If Bitcoin Community Doesn’t Take Action, Opportunists Like Trademark Lawyer Could “Box Them In”

“A registered trademark in a civil law country gives the holder of the mark the exclusive right to use the mark in commerce, for a prescribed period of time, usually ten years,” the lawyer, Michael Pascazi, told Betabeat. “Anyone infringing upon the mark in those countries, where it is registered, would be subject to money damages, and an order to stop the infringing.” Mr. Pascazi is counting on those suits turning into royalty agreements, where he could license the mark to other businesses.

Mr. Pascazi pulled his application after he decided it would be too difficult to meet the standard of “first use” required in the U.S. But he’s taking his effort to France, Japan and other countries where the standard is “first to file” rather than “first to use.” If he succeeds, the consequences for the budding Bitcoin movement could be dire.

Bitcoin enthusiasts were incensed over Mr. Pascazi’s admitted opportunism–”Can we get him disbarred? He tried to steal our money. He tried to destroy any chance of bitcoin ever changing the world,” one user wrote in a typical comment on Reddit.

With other distributed efforts on the internet, including open source software, it’s common for someone in the community to register a trademark in order to prevent abuses like this, as the Open Source Initiative trademarked the term “open source” so companies couldn’t slap that label on any proprietary software. But because collaborative communities are inherently non-hierarchical, it can be hard to get someone to step up. So far, no one from the Bitcoin community has taken the lead.

It’s likely that Mr. Pascazi will be granted the trademark in other countries unless someone objects and proves that Bitcoin has achieved a level of “a level of fame or notoriety for protection of famous marks,” said Katherine M. Basile, a trademark attorney and Partner at Novak Druce + Quigg LLP in San Fransciso, based on our explanation of the situation.

It’s not clear that Bitcoin meets this standard–but considering its widespread use and recent media exposure, it certainly seems possible. ”If someone in the U.S. doesn’t step up to either try to make Bitcoin generic or to try to protect it as a trademark, this applicant likely will box them in,” Ms. Basile said.

In other words, if Mr. Pascazi’s applications abroad are granted, things could get really messy for any of the Bitcoin entrepreneurs who have started rising up. That includes Bruce Wagner, creator of The Bitcoin Show, who is currently recruiting multi-lingual hosts in order to broadcast the show in different languages. If he wants his show to air in other countries, he could run into trouble with Mr. Pascazi’s mark.

Betabeat has not found anyone in the Bitcoin community who is trying to combat this threat legally. “It’s going to be impossible to fight this,” said Donald Norman of the U.K.-based Bitcoin Consultancy. Unless, he intimated, we use our hacker powers.

“If you look at what happened with Playstation,” he said, vaguely. “If you’re attacking Bitcoin you’re attacking people who are incredibly technically advanced. When you’re actually attacking their actual money… I think a lot of people will spring up and it’ll be interesting.”

It’s debatable whether cyberattacks would be effective against Mr. Pascazi or against any court-ordered enforcement of his trademark, if he gets one anywhere.

“If it’s such a big deal then people will just adopt a new name,” he said.

But a trademark is a verification of authenticity–Bitcoin isn’t the only digital currency in existence, but it’s highly advanced and the encryption, mining requirements and related software are all unique. Changing the name is an anarchic solution somewhat in keeping with the subversive strengths of Bitcoin–Bitcoiners believe they can evade legal and commercial interference because the network is decentralized and the technology is inherently adaptable. But it will be extremely difficult to establish the currency’s legitimacy without consistent branding. People want to know that what they’re buying on Mt. Gox is really Bitcoin.