Blockchain technology and cryptocurrency have become emergingly relevant in current times, enabling individuals to receive and send payments not restricted to a particular currency. Such technology has the potential innovative framework for completely transforming and revolutionizing our business interactions and transactions.
Cryptocurrency exchanges are facilitated by blockchain technology which enable transactions to be undertaken in a secure, protected ledger through a networked database structure made secure by hashing power. Hence, such transactions are permanent, unmodifiable, anonymous bypassing intermediaries while remaining transparent and without any interference.
Both blockchain and cryptocurrency is subject to a rather striking question regarding its ownership or control. As such, identification of owners of such technology and currencies are challenging for the purpose of granting it intellectual property protection, including trademarks.
The base of trademark law is enforcing the ability of the trademark owner to utilize the mark for his products only and preventing the infringement of such trademark. Applying this concept to blockchain and cryptocurrency can be challenging as the founder of blockchain is anonymous and the technology is based upon solely anonymous and interference-free transactions.
Therefore, it would be difficult for individual or entity to claim ownership of “blockchain”. However, in the United Kingdom and Spain, “Blockchain” is a registered trademark for two different individuals/entities. This has been widely protested as many people believe that “blockchain” is a technology, not a trademark, which can be freely used by everyone around the world and hence, its ownership cannot be given to a particular entity. Additionally, some countries like the United States permits registration of trademarks belonging to firms providing cryptocurrency facilities.
OVERVIEW OF BLOCKCHAIN AND VIRTUAL CURRENCY
Blockchain refers to an electronic distributed ledger of entries, being maintained by various users through a network of computers. This technology was incorporated for online financial transactions in 2009. The concept of Bitcoin came into existence in 2008, when an article titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by Satoshi Nakamoto, a pseudonym used by the anonymous founder of Bitcoin.
Bitcoin has the potential for widespread use amongst various industries, such as financial services, energy, health care, transportation, and cybersecurity. Blockchain technology is used in currencies such as Bitcoin and Ethereum.
Current day blockchain involves complex processes which enables building applications on blockchains, providing innovative technology such as smart contracts which rely on blockchain to verify transactions.
Virtual currency refers to the digital representation of a value, which is used as a medium of exchange, unit of account, or store of value and which can be digitally traded. Such virtual currencies, coins or tokens are developed using the distributed ledger or blockchain technology. Similarly, cryptocurrencies provide inherent value to items which can be utilized to make purchases, sales and other financial transactions.
Therefore, virtual currencies or cryptocurrencies are developed to replace some of the established currencies and perform similar financial functions without receiving any official status from the government or getting recognized as a legal tender. Generally, they are issued by a virtual organization or a capital raising entity. Virtual organization refers to an organization embodied in computer code, which can be executed on distributed ledger or blockchain.
TRADEMARK PROTECTION FOR BLOCKCHAIN & CRYPTOCURRENCY
A trademark refers to a word, name, symbol, design or phrase which represents a company or particular person’s product or service and distinguishes it from similar products or services. Therefore, the terms “Blockchain” and “Bitcoin” have been considered to be generic by the USPTO as it refers to a decentralized cryptocurrency which does not originate or indicate a single source and cannot function as trademark. Trademark of cryptocurrency depends upon two factors, i.e. whether cryptocurrency is a product or service and whether the name of a cryptocurrency can be used to determine its source, particularly when the source of cryptocurrency is anonymous.
Cryptocurrency, being a form of storing value or a medium of exchange, similar to traditional currencies, cannot be classified as either product or service. Nonetheless, cryptocurrencies become a product or service when it is used for a specific purpose distinct from the purpose of traditional currency. A United States Federal District Court has determined that cryptocurrency may be considered as a “good” for the purpose of trademark registration, in the case of Alibaba Grp. Holding Ltd. v. Alibabacoin Found., No. 18-CV2897 (JPO), 2018 U.S. Dist. LEXIS 72282.
If cryptocurrency is registered as a product for the purpose of trademark, such trademark should indicate that the cryptocurrency arises from a specific entity alone. The cryptocurrency should originate from a single sourceand clearly stipulate the same in order to be registered as trademark.
Further, generic marks like “Blockchain network” or “Bitcoin Café” cannot be registered as trademarks. These generic terms can be included in the trademark in addition with distinctive terms which indicate ownership.
