Welcome back,
Today we will be looking at the application of trademark law to cryptocurrencies. This is a fascinating area of law and one that provides excellent insight into how the legal profession is currently dealing with cryptocurrencies without clear guidelines.
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Onwards and upwards,
Liam
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Background
Cryptocurrencies are growing in popularity. Despite the market downturn this year, the industry continues to see tremendous growth in support from national governments, private companies and individual users. It's expected that the industry will continue to grow by an average of 12.8% until 2030, far outpacing any other existing sector.
So far, in 2022, trademarks seem to be an area of law where many in the industry are focusing. As of August 31st, there were 3899 fillings with the United States Patent and Trademark offices for cryptocurrencies and related services compared with 3516 in all of 2022. If the trend continues to the end of the year, that will be ~50% growth.
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The Law
The US is ahead of much of the world and already has specific classes for trademark protection, including Class 9 for cryptocurrency hardware or hardware for cryptocurrency mining. Class 36 for financial exchanges, including cryptocurrency trading services and Class 42 for online cryptocurrency wallets.
The issue here comes mainly from the way trademarks will be applied and recognized internationally. A unique aspect of this market is the distribution of its users. The top 5 cryptocurrency markets, according to TripleA, are:
- United States
- India
- Pakistan
- Nigeria
- Vietnam
These are not a list of countries that have historically protected IP and recognized each other's IP rights as equivalent. Adding to this issue is the uncertainty around how trademarks should be treated in this industry. The trademark "BITCOIN" was rejected in the US but allowed in the UK and Spain.
Some of the issues in trademarking cryptocurrencies include:
- Defining if it is a product or service capable of being protected
- Determining what is distinctive in the industry.
- Determining if there is a source identifier who can own the trademark for DAOs and other blockchain-based bodies or technologies specifically built to avoid having a central or controlling entity.
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Takeaways
If you are working in this space, it is worth consulting a lawyer or other advisor to help clarify and assess the business risks if you cannot protect your intellectual property. Suppose you're investing in the industry or working tangentially with the industry. In that case, it's essential to understand what the companies you are working with can own and what may be copied or used by others before you invest time and effort into the venture.
Unfortunately, the law is unclear here, but this is another risk to weigh against the rewards of being in the fastest-growing industry.
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This newsletter (or any other content provided by Law4Startups) is not legal, financial, or tax advice. We are simply providing legal information and collating news from around the world. We recommend that you consult an attorney before making any legal decisions. We do n t make any representations and take no responsibility for your actions based on this information.
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