In the field of blockchain technology, where decentralisation prevails, a new frontier has emerged: blockchain domain names. Blockchain domain names are part of a new type of domain name system operating on a blockchain, thereby providing decentralised and secure domain registration and management. Blockchain domain names can be recognised by their extensions ".crypto", ".nft", ".blockchain" or ".eth". Unlike traditional domain names, blockchain domain names are not managed by centralised entities like domain registrars and DNS servers. Despite the promising benefits of this decentralised approach, there are pressing legal challenges, since blockchain domain names may disrupt the traditional domain name systems or give rise to trademark infringement, cybersquatting and jurisdictional complexities.
One of main concerns relating to registration of blockchain domain names is the risk of trademark infringement. Due to the decentralised nature of blockchain, anyone can register domain names without being subjected to strict verification processes. This creates potential for bad actors to register domain names that infringe intellectual property rights to existing trademarks. Such actions may lead to confusion among consumers and trademark dilution resulting in reputation damage (harming consumer's perception of the trademark), and, hence, financial losses.
Cybersquatting is the practice of registering, trafficking in or using a domain name with the intent to profit from the reputation of a trademark belonging to third parties. Often cybersquatters register domain names with the intention of selling them later to the rightful trademark owners. The lack of a centralised authority governing blockchain domain names makes it easier to exploit the system and engage in speculative practices.
- Lack of centralised authority
Whereas bodies like the ICANN and EURid govern traditional domain names, blockchain domain names are not part of this hierarchy, as they operate on decentralised networks. The blockchain domain name services "Unstoppable Domains" and "ENS" that distribute blockchain domain names also state in their governance documentation that the respective blockchain domain systems do not belong to the current DNS. The absence of a centralised authorities makes it harder to enforce IP rights against infringers, resolve disputes and take down infringing websites. This poses a significant challenge for brand owners in safeguarding their intellectual property rights in the blockchain ecosystem.
- Jurisdictional complexities
Decentralised blockchain networks operate globally and independently of any specific jurisdiction, making it more complex to determine the jurisdiction and applicable laws for dispute resolution related to blockchain domain names. This lack of clarity complicates the process of navigating legal frameworks, enforcing IP rights and seeking legal remedies.
There are numerous questions and challenges associated with blockchain domain names that brand owners should duly consider to protect their IP rights effectively. The necessary steps for safeguarding brand owners' IP rights may include registration and monitoring their trademarks, defensive registrations of relevant blockchain domain names, a proactive approach to enforcing their intellectual property rights and collaboration with blockchain platforms.