For a mark to be registered as trademark for cryptocurrency, it should indicate its single source and name of the producer in the minds of the consumers, and not only the name of the product or service. A mark solely identifying the good or service cannot be granted trademark protection as it becomes a generic term. Therefore, cryptocurrency providers have to generate names/marks which distinguish the cryptocurrency firm from genericity, as a particular firm cannot be the sole provider of cryptocurrency in the market.
To indicate the existence of trademark owned by a cryptocurrency firm, they should consistently use the trademark and appropriate symbols associated with trademark. Affixing the symbol TM before registration is granted and the registration symbol ® after grant of trademark is necessary to provide notice of registered trademark to competitors.
DISTINCTIVENESS OF CRYPTOCURRENCY
Section 9(1)(b) of the Trade Marks Act, 1999 provides that a trade mark which exclusively indicates the “kind, quality, quantity, intended purpose, values, geographical origin or the time of production of the goods or rendering of the service or other characteristics of the goods or service” cannot be registered, unless the trademark has acquired distinctive character due to its use or is a well-known trademark. Therefore, the degree of distinctiveness plays an important role in registration of an otherwise generic trademark.
In the landmark judgment of Reddaway and Co Ltd v Banham and Co Ltd.  AC 199, the House of Lords held that common words of a language being descriptive in nature can acquire secondary meaning or significance and hence can be trademarked when they acquire distinctiveness.
Currency cannot be trademarked as it is a generic term having a single source – being the government which issues it. However, cryptocurrency is issued by distinct firms and not by a specific government body. Despite that, it is difficult to trademark cryptocurrency as it acts a medium of exchange and works on an open source software, making it a generic term which does not act as source-identifier.
In practice, Patent Offices have permitted the registration of trademark for names of cryptocurrency coins, for example “Ripple”. Therefore, trademarking cryptocurrency can be made possible when entities include distinct terms in the trademark which can be used as source-identifier.
A mark becomes merely descriptive when it provides information regarding its kind, quality, quantity, purpose, values, geographical origin, time or characteristic features. The USPTO had rejected a trademark application in 2016 to registered the term “Bitcoin” for use as “computer programs used in the field of electronic commerce transactions; computer programs; electronic machines and apparatus; telecommunication machines and apparatus,” applied for by BitFlyer, Inc. The Patents Office held that the term was merely descriptive of the subject matter and feature of the goods provided by the applicant. In 2018, the USPTO further rejected an application for registering the term “Bitcoin” on the ground that the mark was merely descriptive of the subject matter and feature of applicant’s services. The USPTO observed that the mark appeared generic in relation to identified services, and therefore could not function as a single source-identifier for the applicant’s services.
Contrastingly, the United Kingdom Patents Office has registered “Bitcoin” as a trademark, bearing trademark number UK00003279106 and valid till 22.12.2027. However, such trademark has been granted in relation to clothing and beverages, broadly.
Further, the Spain Patents and Trademark Office granted trademark protection to “Bitcoin” and its logo, bearing registration number M4046141 to a Bitcoin salesman engaged in buying and selling of bitcoin on 24.06.2020. Such trademark grants for “Bitcoin” has been protested worldwide, as Bitcoin and Blockchain work on open source software which can be accessed by anyone for the purpose of providing cryptocurrency facility.
Although both, the Bitcoin and Blockchain are being deemed as generic terms by most countries, these registered trademarks indicate that even after successfully registering a trademark, there can be severe consequences arising due to the trademark’s descriptiveness and genericity.
ISSUES ARISING DUE TO LACK OF TRADEMARK PROTECTION FOR CRYPTOCURRENCIES
Lack of trademark protection granted to cryptocurrency providers have resulted in serious concerns, relating to the newer aspects of such technology. The wide variety of cryptocurrency available in the market has extended the scope for applicability of laws and regulations.
One major issue relating to cryptocurrencies and its unregulated, unregistered use is that a user may come across different cryptocurrency providers across the internet, engaged in buying and selling of bitcoins. Such a user may be susceptible to fake cryptocurrency providers and may initiate exchange involving actual currency with the fraudulent website.
After completing the transaction, the individual discovers the fraud committed, however, there aren’t any remedies available for the user. While undertaking financial exchange through a regular mode, if a user would be defrauded in similar manner, the original trademark owner could immediately injunct the defrauder from further diluting the brand’s reputation.
