TM VLOG

The invention of blockchain distributed ledger technology has sparked a technological boom that has unceremoniously thrust the legal system square into the middle of a new and rapidly evolving digital landscape. One field at the forefront of these massive changes is intellectual property, where the legal community is grappling with the unenviable task of outlining whether the names and logos associated with blockchain technologies, and the ever-growing network of cryptocurrencies that can be built off of such programs, serve source-identifying functions such that they are eligible for trademark protection. The United States Patent and Trademark Office (USPTO) has boiled this determination down to assessing (1) whether the proposed mark is associated with an actual good or service, and (2) whether the name or design functions to identify its source.

While the debate over whether blockchains and associated cryptocurrencies indeed qualify as protected goods and services rages onward, another battle over a proposed mark’s ability to show source has also presented a rather complex dilemma. Blockchains are digitally distributed ledgers which share bits of information among multiple computers. The pool of data creates “blocks” of information, which are cryptographically secured and authenticated before a new block of information can be added to the “chain”. The network of computers maintains a secured digital record of each transaction, and the computational work for validating such a transaction (often called “mining”) is then automatically compensated with newly-created currency. It is important to note that while different “types” of blockchain designs are now emerging, these core components will generally remain the same.

With that being said, at some point, all budding blockchain companies will have to ask themselves whether the intention is to build a network that is centralized or decentralized, which beyond security considerations, also has prominent implications when attempting to establish “source” for trademark purposes. The designation of “centralized” vs. “decentralized” has nothing to do with the distributed nature of any blockchain, as any such system will always involve some level of distributed ledger technology, but instead comes down to defining which parties have the ability to participate in mining functions and the rights of those who can transact. In the case of decentralized currencies like Bitcoin, anyone can transact on the ledger (provided that they provide “proof of work”), and thus the computational work can be completed by anyone the computing power to do so. Conversely, centralized networks only permit known and approved parties (usually owned by or associated with a specific company) to transact on the ledger, and because the parties are identified, the transactions can also be audited. In highly regulated industries, like finance, many prefer the security of knowing what entities are conducting transactions so that if anything deemed invalid does indeed occur, then the parties responsible can be identified. Centralized networks prioritize the ability to identify any attempts to corrupt the system through detailed inspections over the open anonymity native to decentralized chains.

Most cryptocurrency exchanges have embraced centralized blockchain networks, where companies operate as third parties to process the transactions between buyer and seller. In this instance in particular, companies are inuring themselves to the benefit of more reliability over more security. While this decision should not be made lightly, as there are horror stories like Mt. Gox, a centralized blockchain company which was hacked in 2014 in an attack that led to over $460 million in customer funds being stolen, it does tend to make the process of determining source for intellectual property purposes much simpler. Trusted centralized exchanges like Coinbase, Binance, and Kraken have all successfully registered trademarks in their associated companies’ respective names. In this sense, guidance from the USPTO tends to suggest that the more blockchain networks function in a standard way (i.e. as close to traditional banking as possible), then the clearer the path towards registration.

Given the complex considerations that must be made when determining the optimal way to structure and protect a blockchain company, it is important to speak with a dedicated trademark attorney to help find a strategy that works for your business. At McCoy Russell LLP, our trademark and branding team have the technical knowledge and experience that it takes to assist in traversing through these new and exciting times in law and technology. And on the patent side, McCoy Russell attorneys are highly skilled in protecting the underlying technological innovations.

In what many consider to be one of the largest technological leaps since the invention of the internet, the emergence of blockchain technology has ushered in a new frontier across a multitude of fields. The implications of these secured digital ledgers is clear in the world of finance, where cryptocurrencies have gained global prominence, but the outlook for intellectual property has thus-far been a bit murkier. An interesting philosophical debate is now waging around some of the key tenets of trademark law. A major point of contention lies in the fact that trademark rights are only granted to those who can demonstrate that their mark is associated with a good or service in such a way that it functions as a source-identifier for the products offered. The concept of using a mark to identify the singular source of goods or services does not necessarily lend itself to a technology whose very ethos is based in a rejection of the very principles of centralization.

