Trademarks in cryptocurrency: Litecoin, “the silver to bitcoin’s gold.”

22 Jul 2021

On 16 July 2021 John Kimbell QC, sitting as a Judge of the High Court, handed down a reserved judgment in the first reported case to consider passing off and the registration of trademarks in the context of cryptocurrency. Christopher Snell acted for the successful party; the founders of Litecoin, a cryptocurrency frequently referred to as “the silver to bitcoin’s gold.”

In 2017 Mr John Pepin, a well-known cybersquatter, had applied (n the name of a corporate entity solely owned and controlled by him) to register two trademarks for the word mark “LITECOIN”. He subsequently caused a second corporate entity under his control to change its name at Companies House to “Litecoin Exchange Limited”. 

Those steps caused the Litecoin Foundation, which claimed to hold the goodwill in the word mark Litecoin as a result of its CEO, Charles Lee, having founded the cyrptoasset; to: (a) oppose the trademark applications; and (b) to issue proceedings seeking injunctive relief to prevent passing off of the word mark Litecoin. 

At first instance, injunctive relief was granted. The first instance judge held that:

(a) The placing onto the public register of the application for a trademark for the mark Litecoin was sufficient to constitute a misrepresentation to the public so as to found an action in passing off;

(b) Simply changing a company name to Litecoin Echcange Limited was not sufficient to constitute a misrepresentation;

(c) But, in any event, the trademark application and the company name change were intended to equip Mr Pepin with instruments of fraud to allow him, or third parties, to appropriate the goodwill in the Litecoin mark. Consequently, quia timet injunctive relief was appropriate in both instances. 

 

On appeal John Kimbell QC, sitting as a High Court Judge, upheld all aspects of the first instance decision.

The decision is notable for two reasons:

(a) Firstly, it is the first occasion on which the Court has held (in a reported decision at least) that an application for a trademark – which appears in the Trademarks journal – constitutes a misrepresentation to the public that the applicant owns the goodwill in the word mark. The foundation for such a finding is the well-known decision in British Telecommunications PLC v One in a Million Ltd and others [1999] 1 W.L.R. 903; [1999] F.S.R.

On appeal, Mr Pepin argued that such a finding was against public policy; and that the Litecoin foundation ought to have opposed the registration using the procedure set out in the Trade Marks Act 1994 rather than issuing a claim in passing off. That argument was rejected; the appeal Court finding that the procedure set out in the Trade Marks Act 1994 is not an exclusive remedy where there is infringement. 

(b) Secondly, it confirms – as is again set out in One in a Million – that the Court has jurisdiction to grant quia timet relief where a party has equipped, or is taking steps to equip, themselves with an instrument of fraud. There is no need, in such a circumstance, to establish all of the traditional elements of passing off. It is sufficient to show: (a) goodwill in the name mark; and (b) act(s) on the part of the respondent which demonstrate that they are taking steps with the intention of equipping themselves with an instrument (such as a trademark or company name) which will allow them, or a third party, to appropriate the goodwill in the word mark.

With thanks to Lawdit Solicitors.

 

 

Contributors

Christopher Snell