It becomes difficult to injunct such fraudulent websites under trademark law due to the lack of trademark protection awarded to cryptocurrency firms in India and across the world. Further, when such fraud is related to generic terms such as Blockchain and Bitcoin, trademark law cannot be applied to protect users from passing off and fraud, as no single person can claim trademark protection as owner of the mark. This situation is further aggravated due to the fact that no other regulation in India specifically deals with cryptocurrency and blockchain.
Further, various cryptocurrencies having deceptively similar names to Bitcoin are on the rise, such as “Baitcoin” which significantly confuse the users to invest in such currencies believing that they are actually investing in the well-known Bitcoin. Bitcoin, being an unregistered mark, cannot protect its goodwill and reputation, due to the lack of trademark protection.
Businesses have also began using the terms “Bitcoin” and “Blockchain” for providing goods or services other than that of cryptocurrency, as can be seen for the UK registered trademark of Bitcoin. Such businesses profit due to the well-known nature of such terms. However, no action can be taken against such businesses under the Trade Marks Act due to the lack of locus.
The need of the hour is to determine methods to grant trademark protection to cryptocurrencies and further protect users from fraudulent blockchain, bitcoin and other cryptocurrency providers.
CRYPTOCURRENCY TRADEMARKS GRANTED BY USPTO
In the United States, entities providing cryptocurrency can opt for federal trademark protection for their cryptocurrency mark, provided that such mark is distinctive and acts as source identifier of the cryptocurrency. By registering a trademark with the USPTO, the mark acquires prima facie evidence of its validity and exclusivity over its usage. Further, registered trademarks are to display the symbol ® beside the trademark to bring others to notice regarding the registered trademark.
Under the US Trademark laws, a trademark can be registered when it is presently being used in commerce regulated by Congress or the trademark owner must with bonafide plan to use it in commerce. The application is to be filed with the USPTO identifying the trademark with description of the goods and/or services for which the mark is to be used. Therefore, cryptocurrency should be defined in a way that they can be classified as goods or services, and not solely as a medium of exchange.
The USPTO’s Trademark ID Manual enlists the identifications for goods and services which are permitted for federal registration as trademark. Various descriptions consist of “cryptocurrency” falling within different classes of goods and services. Some of these include:
Class 9: Software products in hard form. Some examples of acceptable identifications include cryptocurrency hardware wallets, hardware for cryptocurrency mining and computer software for use as cryptocurrency wallet.
Class 36: Financial services, financial consultancy services, financial exchange, such as cryptocurrency payment processing, cryptocurrency trading service, cryptocurrency exchange service, etc.
Class 42: Software as a service (SAAS), downloadable software services, computer consulting service. It includes online cryptocurrency wallet computer software.
Class 41: Educational services on the topic of cryptocurrency
A cryptocurrency firm can seek registration of trademark relating to cryptocurrency in the aforementioned Classes, although none of them expressly cover cryptocurrency as an acceptable identification. Cryptocurrency firms can also formulate specific identifications which suit their requirement. Though generally cryptocurrency falls within financial services under Class 36, cryptocurrency firms have worked out means to identify them in different classes to provide protection without indicating that the goods/services in question are cryptocurrency.
Under few circumstances the USPTO has held “cryptocurrency” as a service and granted registration for such trademarks. These include:
OMNICOINwas 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 through the internet, and used as a method of payment for goods and services”
CONCOIN was registered in Class 36 for “cryptocurrency, namely, a peer-to-peer digital currency, incorporating cryptographic protocols, operating through the internet, and used as a method of payment for goods and services”
QUIQwas 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 through the internet, and used as a method of payment for goods and services.”
TRADEMARK VIOLATION W.R.T CRYPTOCURRENCY IN THE US
The owner of a trademark can prevent others from infringing their trademark and further prevent them from using the mark to dilute their brand. Similarly, the owner of a cryptocurrency firm can take action against trademark infringers by first proving the ownership of a valid mark and usage of similar mark in commerce for activities regarding sale, offer for sale, distribution, or advertising of goods or services. Various lawsuits of trademarks infringement w.r.t. cryptocurrency have recently been filed in the United States.
