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Altcoins Seek Trademark Registration For ICOs and Beyond

(...and a nod to rap classic C.R.E.A.M.)

Raina Haque, Ali Portaro, Jon Mayhugh

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Trademark applications for altcoins are beginning to flood the United States Patent and Trademark Office (USPTO).  Initial coin offerings (“ICOs”), or token sales, have taken off, especially after the SEC’s initial weigh-in late July that indicated that there may be ways to perform ICOs that would not be deemed as sales of securities.  Cryptoenthusiasm now extends beyond the technorati; personalities such as Mark Cuban, Paris Hilton, and Ghostface Killah are backing ICOs.  Trademark protection is especially important for distributed technologies that seek widespread adoption for network effects. The general public will gloss over the details of the underlying technology, but it will appreciate the reputation that a crypto venture garners through their trademarks among thought leaders, celebrities, and members of their social networks.  Trademark registration* is an important way to effectively convey a crypto venture’s stake in a rapidly crowding altcoin market.

Who is Serious About Crypto Trademarks? Ghostface Killah's Company Registers “Crypto Rules Everything Around Me”

Just last week, we saw that an already famous mark in music may extend itself as a source identifier for tokens.  Ghostface Killah, of the Wu-Tang Clan, just backed the Cream Capital LLC’s CREAM token.  C.R.E.A.M., one could argue, is the Wu-Tang Clan’s most recognizable song, and a hip-hop classic generally.  The song’s title, C.R.E.A.M., stands for “Cash Rules Everything Around Me,” but Cream Capital has reappropriated the well-known acronym, and has applied for trademark registration of “Crypto Rules Everything Around Me” (Application No. 87592073).  With this history of recognition as a song that relates to economic forces shaping a society, CREAM is an apt name for a token.  On the other hand, however, the trademark owners are taking a risk that the success of 90’s C.R.E.A.M. will be spent on a trademark for a crypto venture that may or may not live up to the glory of its namesake.   Famous trademarks may get new life, and take on (in the general sense) dilution and tarnishment risks, when adopted as an altcoin or DApp trademark.

Filing for Trademark Registration of Crypto ventures and their Tokens and other IP Assets

The TEAS Plus application system may be suboptimal for core crypto venture trademarks at the time of this writing.  That application system has the cheapest filing fee ($225 per class of good/service), but it has only stock classes of goods and services to choose from; the TEAS Plus application system allows for little flexibility in specifying the nature of a bleeding-edge technology or crypto venture.  The USPTO’s trademark classification database, with stock good/services identifiers, has only a pair of entries that have the string 'virtual currency' (one added in 2007, the other in 2014), and no stock entries for 'cryptocurrency,' 'digital money,' or 'digital currency.'  It has two entries including “token” that vaguely apply to cryptocurrencies (Term ID 036-884 and 036-559).  Thus, a crypto venture may be better off using the TEAS RF application system, which allows the applicant flexibility and greater definition in the description of the underlying technology.  Nailing an appropriate description is important; trademark protections are tethered to the classes of goods and services that are registered with the mark.  It will take a while for the Trademark Office to adapt to the realities of this burgeoning industry.  

Before the mark may be registered with the USPTO, the applicant must submit evidence of the use of the mark in commerce for the specified goods and services.  Many of the crypto venture-related applications to the USPTO are currently intent-to-use applications, meaning that the applicant has an intent to use the mark in commerce in the future and will submit such evidence of the use of the mark in those categories of goods and services.  Cream Capital, LLC, filed such an application, and as of the date of this writing, has yet to file its “Statement of Use” that evinces use in commerce.  Cream Capital is wise to start the process to stake its claim in the altcoin market.

If a cryptoventure is already using a mark in commerce, it should file a registration application with either the USPTO and/or the international Madrid Protocol system as soon as possible to be in the best position to protect its clever trademark from any other cryptoventure that may try to use it in the future.  Generally, when litigating trademarks, registered trademarks are given an initial presumption of validity whereas unregistered trademarks have more of an evidentiary burden (meaning, more attorney work is required) to squash the superior position of a registered trademark.  The floor of trademark litigation costs is estimated to be $100,000.00 in the US.  Therefore, the application for trademark registration as soon as a venture is serious about a trademark is a worthy investment to mitigate the risks of a protracted trademark legal battle later on.

Applications for Trademark Registration Augur Serious Ventures

(See what we did there?)

It is surprising that when there is a linking of value, fame, and claim, there is not more discussion and direction registering the trademarks of tokens and their ecosystems.  A cynical explanation is that perhaps some of these token sales are intended to be merely a play in speculation. Continuing in this line of thinking, if speculation is the aim, capital to run the ICOs is allocated towards getting buyers rather than protecting a long-term profit-producing venture.  Trademark protection is an initial consideration for any venture that is intended to be a serious one for the long term, crypto or not.

A Prime Example: RECoin

A prime example of the importance of trademark protection for crypto ventures  is the “RECOIN” mark, which belongs to German entity Blacksquared Gmbh.  The “RECOIN” mark was granted trademark registration by the USPTO on Oct. 11, 2016 for goods and services related to virtual currency.  Coincidentally, the SEC just filed a lawsuit against a New York based company REcoin LLC et al., alleging that its ICO effectuated fraud under the Securities Act.  From the TESS database, there is no indication that the German entity and the New York entity are related at all. The New York entity allegedly made many claims of its value tied to real estate and diamonds, yet it did not register its trademarks!  Even if the SEC had not stepped in to seek to shut the New York entity down, the German entity may have been able to bring a lawsuit to enjoin the New York entity from using any mark that related to its registered mark “RECOIN.”  Certainly, no token issuer wants its tokens confused for tokens of an ICO that is under allegations of fraud.   (The allegation of fraud from the SEC is not the New York entity’s only problem; the principal and the company may also be liable if a suit is brought against them for trademark infringement.)

In short, trademark protection may be the most important form of intellectual property protection for most crypto ventures.  Mainly, such protection allows for the entity holding the mark to have a superior position to squash other crypto ventures from using the mark in a way that confuses token buyers or from others tarnishing their mark by associating it with fraudulent actions.  Applying for trademark registration is one way a crypto venture establishes itself as a serious venture that intends to be around even after the token sale bubble pops.  The services of an attorney are important in this phase of general blockchain-technology development and adoption.

*The irony of having to seek trademark registration from a central authority for a venture that relies on consensus protocols is not lost on us.  Perhaps one day there will be consensus protocols that allow for distributed networks to validate trademark registration.  In that vein, Cognate is one blockchain-related venture that seeks to establish service for recording evidence supporting trademark rights on a blockchain.

Warning & Disclaimer: The pages, articles, and comments on do not constitute legal or investment advice, nor do they create any attorney-client relationship.