, incorporating cryptographic protocols, operating over the internet, and used as a method of payment for goods and services; cryptocurrency, namely, a peer-to-peer digital currency, incorporating cryptographic protocols “Cryptocurrency, essentially, a peer-to-peer digital currency, combining cryptographic protocols, running over the internet, and utilised as a form of payment for goods and services,” according to Class 36.
In June 2020, the Spanish Patents and Trademark Office, like the UK, awarded Trademark Protection to a Bitcoin salesperson engaged in buying and selling bitcoin, with registration number M4046141. Such a grant of Trademark Rights for the term “BITCOIN” has been criticised across the world because Bitcoin and Blockchain are based on open source technologies that anybody may use to deliver cryptocurrency services.
The United States is most likely the first country to experience an increase in case laws relating to trademark law and cryptocurrencies, especially since it began enabling the registration of bitcoin names.
The plaintiff in Alibaba Group Holding Ltd vs. Alibabacoin Foundation requested a preliminary injunction against the defendants for trademark infringement of its brand Alibaba as a new cryptocurrency, Alibabacoin. They asked for a ban on using the word Alibaba Coin to refer to their cryptocurrency until the lawsuit was resolved.
The preliminary injunction was granted by the US District Court for the Southern District of New York, and the defendants’ move to dismiss the lawsuit was refused. One of the defendants’ main claims was that Alibaba had clearly said that it would never engage in the cryptocurrency sector and, as a result, had relinquished its right to use its cryptocurrency trademark. The Court dismissed this argument, noting that “accepting this view of abandonment would render American trademark law largely ineffective,” and granted Alibaba a preliminary injunction after determining that Alibaba had established a likelihood of success on the merits of its trademark infringement claim. Furthermore, the Court determined that the defendants used the mark “in conjunction with their online business activities,” indicating that the mark was utilised in commerce as a good or service.
In Telegram Messenger Inc. vs. Lantah LLC, the US District Court for the Northern District of California granted a preliminary injunction prohibiting the defendant from using the term ‘Gram’ for its cryptocurrency brand because it was confusingly similar to the plaintiff’s trademark of ‘Gram,’ which was a pending registration at the USPTO for “financial services, namely, providing a virtual currency for use by members of an online co-op.”
The Southern District Court of New York issued a default judgement in favour of Kanye West in the matter of West vs. McEnery, ordering the defendants to stop using the name ‘Coinye West’ as a trademark for their cryptocurrency firm.
Due to its drive to change, cryptocurrency has assumed many different forms. Since the introduction of bitcoins, other variations have appeared in the form of ‘alt-coins,’ which are alternatives of differing degrees and can take on a variety of other forms. With next-generation blockchains like Neo and Ethereum, the world of cryptocurrencies becomes significantly more difficult. Because bitcoin is so varied and difficult to regulate, no single person or institution can claim ownership or responsibility for it; as a result, there appears to be little chance of protecting any Intellectual Property Rights (IPRs) in community-based blockchains.
The drawback of not giving cryptocurrency trademark protection
The consequences of failing to attribute trademark ownership might result in a slew of problems stemming from the erroneous application of such technology. Consider the case of a typical internet user who is interested in cryptocurrencies and intends to purchase it. After reviewing his options for purchasing bitcoins, he decides to get them from a person who is actively pushing the sale of the currency while also operating as a fraudulent investor. Because the aforementioned cryptocurrency is not held and protected under trademark law, the proprietor cannot prevent anybody acting in such a fraudulent capacity from causing harm to the cryptocurrency brand’s image.
If the customer fails to avoid the aforementioned activity, he or she may incur unwarranted difficulties as a result of a lack of available remedies. Furthermore, phrases like ‘Bitcoin’ and ‘Blockchain’ have grown in popularity, and it is simple to use similar terms for other goods or services without violating the law. As a result, it’s critical to figure out how to preserve cryptocurrencies so that customers aren’t duped by different cryptocurrency providers and approved providers’ reputations aren’t tarnished.
As a result, attribution of collaborative authorship to owners in the form of ‘collective marks’ is another option to sole proprietorship over such technologies. The same would serve as a safeguard against consumer deception while simultaneously resolving the decentralised control dilemma. However, this is not a problem-free path because verifying genuine ownership of trademarks can be challenging.
Cryptocurrency has grown in popularity in recent years, allowing people to receive and send payments that are not confined to a single currency. Such technology has the ability to completely transform and revolutionise our economic operations. However, the globe as a whole is still grappling with a slew of regulatory and legal issues surrounding bitcoin.
Many titans, including Facebook, Samsung, and Nike, are eager to enter the cryptocurrency race to provide for its cryptocurrency outlets. As a result, as previously stated, technological advancements in the realm of cryptocurrencies have introduced new obstacles and issues that must be handled through regulatory and legislative adjustments.
First and foremost, cryptocurrencies and the many types of cryptocurrencies that might arise must be given a position in the Nice Classification. As a result, recognition must take the shape of law in order to generate new jurisprudence. Furthermore, while a formal framework in the intended member state is formed, cryptocurrency should seek Trademark Protection in countries that allow such protection to reinforce their claim over the use of a certain mark, work, or logo.
Finally, reforming trademark laws may appear ambitious in countries where bitcoin has been outright prohibited (for example, India) because of its negative impacts on morals and public policy. Such nations will not provide protection against misrepresentation and deceit by third parties. As a result, any technology would have to withstand the test of time in order for us to determine the best course of action for dealing with the threats that arise from the use of bitcoin.
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