What do people in the DeFi and cryptocurrency space need to know about trademarks?
I’ve written about cryptocurrency and related topics before: see Trademarks and the Blockchain (2018) and NFTs and Copyright Law (2021). Even people who have been skeptical about cryptocurrency are beginning to identify use cases. For example, George Mason University economist Tyler Cowen recently wrote in Bloomberg: “After many years of doubt and uncertainty, a killer app has finally been found.” Cowen goes on:
The core use case for crypto is called DeFi, a recently coined abbreviation for “decentralized finance.” DeFi doesn’t have a formal definition, but it typically includes the use of the blockchain to borrow and lend using auction markets; to trade in unconventional derivatives; to trade one set of crypto assets against another; and for unusual forms of insurance. The profit opportunities arise in part because the blockchain eliminates the need for traditional financial intermediaries, with their fees and associated regulations.
While most people are familiar with Bitcoin and possibly with other big names like Dogecoin and Ethereum, new crypto “coins” (units of exchange) are entering the market all the time. In the DeFi space, these coins are the means to invest in new projects and finance opportunities.
Like any other type of asset, a DeFi coin has to have a name, and that name functions as a trademark. Remember, a trademark is anything that identifies the source of goods or services. Business names and product names are trademarks. The name of a DeFi coin identifies it as being connected with specific financial products and services.
As a result, when one is selecting a name for a DeFi coin, the same best practices apply as for any other type of product. It’s important to make sure that the name is available, meaning, that nobody is using an identical or confusingly similar brand name for related goods or services. “Related goods or services” can be challenging to define, but in this context one should start by looking for potentially conflicting brand names in the worlds of both crypto and finance. Extensive due diligence is recommended, of course.
Once a brand name for a DeFi coin has been selected, it’s important to protect it. Trademark protection varies by jurisdiction; there is no one worldwide registry of trademarks. That said, most high-profile brand names seek protection with the United States Patent and Trademark Office (USPTO) as well as other countries or jurisdictions where they do business.
Registering the brand name of a DeFi coin as a trademark has several advantages, including making it easier to defend the name against potential infringers. While DeFi coins are “decentralized” by nature, that doesn’t mean that nobody controls the underlying software. All DeFi projects have some group or organization behind them. That’s the party who should seek to protect the name as a trademark. Inevitably, some unscrupulous bad actor will come along and try to fool investors into thinking they are the real party behind the coin. The ability to leverage a trademark registration will be invaluable when such an issue arises.
In the event of a dispute or disagreement between the people developing the DeFi product or platform, having gone through the trademark registration process may also help to clarify who has the right to use the brand name (or variations thereof) in the future.
Many parties in the crypto and DeFi world have registered their brand names as trademarks for the reasons cited above. For example, the Ethereum Foundation has three USPTO trademark registrations for the word ETHEREUM as of this writing: here, here, and here. Note that the last registration is for the word “ETHEREUM” in connection with shirts and t-shirts. It’s important to think beyond the initial crypto applications and consider all of the goods and services associated with the brand.
Feel free to be in touch if you have questions about trademarks or other IP law issues.