Bitcoin and Trademark Law

Recently, some people try to change the Bitcoin network rules. They want larger blocks, and call their effort “Bitcoin Unlimited”.

Now someone has applied for a trademark on “Bitcoin Unlimited” in the United States. I would link to the appropriate search result, but doing so would result in a link that only works for a couple of hours. So here is a copypaste of the information there:

Mark Image

Goods and Services IC 036. US 100 101 102. G & S: Financial services, namely, providing a virtual currency for use by members of an on-line community via a global computer network. FIRST USE: 20120215. FIRST USE IN COMMERCE: 20170315
Standard Characters Claimed
Serial Number 87380353
Filing Date March 21, 2017
Current Basis 1A
Original Filing Basis 1A
Owner (APPLICANT) Crawford, Jesse L. INDIVIDUAL UNITED STATES 4821 Lankershim Blvd, #F117 North Hollywood CALIFORNIA 91601
Live/Dead Indicator LIVE

There is a fight going on right now. I have spent some time following the issue and tend to the position that the “Bitcoin Unlimited” proposal is without merit. Many people share this position.

Since the Bitcoin project is open source, anyone wanting larger blocks or whatever other change is free to start their own project. They can even use the legacy Bitcoin blockchain. Find some mining hardware and start a new chain from some point in time.

But you can’t easily call the resulting project “Bitcoin”.

That’s not for trademark reasons. Actually, a recent application from the Japanese “Bitflyer” exchange to register “Bitcoin” as a trademark in the United States was rejected in February 2016.

That’s because the word “Bitcoin” is descriptive and needs to be held free for anyone in the industry. I agree with that assessment.

That in turn means that if someone starts another “Bitcoin” project, there is not much anyone can do about that under trademark law.

But the reasons to have a trademark law in the first place apply also to this situation.

For example, the quality of the “Bitcoin Unlimited” code seems to be rather lacking. In contrast, the team in charge for the “Bitcoin Core” software has a record of 100% uptime over the last couple of years.

So if they get to name their different project “Bitcoin”, users that support Bitcoin because of the above 100% uptime record may be confused and misled. They may be expecting to deal with sound software and sound money, when they actually are dealing with a completely new and unproven software.

Obviously, anyone involved in the industry will be able to tell the difference. But many users not following all the finer points of the debate may not know or not care about the difference.

It is exactly in this kind of situation that trademark law normally steps in to prevent taking advantage of the success of other people. You can’t just go ahead and sell your own beverage as “Coca-Cola”, misleading consumers and damaging the brand.

Interestingly, the situation is different with Linux. “Linux” is registered as a trademark, and the owner of that registration is Linus Torvalds in the United States and other countries. The trademark is sublicensed exclusively to the “Linux Foundation”, which in turn gives out sublicenses to people requesting them. They have published a FAQ document on the details of their policy regarding that.

Normally, if someone wants to fork an open source project, they just find a new name and move on. That has been the norm for Bitcoin as well. There have been hundreds of altcoins trying the same idea with some changes.

But they have all left in peace. Started their own blockchain under a different name. The “Bitcoin Unlimited” challenge is different. They want to own the name “Bitcoin” and all the trust that the market has for this brand, while booting out the development team that has achieved this trust in the first place.

I for one think that is unacceptable and unethical, even if there is no way to counter this under current trademark law.