For those a bit confused on what exactly a blockchain is, welcome to the club. You are in very good company. In the most basic sense, blockchains are digitally distributed ledgers which share bits of data among multiple computers, as opposed to the typical process of having all data backed by a central server. This information creates “blocks” of data, which are cryptographically secured and authenticated before a new block of information can be added to the “chain”. In the case of decentralized cryptocurrencies, unlike with a government currency where a central authority controls printing and minting, there is no central authority tasked with performing these currency-producing functions. Instead, the network of computers maintains a cryptographically secured digital record of each transaction, and the computational work is then automatically compensated with newly-created currency. Given the recent rise in data hacks among major commercial and financial leaders, this idea of decentralization is particularly appealing to a public becoming increasingly mindful of cyber security.

With that being said, from an intellectual property perspective, the decentralized nature of these currencies calls into question some of the core doctrines of trademark law. As technology continues to change in new and often unforeseen ways, the USPTO has been forced to grapple with its interpretation of how to identify “source” in an increasingly digital world. The question at play is whether or not a system which by definition does not have a singular source, can still serve as a source identifier.

The USPTO’s focus is on determining (1) whether the proposed mark is associated with an actual good or service, and (2) whether the name or logo functions to identify its source (even if the actual source technically remains unknown). If a cryptocurrency is simply viewed as a store of value, or medium of exchange, then like a traditional currency, it may not be deemed to be a product or service, and if consumers view the mark as associated with a general currency, then much like Bitcoin, it runs the risk of being deemed generic. This creates a highly nuanced tightrope for applicants to traverse.

Given the general uncertainty over whether a cryptocurrency using decentralized blockchain technology can function to identify the source of a good or product, whether or not a mark is deemed acceptable for registration will largely come down to drafting a creative description of the goods and services offered. Our trademark and branding team at McCoy Russell LLP work to make sure that our clients get the most out of their intellectual property rights, and are here to assist in navigating this new and exciting landscape.

On July 1, 2021, laws and executive orders across numerous states permitting student athletes to profit off of their name, image, and likeness (“NIL”) officially became effective. Many thought that lawmakers in Congress would view this looming date as a deadline to pass a bill providing nation-wide guidelines for current and incoming student athletes; however, four months later, Congress has yet to offer clarity despite the NCAA’s request for assistance in creating a federal NIL law.

So what’s the holdup?

While there is bipartisan support in enacting some form of legislation regarding NIL rules, with a multitude of student athlete compensation proposals on the table, some hotly-contested issues have brought lawmakers to their respective sides of the aisle. One bill under consideration provides for broad and sweeping legislation which would include revenue sharing, lifetime scholarships, and unrestricted endorsements, while another bill shows the opposing train of thought, providing for very specific legislation narrowly tailored to solely focus on NIL rules, and featuring certain athlete restrictions and NCAA protections. Other sticking points include whether a school should be able to control an athlete’s endorsement or commercial opportunities, the role of boosters, guidelines for determining the fair market value on commercial deals, the possibility of providing athletes with long-term healthcare, and determining which department would be tasked with enforcement.

With no way to estimate how long it will take for Congress to act, other federal bodies are stepping into the fray.

In an unprecedented step toward federal recognition, the National Labor Relations Board recently issued a memo which classifies certain private college athletes as employees under federal labor law, granting them the same rights and protections provided to professional athletes and other private sector employees. The memo paves the way for student athletes to be covered under the National Labor Relations Act, a statute guaranteeing employees in the private sector the right to organize into trade unions, strike, and participate in collective bargaining.

The National Relations Board memo comes on the heels of a landmark Supreme Court decision in the antitrust case National Collegiate Athletic Assn. v. Alston. This case centered around limits to payments and other benefits tied directly to education, such as compensation for internships and book stipends.

The court ruled in a unanimous decision that the NCAA’s cap on educational-related benefits is an unfair restraint to trade, in violation of the nation’s antitrust laws.

Justice Brett Kavanaugh’s scathing concurrence drew particular attention, remarking that, “[n]owhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate…under ordinary principles of antitrust law, it is not evident why college sports should be any different. The NCAA is not above the law.”

