Trademarking of Blockchain Technology and Virtual Currencies: An Unsolvable Conundrum?

We’re glad to bring you another post by our intern, Bhavik Shukla, discussing the various aspects of trademark registration for virtual currencies. Bhavik is a 5th year student at NLIU, Bhopal. His earlier posts on the blog can be viewed here, here, here, here, here and here.

Trademarking of Blockchain Technology and Virtual Currencies: An Unsolvable Conundrum?

Bhavik Shukla

I read Arun’s post on trademarking of virtual currencies with much interest. He lucidly explained the concepts relating to the ‘befuddling’ blockchain technology, and further espoused the trademarking of cryptocurrencies. This post is a follow-up post that seeks to explore some of the ideas introduced by Arun, and related aspects. As such, before you read any further, it would help to first read Arun’s post.

In this post, I seek to highlight the issues which may make trademarking of blockchain-related technologies (encompassing cryptocurrencies, smart contracts, among others) a tricky affair, while also expounding on reasons for this.

Case against Trademarking: A Blockchain Perspective     

In this section, I attempt to elaborate on why the trademarking of blockchain-related technologies present an insurmountable challenge to the application of trademark law.

To begin with, I draw on an issue that forms the basis of many of the trademark-related issues surrounding blockchain (as I will explain through the length of this post): as Arun explains, public blockchain technology and cryptocurrencies have no “central control or ownership.” Further, this lack of centralized control over such technologies makes it particularly improbable for them to be protected under trademark law.

First, Arun suggests that it would be “worthwhile considering if such blockchain technology can be brought within the ambit of “collective marks” i.e. marks belonging to a community of users.”  In my view, a collective trademark cannot afford any protection to such technologies, as section 2(1)(g) of the Trade Marks Act (‘Act’) necessarily envisages collective trademark ownership to ‘members of an association of persons which is the proprietor of the mark.’ As, it has been emphasized before public blockchains are not controlled by any entity, much less can they be said to have a ‘single’ proprietor. As such, a public blockchain merely has participants, and such participants cannot be equated to be ‘proprietors’ within the meaning of the Act. The bottom line is that participation in blockchain is constantly subject to change, and its activities are controlled by no one in particular. It is a community platform on which all have an equal participating right.

Second, in respect of public/ community blockchain-related technologies, anonymity forms a core principle to the extent that it has been termed a ‘necessary evil’. The requirement of anonymity or even pseudo-anonymity (see more on the concept here) is stressed upon, keeping in mind the breaches of data, hacking, or even kidnapping of persons linked to a cryptocurrency address. So, would a person or an organization of persons having vested interest in a community blockchain give up their anonymity, in order to seek a trademark registration? It appears highly unlikely. It has to be borne in mind that the central purpose of affording trademark protection to goods/ services is to indicate the source of goods and/ or services, and thus, distinguish proprietors in the market. In a reflection of this, the Form TM-A (for registration of a trademark in India) requires applicants to reveal details. This strikes at the heart of the requirement for anonymity in blockchain technologies conflicting directly with the blockchain participants’ maintenance of anonymity.

This brings me to Arun’s call for doing away with decentralization in such technologies, where he states that an adoption of trademarks for blockchain-related technologies may “also overcome the paradox of de-centralized control”. To quickly relay this paradox for our readers’ benefit:  the blockchain technology is not owned/ controlled by anyone, thereby being purely decentralized, but such decentralization does not, in itself, make the blockchain system trustworthy or resilient to frauds. I do not think that decentralized nature of the technology is undesirable, (except perhaps to the government, see here). I feel, instead, that it gives public blockchains its flair. Decentralized control ensures that there is no single authority through which, changes may be effectuated to the blockchain, thereby making it a trustless system (i.e. one not controlled by a single authority). In this sense, although it may be beneficial to grant trademark protection to blockchain related technologies, thereby overcoming the paradox, such protection should not be extended at the cost of doing away with its core infrastructural characteristic- decentralization.

That said, the decentralised nature of the blockchain throws up another set of issues. For instance, in such a decentralized system, what if certain members of the blockchain disagree with obtaining a trademark registration? This will result in a forked blockchain, which refers to a split in the original blockchain into two or more separate paths due to a disagreement: one which supports the registration and other which does not. This will cause highly complex issues for trademark law to deal with, considering that the basic infrastructure of both the paths is identical. In that case, can the other path (group which does not seek registration) use a registered trademark? Further, what if an action is brought against them for their use of the trademark? Strictly speaking, the forked blockchain remains a part of the parent blockchain. It is uncertain how these issues may be resolved by the Indian trademark law – that is if they ever come up!

Will Trademark Registration for Blockchain Related Technologies Actually Help?

The underlying infrastructure of blockchain related technologies make it a Herculean task to grant them protection under the trademark laws. However, let’s, for the sake of argument, consider a situation where a trademark is granted in respect of these technologies. In my view, the trademarking of blockchain related technologies may make no difference to the status quo.

First, it is admittedly improbable that every new participant in the blockchain, where a collective trademark is granted, or a registered user in case of an ordinary mark, may be in favour of stripping his anonymity only to ‘use’ the trademarked name.

Second, one must remember, the blockchain is just a medium over which transactions are carried out. For clarity, the creation of ‘blocks’ through the solving of a puzzle is the participative key, and in some ways this technology is a true symbolism of ‘reap what you sow’. So, a person who adds a ‘block’ does not need an authorization from an organization/ guild to use the blockchain’s name or even that of a specific cryptocurrency. Therefore, it is unlike a good or service which can be further sold or distributed by a proprietor who uses a mark as a source indicator.

Third, the problem with trademarking blockchain/ cryptocurrency also stems from its ‘illegal’ classification in some countries. Fortunately, the Supreme Court struck down the RBI’s ban on dealing of cryptocurrencies in India. But in countries where cryptocurrency is banned, seeking a trademark registration, may be quite impossible. ‘Public policy’ and ‘morality’ may be invoked in order to deny trademark protection to blockchain/ cryptocurrency. In a nutshell, such countries will not afford protection from misrepresentation and deception through actions of third parties.

Recent times have seen a surge in the discussion surrounding trademarking of blockchain related technologies across the world. However, the trademarking of these technologies calls for an overhaul of the understanding and application of trademark laws to the digital space. These technologies, being ‘disruptive’ in nature, have majorly impacted the surroundings in a way that their reconciliation with existing laws may well be a stretch. Accordingly, it is worth exploring the need for the development of new jurisprudence, with these technologies in perspective. I welcome readers’ thoughts and comments on the subject and sign off in agreement with Arun’s conclusion: the blockchain technology is here, and we are not ready for it.

Thanks to Sreyoshi Guha for her helpful inputs on this post!