The interaction between crypto, trademarks raises questions

Cryptocurrency is a form of digital currency without a central issuing or regulatory authority, and instead uses a decentralized system to record transactions and manage the issuance of new units, and which relies on cryptography to prevent counterfeiting and fraudulent transactions. Not an entirely new resource (the first cryptocurrency, eCash, was created back in 1990), the increased use of currencies such as Bitcoin and Ether, for example, has brought crypto into the mainstream and made the interaction between these digital assets and brands an increasingly important topic . .

No longer a niche field, the global cryptocurrency market reached $1.49 billion in value in 2020 and is projected to reach $4.94 billion by 2030, according to data from Cryptocurrency Market Outlook. With an expected compound annual growth rate of 12.8 percent between 2021 and 2030, continued growth in crypto market growth is being aided by increased use of distributed ledger technology and growing digital investments in venture capital. At the same time, blockchain technology offers decentralized, fast, transparent and reliable ways to conduct financial transactions, making it easier for companies to deliver high-quality services to consumers around the world.

With a widespread embrace of crypto across the globe (the key countries when it comes to their share of cryptocurrency owners are the US (46 million), India (27 million), Pakistan (26 million), Nigeria (22 million) and Vietnam (20 million ), according to statistics compiled by TripleA) has brought with it an increase in companies applying to relevant trademark offices to collect registrations for their branding in relation to the digital world – albeit not without challenges in some cases.

Existing classes of goods/services explicitly extend to cryptocurrencies and related services. For example, crypto is covered within Class 9 (cryptocurrency hardware wallets, cryptocurrency mining hardware, etc.), Class 36 (financial exchange, such as cryptocurrency payment processing, cryptocurrency trading service, etc.), and Class 42 (cryptocurrency online wallet), etc.). And no shortage of companies list these classes in connection with crypto-related applications that they filed with the US Patent and Trademark Office (“USPTO”). The latest data on this front, which comes from intellectual property attorney Mike Kondoudis, revealed that individuals and businesses filed more than 3,600 applications for trademarks for cryptocurrencies and crypto-related services with the USPTO as of August 31, up from 3,516 applications. throughout 2021.

(It is worth noting that while US and EU trademark systems are “somewhat amenable to adaptation” for new technology, trademark registrants in some other countries, including China, struggle to aggregate registrations in light of a lack of concrete provisions for cryptocurrencies (and other categories related to virtual goods/services).

The rapid growth in popularity of cryptocurrencies and associated applications for crypto-focused trademarks is not without its problems, thus giving rise to new trademark questions regarding the crypto market, many of which focus on the following questions…

Is cryptocurrency a type of product or service?

One of the main problems stems from the fact that trademark protection, in its traditional form, exclusively covers products and services, while cryptocurrency is better understood as a medium of exchange. Nevertheless, while cryptocurrencies themselves cannot be registered as products or services, the name of the coin may be trademarked as either: Class 36 financial services, for example: “Financial services, namely, providing a virtual currency for use by members of a online community via a global computer network;” or Class 42 as software as a service (“SAAS”), for example: “SAAS services containing software for the clearing, allocation, compliance, registration and settlement of trades related to bitcoins.”

In addition, cryptocurrency-related consultancy services may be classified in Class 36 as “financial consultancy services”, while “educational articles, videos, blogs or lectures on the subject of cryptocurrency” fall under Class 41 as “educational and/or entertainment services.”

Can the name of a crypto be a source identifier, even if the source is unknown?

As source indicators, trademarks identify a single source of goods/services, which conflicts with the key logic behind cryptocurrencies. Because cryptocurrencies are generated through blockchain technology, they are fundamentally characterized by the absence of central control or ownership. Bitcoin, for example, is a decentralized cryptocurrency – hence the controversy surrounding its trademark registration. However, where a currency is centralized, the chances of it being considered a trademark may increase since it originates and is distributed by a single known source.

Does it contain creative elements to establish a degree of distinctiveness?

As with other forms of trademarks, the most important criterion is to ensure that a cryptocurrency-related trademark is distinctive. In other words, the trademark must not mirror an already registered trademark in a similar field, and must not be merely descriptive. One of the most cited examples of this is, of course, Bitcoin. In 2016, BitFlyer, Inc. applied to register the word “BITCOIN” for use in connection with “computer programs used in electronic commerce transactions; computer programs; electronic machines and apparatus; telecommunications machines and apparatus.” In an Office action, an examining attorney for the USPTO refused to register the mark on the grounds that it was descriptive of the subject goods/services “as they are used in connection with electronic commerce transactions using bitcoin.”

At the same time, the USPTO attorney also took issue with BitFlyer’s since-abandoned application, arguing that “in addition to being merely descriptive, the applied-for mark appears to be generic in relation to the identified services and therefore incapable of functioning as a source identifier for [BitFlyer’s] services.” But since this (and the fate of other crypto trademarks) is up to subjective analysis, some countries have registered “Bitcoin” as a legitimate trademark, such as the UK Patent Office and the Spanish Patent and Trademark Office.

Igor Demcak is CEO and Head of Legal at Trama, a trademark and brand protection firm.