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How to Protect Your Brand in Web3

In 2014, computer scientist Gavin Wood coined the term “Web 3.0.” The phrase, which has now been shortened to “Web3”, refers to the third generation of the internet that’s designed to be truly decentralised and free from a central authority.

Web3 has the potential to add real-world value for businesses by creating additional avenues to reach consumers. However, owing to its less regulated nature, brands also have the potential to be taken advantage of both by users and by the providers in the space.

Take blockchain domains, which lack the trademark protections implemented by ICANN, as an example. Registrations are anonymous, irreversible and (as yet) have no harmonized legal reclaim process, leaving them open for a new generation of cybersquatters looking to take advantage of an unregulated space.

With this in mind, there are a few key lessons for brands looking to claim their stake in Web3:

Brands can learn from the opportunities early domains presented

Web3 has the potential to change our lives as much as the internet did, and the current stage of Web3 is similar to the internet boom of the early 90s. There is as much potential and opportunity for real innovative change. For example, we can expect to see the emergence of long-lasting innovation. From its potential to impact the way e-commerce operates to the decentralisation of financial transactions and more powerful marketing initiatives, like Frito-Lay’s FIFA World Cup campaign where customers could scan a QR code to join its ‘Pass the Ball’ challenge for a chance to win prizes.

Today’s market was shaped by the brands that capitalised on the opportunities early domains presented, leaving late adopters and the brands who failed to innovate to rue what could have been. Just as many brands first saw the dawn of the commercial internet as a fad, many are now sceptical as to what the long-term impact of Web3 will be. Brands risk repeating past mistakes because, in 20 years, Web3 has the potential to be a major part of how consumers and businesses alike express their digital presence.

The challenges of identifying infringing parties

We’ve seen the adoption of blockchain domains skyrocket over the last few years and in 2022 alone, the Ethereum Name Service had over 2.2 million .eth domain name registrations. But, unlike traditional domains that are registered through internet registrars operating through the ICANN-regulated DNS system, blockchain domains are not governed by any centralised body.

Traditionally, blockchain domain purchases are made with a blockchain DNS provider such as Ethereum, Handshake and Unstoppable. Once the transaction has been made, the domain name, IP, and transaction are immutably recorded onto the blockchain. Without a formal reclaim process, it can be difficult to shut down an infringing domain or even trace it back to the owner, making these assets ripe for abuse from a new generation of cybercriminals looking to leverage the name of trusted brands. In some cases, blockchain domains provide the means for criminals to produce counterfeit versions of legitimate products that confuse potential victims. For example, earlier this year we saw luxury handbag maker Hermes take the creator of the “MetaBirkin” to court.

To deliver on its full potential, Web3 needs to operate in a reliable, predictable legal framework. This takes us right back to the earliest days of the DNS when US courts weren’t certain as to whether they had jurisdiction over cybersquatters located beyond US borders and had only US trademark law to rely on.

Collaborating across generations

Here comes the need for a new generation of legal officers, qualified and equipped to operate within digital and decentralised environments. We’re seeing younger generations come into the domain world with the knowledge that some of us could only dream of when protecting brands and their IP in the 90s. This new generation of talent into trademark legal teams not only have lived experience with the latest technology, but some of them also have computer science backgrounds. As programmers, they truly understand the technologies that make Web3 work.

As is always true, more seasoned workers can also teach more recent graduates a thing or two. For instance, the new generations didn’t fight the domain battles of 20 years ago, and there are still people in the workplace who remember a time before the DNS was created. These veterans can pass along what they know from the early days of the internet, including where the issues might be lurking and where the opportunities lie for brands. Only then can the newer generations avoid repeating the same missteps and help brands rise to the new domain innovation and protection challenges that come with Web3.

Getting Web3 ready

Considering the future potential of Web3 and the Metaverse, brands should start taking the necessary precautions now to make sure they are protecting their brand and IP.

Effective brand protection in Web3 is a collaborative process, both in terms of internal resources and external experts who can use their experience to stop third parties from profiting from your hard work, be it through tracking registrants, negotiating domain transfers or enforcing your rights.

The first step might be working with a domain name specialist who can assess where your brands appear in the most popular blockchains and conduct a risk assessment. Following this, actionable steps can be taken to help build a registration and enforcement strategy, keeping your brand safe in an online world that is complex and constantly evolving.

By Heather Forrest, Head of Legal at Com Laude

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