With the National Labor Relations Board making their stance clear, the Supreme Court openly criticizing the NCAA’s practices, and so many states passing their own patchwork of ad-hoc NIL laws, the writing is on the wall. The federal government will eventually need to step in to create some clear sense of standardization for student athletes.

With that being said, there is no indication that a universal policy will pass through Congress any time soon, so it is important for student athletes to meet with a trademark and branding specialist now to assist them in traversing through the complex NIL rules of each state and school. At McCoy Russell LLP, our team is prepared to help our student athlete clients to navigate this groundbreaking shift in player rights.

While the NCAA maintains that its athletes are prohibited from engaging in what it calls “pay-for-play”, the organization has recently changed its longstanding rules and created a new opportunity for incoming and current student athletes to monetize on their efforts away from the game. Specifically, the NCAA has instituted a new policy which permits competitors to profit off of their name, image, and likeness, or “NIL” for short. That means that social media, endorsements, autograph signings, offseason sport camps, and a number of other financial opportunities can now become independently lucrative endeavors.

With the National College Players’ Association (NCPA) recently releasing its Official NIL Ratings, which give each state a score between 0-100 percent based on which state laws grant college athletes the greatest freedom to negotiate and sign NIL deals, it seems like an apt time to revisit the NCAA’s NIL rule changes, and how they apply to states. You may be asking what exactly sparked the NCAA’s change of heart after all of these years. Well on the state side, after years of debate, lawmakers around the country were taking initiative by signing their own legislation to allow for athletes to profit off of their NIL.

Much of this can be traced back to 2019, when California governor Gavin Newsome ceremoniously signed the “Fair Play to Pay” bill into law on LeBron James’ TV show The Shop. Fast-forward two years, and 27 more states have now passed NIL laws of their own.

If the NCAA were to have any chance at creating a cohesive rule which would not be subject to a patchwork of different state laws, all slated to take effect at different times, then they had no choice but to act. With no less than eight different states having their laws take effect this year, the palpable fear was that there would be a much larger recruiting pull to states with their NIL laws in place as opposed to those which would not take effect for a few years, or over a state with no legislation at all.

So the NCAA acted, but did their new rule changes do the trick? Not really.
The NCAA’s rules give the “OK” for students to profit off of their NIL, but from an athlete perspective, those rules are still subject to state law. Student athletes now must research key differences between states before making their choice to commit. That makes what is already a monumental decision just a little bit harder.

While most of the overarching themes between state NIL laws remain the same, the subtle differences between the legislations can ultimately have major financial impacts. For example, some states allow schools to act as a broker for NIL deals, while others forbid that level of school involvement. Thus, the means by which an athlete obtains deals can drastically be effected by which state an athlete decides to play in.

The timing of a deal may just as easily be impacted by the laws of a particular state. Illinois, Mississippi, and Texas are among a number of states where athletes can be punished for signing an endorsement deal in between the time that they sign a scholarship agreement and the time that they enroll at the university.

One step further, using a large conference like the ACC as an example, in some states, athletes can use their school’s logo and team colors in promotional materials, while in others, that would be prohibited. This small difference can have a large impact on an athlete’s personal branding opportunities.
Thus, as you can see, the means, timing, and content of a deal may all be effected by what state an athlete chooses to play their sport in.

It is also important to note that 22 states still have yet to enact any form of NIL legislation. What about them? Well in these states, which all earned a 0% in the NCPA’s ratings, without guidance at the state level, each school is tasked with creating its own unique interpretation of NIL rules, and implement their own policy. This creates a pretty mind-numbing experience where students are forced to learn the NIL rules of each individual school’s athletic program before making an informed decision.

With all of these sudden changes in law and policy, it is more important now than ever for incoming and current college athletes to speak with a branding specialist to assist them in navigating this new and developing world of NIL profitability. Our trademark and branding team at McCoy Russell LLP are ready and enthusiastic about making sure that our student athlete clients are well prepared and properly positioned to take full advantage of this monumental shift in collegiate sports.