Details of the case
American digital payments company Block Inc. issued a trademark infringement claim against Roger Ver's Bitcoin.com involving its newly launched Verse token, which concluded a $33.6 million private sale in May 2022.
Block, Inc., formerly Square, Inc., is an American multinational technology conglomerate founded in 2009 by Jack Dorsey and Jim McKelvey and formally launched its first platform in 2010. The digital payments company creates tools that enable businesses, sellers and individuals to participate in the economy. Its segments include Square and Cash App. The Square segment includes managed payment services, software solutions, hardware and financial services products offered to sellers.
Bitcoin.com launched its VERSE token in June 2022. The virtual token is meant to enhance the company's growth by rewarding users for using Bitcoin.com's services. VERSE would mainly reward liquidity providers for yield farming and can be used on the Bitcoin.com exchange in the form of cashback for buying, selling and swapping crypto assets.
According to Block Inc., they have sent multiple letters to the CEO of Bitcoin.com, Dennis Jarvis and the company's legal counsel Joseph Collement. In these letters, Block Inc. warned the crypto company that the use of "Verse" by Bitcoin.com violates their trademark as per the German trademark law. Bitcoin.com was asked by Block's legal counsel to sign a declaration of discontinuance and undertaking by August 17, 2022, or face further legal action. It also demanded that Bitcoin.com 'cease and desist' its Verse token operations in the European Union or face a $10,400 (€10,000) contractual penalty 'for each case of contravention.'
Trademarks and Cryptocurrencies
A cryptocurrency is a form of currency that only exists digitally and usually has no central issuing or regulating authority. Instead, this currency uses a decentralised system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions. Cryptocurrencies' relation to trademarks is becoming increasingly important as more businesses and consumers take an interest in this class of digital assets. As of October 2022, individuals and businesses filed more than 4.280 trademark applications for cryptocurrencies and crypto-related services with the United States Patent and Trademark Office (USPTO), compared to 3,516 in all of 2021.
Mike Kondoudis (@KondoudisLaw)
However, the rapid growth in the popularity of cryptocurrencies and associated trademark applications goes hand in hand with the emerging trademark issues concerning the crypto market. As with other trademarks, the most important criterion is ensuring that the cryptocurrency trademark is distinctive. In 2016, BitFlyer, Inc. applied for trademark registration of the word “BITCOIN” for “computer programs employed in the field of electronic commerce transactions; computer programs; electronic machines and apparatus; telecommunication machines and apparatus”, but the USPTO had refused it. The word was only descriptive of the subject matter and characteristics of the goods submitted by the applicant, according to the USPTO. However, some countries have registered ‘Bitcoin’ as a legitimate trademark for various classes, like the United Kingdom Patent Office and the Spanish Patent and Trademark Office.
Another issue is that trademark protection, in its traditional form, covers goods and services exclusively, while cryptocurrency is merely a medium of exchange. However, while cryptocurrencies themselves can hardly be registered as goods or services, the name of the coin can be trademarked for "financial services" in Class 36 or "software as a service (SAAS)" in Class 42. Experienced trademark lawyers can help you select the correct classification categories to protect your brand as you enter the digital marketplace. To learn more about trademark options for cryptocurrencies and other digital assets, contact an experienced trademark attorney today.