The Other Side of the Coin

As Dogecoin became more valuable, other cryptocurrencies and merchandise outlets started to use variations of its name and image.

In August 2021, the Dogecoin Foundation, a Colorado-based not-for-profit that supports the Dogecoin cryptocurrency through development and advocacy, filed a trademark application with the United States Patent and Trademark Office (USPTO). By September 2021, the Foundation’s trademark application was competing with others, and at least 100 unrelated cryptocurrencies were using the Dogecoin name.

“People can have fair use of a trademark, but there are difficulties if consumers are unsure about which is the official coin and which is not, and whether someone is trying to confuse the consumer,” explained Mr. Gerben.

“If there is a genuine infringement,” he continued, “the owner of the trademark has every right to shut it down, especially if a coin out there with your company’s name on it is causing reputational damage.”

As Mr. Markus observed: “Eight years ago, the space was not mature at all. Now it is quite mainstream and should follow well-established intellectual property (IP) laws.”

One of the main reasons why cryptocurrencies were late to the trademark party is their very nature as decentralized platforms without a controlling authority, leaving the question of who would apply for and register the trademark very much open.

Senator Ihenyen, lead partner at Infusion Lawyers (Nigeria), explained that “by being decentralized and dispersed across a network, there is typically no registered company or organization that owns” a given cryptocurrency. “They are typically community driven, using a governing system based on consensus.”

For example, he said “Bitcoin is a public blockchain, an open-source software, a distributed network, and a decentralized cryptocurrency owned by no one. While Bitcoin could pass for a good such as an asset or currency, it has no particular proprietor.”

In that case, the Bitcoin Foundation has picked up the slack and registered trademarks, but with many new cryptocurrencies, the challenges remains.

However, there are some positive signs globally from a trademark perspective, such as the inclusion of cryptocurrency in the Nice Classification system. And when thinking about specific trademarks for a brand, it is suggested that brand professionals develop an IP strategy that encompasses not just what your mark will be, but also where and how you will use it.

Anne Rose, managing associate who co-leads the blockchain group at Mishcon de Reya (UK), pointed out that since trademarks are based on distinctive character and cannot be descriptive, another issue arises.

“When a crypto brand that has not been protected by a trademark takes off, it can proliferate to the extent that its brand becomes so synonymous with its offering that it cannot be registered as a trademark,” she said.

This is a subjective decision which may vary between jurisdictions. For example, while Bitcoin has been identified as a generic mark by the USPTO it has been registered as a trademark by the UK Intellectual Property Office and the Spanish Patent and Trademark Office.

On January 13, 2022, the Dogecoin Foundation secured trademark protection for Doge, Dogecoin, and associated logos in the European Union. On March 2, the Dogecoin Foundation tweeted: “Given an increasing number of bad-faith attempts to register trademarks for Doge, Dogecoin, and even the logos created for Dogecoin by Christine Ricks, we had no option but to register them to protect all good shibes in the @Dogecoin community.”

Mr. Markus commented: “Technically, anyone can make a cryptocurrency or NFT [non-fungible token}, but if people are stealing art or music for NFTs or stealing company property to make [for example] their own ‘Walmart token’ that isn’t created by Walmart, that’s a problem.”

In other words, cryptocurrencies are registering trademarks to protect their brands from damage by association with unrelated products. But they did not start doing this until some tokens had accrued sufficient value and notoriety to attract imitators.

Because cryptocurrencies are traded in a decentralized manner, trademark enforcement is a much bigger problem, explained Omri Bouton, an associate at Sheridans (UK), who specializes in fintech, crypto, and IP.

“If you discover an infringing item on [NFT marketplace] OpenSea, for example, you can send a request for delisting, but the token will still be in people’s wallets, and you will likely still see it on decentralized exchanges,” he said.

Decentralization is also an issue for IP infringement because IP rights are primarily about preventing others using your assets, which can be a challenge given the scale of the potential infringer pool.

“Decentralization makes it hard to enforce IP rights,” added Mr. Bouton. “The problem is scale: it is difficult to enforce a right against five million people. NFTs are about creating a peer-to-peer economy of incentive, so that rather than stopping people using an NFT, they are about building in utility and additional value that can only be accessed if you have the token.”

Trademark classification is another consideration. Ms. Rose explained that in the UK most crypto trademarks are registered under Class 42, which covers scientific and technological services and research and design. However, the U.S. includes cryptocurrency under Class 9 (cryptocurrency hardware wallets, hardware for cryptocurrency mining, etc.), Class 36 (financial exchange, such as cryptocurrency payment processing, cryptocurrency trading service, etc.), and Class 42 (online cryptocurrency wallet, etc.).

Big Brands Go Virtual

Trademarks represent a way for crypto brands to legitimize their offerings and protect their IP and their customers from imitators. On the other side of the coin, trademarks offer global financial services and retail businesses the opportunity to leverage recognized brands in the virtual world—and customers the opportunity to explore crypto via a trusted, familiar brand.

Global brands recognize the danger of imitators, and the start of 2022 has seen a raft of trademark applications for cryptocurrencies and metaverse offerings. While metaverse trademarks are about leveraging known brands in virtual worlds and new markets, they are also about protecting them from third-party virtual imitators. Trademarked crypto brands may be the start of a new direction in mainstream retail and financial services.

Among a recent flurry of activity, in December 2021, Walmart (US) filed applications with the USPTO indicating that it plans to launch a digital coin and crypto wallet and sell virtual products as NFTs in the metaverse.

Mr. Gerben expects this to be a stablecoin, a cryptocurrency tied to the U.S. dollar, or a coin that is used in a comparable way to a retailer’s gift card. Indeed, Walmart filed a patent application at the USPTO in 2019 covering a method for “generating one digital currency unit by tying the one digital currency unit to a regular currency,” identifying the relevant currency as the U.S. dollar.

In January 2022, PayPal Holdings (US) confirmed its plans to launch a stablecoin. A month later, the New York Stock Exchange (NYSE) applied to the USPTO to use NYSE as a trademark for future business as a cryptocurrency exchange and NFT marketplace.

This shift to the mainstream represents a threat to alt currencies such as Dogecoin and Shiba Inu in metaverse and real-world utility. Paypal will accept its own currency for payments, for example. As Mr. Bouton observed, this places these new tokens somewhere between a fungible currency and an NFT—because their value is tied to a currency or prices.