In the case of Telegram Messenger Inc. v. Lantah LLC 3-18-cv-02811 (N.D. Cal.), Dkt. 1 (May 11, 2018), Dkt. 40, the US District Court for Northern District of California granted a motion of preliminary injunction, restricting the defendant to further use the term “Gram” for its cryptocurrency brand as it was similar to and created confusion regarding the plaintiff’s trademark of “Gram”, which was pending registration at the USPTO for “financial services, namely, providing a virtual currency for use by members of an online community via a global computer network.” No question was raised regarding the validity of trademark, and the Court further observed that the defendant had undertaken sale in commerce through its pre-ICO token sale.
In the Alibaba Group Holding Ltd v. Alibabacoin Foundation case, the plaintiff Alibaba sought preliminary injunction against the defendants for trademark infringement of its trademark Alibaba as a new cryptocurrency, Alibabacoin. They sought restriction over use of term Alibabacoin for their cryptocurrency until the case was decided.
The US District Court for the Southern District of New York granted the preliminary injunction and denied the motion to dismiss the suit filed by the defendants. One of the major arguments of the defendants were that Alibaba had publicly declared that they would never engage in cryptocurrency business and hence had abandoned their right to use their trademark in relation to cryptocurrency.
This argument was rejected by the Court, which observed that “accepting this view of abandonment would render American trademark law largely ineffectual,” and granted Alibaba the preliminary injunction upon finding that Alibaba had established a likelihood to succeed on the merits of its trademark infringement claim. Further, the Court found that the mark used by the defendants was “in connection with their online commercial ventures” which constitutes use of mark in commerce, as a good or service.
In the case of West v. McEnery, 1:14-cv-00250-AT (S.D.N.Y.), Dkt. 90, the Southern District Court of New York passed a default judgment in favour of Kanye West to desist the defendants from using the name “Coinye West” as trademark for their cryptocurrency brand.
Similarly, in Universal Inv. L.P. v. Borodich, No. 18-cv-24286- GAYLES\ OTAZO-REYES (S.D. Fla.), Dkt. 20, the Southern District of Florida passed a default judgment in favor of plaintiff Universa Investments due to use of the mark “Universa” by the defendants as a cryptocurrency name.
It can be observed that the number of cryptocurrency litigations pertaining to trademark infringement is certainly going up as newer cryptocurrencies are developed and more cryptocurrency trademarks are sought for. Cryptocurrency firms seeking to obtain trademark protection should constantly monitor the market situation and position themselves in such a manner that they succeed in obtaining and keeping up the trademark.
There are many regulatory and legal challenges pertaining to cryptocurrency which need to be dealt with in a quick manner in India. Regarding trademark laws, there arises a need to allocate acceptable identifiers for cryptocurrency trademarks, as done by the Trademarks Manual issued by USPTO.
The Trade Marks Act, 1999 has to be amended to include new-age trademarks, including cryptocurrency marks. The legislature should also identify the legal position of cryptocurrencies in India, as currently there is no recognition granted to the same.
Cryptocurrency companies need to protect their trademark early, so as to protect their goodwill and the rights of their users. Such cryptocurrency names should not be generic, descriptive and have a particular distinctiveness which enables users to identify its source. Cryptocurrency firms in India need to begin applying for registration of trademarks. Trademark protection can also be sought for in the USPTO for firms which intend to provide facilities beyond India.
Cryptocurrency has left an impressionable mark across the globe, providing even more possibilities for growth and development, named as the “future of money”. People are increasingly looking for exchanges in cryptocurrency mediums due to the benefits of cryptocurrency, such an anonymity and open source ledger, making it a crypto-asset.
Big players such as Facebook, Samsung and Nike have also decided to join the cryptocurrency market and provide their own cryptocurrency facilities. However, owners of cryptocurrency need to protect their identity and reputation in the market, and this is not possible without trademark protection. For acquiring a valid trademark, a company should have a distinct and original trademark which associates the goods/services with the company directly.
As cryptocurrency is based on the open source software of blockchain, it does not belong to a single known owner and hence cannot be protected as such. Different companies can personalize their cryptocurrency brands with a specific term and obtain trademark protection in the United States. Countries like India are yet to see registration and grant of trademark to cryptocurrency brands.
In the present-day legal scenario, it would be beneficial for the Indian legislature, judiciary or the Controller General of Patents, Designs and Trademarks, India to pass directions or guidelines for the proper implementation and regulation of cryptocurrency in India and provide for protection to be granted to cryptocurrency firms through Trademarks.
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