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Trademark Owners Beware – There’s a New Brand Identifier to Worry About

You might not understand how crypto-currencies or blockchain wallets work, but Facebook’s announcement this week is a clear signal that these new technologies will soon become ubiquitous. Facebook’s introduction of its own crypto-currency to its 2 billion users means mass adoption of crypto-currencies and digital wallets are on the horizon.

This has implications that trademark owners need to be aware of.

When the world wide web first emerged in the ‘90s, I was busy building large-scale searchable databases for trademark lawyers. We quickly added domain name data as they emerged as new trademark identifiers for brand owners. Fast forward to 2019—there are new brand identifiers fast emerging to support crypto-currency and other blockchain applications.

Just as the rapid growth of the world wide web and the emergence of domain names outpaced trademark policing efforts of brand owners in the ‘90s, so too are crypto-currencies and blockchain applications moving faster than brand owners can keep up.

One example is blockchain digital wallets for sending and receiving payments. These are represented as long unreadable strings such as: “1FloatSFTRjhEeobR5637HET76bprJK23T”.

These blockchain wallet identifiers are cumbersome to share. What is needed are human-friendly readable names. Essentially, blockchain wallets need domain names.

The creation of the Internet Corporation of Assigned Names and Numbers (ICANN) in 1999 helped to bring some order to the free-for-all in the early days of the web. Not only did ICANN introduce retail competition to Network Solutions and more choices other than .COM, but the governance body also introduced Rights Protection Mechanisms, such as the Uniform Domain Name Dispute Resolution Policy (UDRP) and the Trademark Clearinghouse to help protect brand owners.

However, blockchain developers are not waiting for acceptance from ICANN. Instead, they are creating their own version of the DNS without the regulatory oversight of ICANN.

This entails the creation of new top-level-domain extensions, such as .ETH, .ZIL and others. None of these extensions are recognized by ICANN and therefore are not in the DNS root zone file nor in the Public Suffix List utilized by web browsers and maintained by Mozilla.

But the workaround is simple. As millions of bitcoin users already know, web access to blockchain applications is as simple as adding a browser extension or plug-in to Firefox or Chrome. There are even browsers such as Opera and Brave that now make the blockchain accessible by default.

Facebook might not utilize a blockchain domain extension and its crypto-currency and blockchain wallet may ultimately fail. Nonetheless, its offerings will help accelerate overall global awareness and actual use of crypto-currency and blockchain wallets.

We’ve identified over a dozen active blockchain domain extensions, including: .BIT, .COIN, .EMC, .ETH and .ZIL. With these blockchain domain names, sending and receiving crypto-currencies are now as easy as sharing a human-readable wallet such as Shoes.ETH or News.ZIL instead of a long unreadable string. To the end-user, these URLs are as easy to enter into the browser as EnCirca.COM.

The biggest of these blockchain domains is clearly .ETH, the extension for the Ethereum blockchain. Two years ago, Ethereum conducted an experiment by launching .ETH domain names that were seven or more characters in length. Nearly 300,000 .ETH domain names were registered. This zone count is higher than 98% of the recent 1,200 ICANN domain extensions.

Ethereum is now back with another domain launch this summer. This time, they are releasing short character .ETH domain names that are from three to six characters in length. They are also charging an annual “rent” for all domain names.

Another blockchain domain to watch is .ZIL, based on the Zilliqa blockchain. Venture capitalists have invested millions to help develop the .ZIL domain extension, which is promising to enable websites to stay beyond the reach of government censorship. .ZIL is currently in the midst of a Trademark Sunrise Period that allows trademark owners to protect their marks ahead of a land-rush. Unlike the typical ICANN regulated domain, the Trademark Clearinghouse is not involved in .ZIL.

The lack of Trademark Clearinghouse involvement is just one way that ICANN regulated domains and blockchain domains are very different.

  • The blockchain is designed to ensure privacy. Owners of blockchain domains are anonymous unless they decide to reveal themselves. There is no public WHOIS database that can be relied upon. There is no one to send a Cease & Desist letter to.
  • The blockchain is decentralized. This means that there is no single court or authority that can shut it down. Trademark owners can’t go to a court to force a takedown or transfer using the IN REM process.
  • The blockchain is immutable. This is another way of saying that blockchain transactions are nearly impossible to reverse. Thus, a brand owner cannot force the cancellation or owner transfer of a blockchain domain name without the consent of the owner.
  • The Rights Protection Mechanisms developed under ICANN do not apply to blockchain domains. This means no UDRP, no Trademark Clearinghouse, no downloadable zone file, etc.

Blockchain domain extensions will likely proliferate as more and more companies unveil their blockchain wallets and currencies. Clearly, trademark enforcement for blockchain domains is going to be much harder compared to ICANN regulated domains.

Of course, governance for blockchain domains will likely continue to evolve, just like ICANN regulated domains have. New Rights Protection Mechanisms may eventually emerge to help brand owners reclaim or blacklist blockchain domain names from the inevitable cyber-squatting that will occur.

But in the meantime, trademark lawyers should be vigilant about monitoring these emerging brand identifiers and be proactive in policing their trademarks from this new threat.

By Thomas Barrett, President - EnCirca, Inc

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