Crypto and Web3 Domains: The Next Frontier for Brand Protection
Web3 and blockchain technology have created new domain ecosystems outside the traditional DNS. Learn how to protect your brand from blockchain-based naming services like ENS, Unstoppable Domains, and Handshake.
Crypto and Web3 Domains: The Next Frontier for Brand Protection
The Rise of Decentralized Domain Systems
Web3 and blockchain technology have created new domain ecosystems outside the traditional DNS. Blockchain-based naming services—like Ethereum Name Service (ENS), Unstoppable Domains, and Handshake—allow users to register domains (e.g. .eth, .crypto) on decentralized ledgers. These domains do not fall under ICANN’s authority or the UDRP, presenting novel trademark protection challenges. Unlike conventional DNS domains that are leased and subject to centralized oversight, blockchain domains are often “owned” permanently via NFTs, making infringement difficult to reverse.
Brand owners face the risk of bad actors securing blockchain domains identical to their trademarks (e.g. YourBrand.eth) and using them for scams, with no easy recourse. In fact, a recent analysis identified thousands of blockchain domains incorporating famous brands like Apple, Amazon, and Google – most not owned by those brands. This highlights the scope of potential infringement in Web3 spaces.
Understanding Web3 Domain Architecture
Ethereum Name Service (ENS) associates .eth names with crypto wallets. Unstoppable Domains sells extensions like .crypto, .nft, .x as NFTs. Handshake (HNS) enables decentralized TLDs managed by a community. These systems lack centralized registrars; once a name NFT is distributed to a wallet, it cannot be revoked or transferred without the owner’s consent. Unlike ICANN-governed domains (which have WHOIS records, expiration, and dispute mechanisms), blockchain domains often have no WHOIS and no expiration, complicating enforcement.
Current Trademark Challenges
Traditional legal tools like the UDRP or the Anticybersquatting Consumer Protection Act (ACPA) are generally inapplicable to blockchain domains. UDRP requires a domain to be within ICANN’s purview (which ENS/Unstoppable are not), and ACPA’s in rem provisions only work if the court can establish jurisdiction over the domain registry or the domain itself. For example, ENS is run out of Singapore and has no centralized server that a U.S. court can control. Courts have noted that parts of a URL not managed by standard registrars (e.g. third-level domains or presumably blockchain domains) fall outside these traditional remedies.
As a result, brand owners cannot simply file a UDRP or U.S. lawsuit to reclaim a .eth or .crypto address. This jurisdictional gap means infringements may go unchecked or require creative strategies.
Jurisdictional Complexity
Even if a trademark owner identifies the person squatting on a blockchain domain, pursuing them can be daunting. Lawsuits require personal jurisdiction over the domain owner or the registry. If the owner’s identity is unknown or overseas, and the naming service has no presence in the relevant country, enforcing a judgment is extremely challenging. Moreover, a savvy infringer could “burn” the domain (send it to an irretrievable blockchain address), effectively locking it away permanently. This tactic stops the misuse but also permanently prevents the brand from ever using that domain – a lose-lose outcome.
Limited Dispute Resolution
Some Web3 naming platforms are experimenting with protection measures, but these are narrow. Unstoppable Domains offers a limited dispute mechanism: if a brand owner proves they had a trademark before an infringing domain was purchased but not yet claimed by its buyer, Unstoppable will cancel the sale and reimburse the buyer. However, once the domain NFT is in the buyer’s wallet (i.e. “distributed”), Unstoppable cannot force a transfer or cancellation. ENS currently offers no formal trademark dispute process. This means brand owners must be proactive and secure important blockchain domains before squatters do.
Some companies have turned to “self-help,” such as preemptively buying blockchain domains matching their trademarks or using Unstoppable’s Protected Marks lists (which block others from registering a term unless they prove rights). These measures can prevent many problems, though they come at an upfront cost.
Case Study – Fortune 500 Brand Conflict
Consider a Fortune 500 company launching an NFT product. A week after announcement, a scammer registers BigBrand.eth and sends phishing emails directing users to pay into that wallet. Consumers, seeing the well-known brand in the wallet name, could be misled and lose money – damaging the brand’s reputation even though the brand had no control. Because the blockchain transaction is irreversible, victims can’t be made whole easily. This scenario is not hypothetical – blockchain domains’ ease of use and perceived legitimacy have already been exploited for fraud.
The company cannot file a UDRP; its options are to attempt to identify and sue the scammer (difficult and time-consuming) or work with the naming service (which, as noted, has limited ability to help after the fact). This underscores why brand owners must treat Web3 domains as critical assets and incorporate them into brand protection programs early.
Strategic Brand Protection Approaches
Until robust dispute mechanisms exist, companies should adopt a multi-pronged strategy:
Defensive Registrations
Proactively register your marks (and obvious variants) on major blockchain naming systems (ENS, Unstoppable) to prevent squatters from doing so. For example, if you own a famous brand, securing YourBrand.eth early is far cheaper than fighting a scam later. As one legal analysis put it, “the best defense is a good offense” – register key blockchain domains before bad actors get them.
Monitoring and Detection
Set up monitoring for blockchain domain registrations that resemble your trademarks. Some services and communities report newly minted names. Early detection allows quick action – possibly contacting the platform if the name hasn’t been distributed yet (in Unstoppable’s window).
Legal Strategy Development
Work with counsel to develop playbooks for Web3 infringement. This might include preparing cease-and-desist letters adapted for anonymous wallet owners (to be posted publicly or via any available contact method), and being ready to file trademark infringement lawsuits if a serious case arises (accepting the challenges involved). In extreme cases, pursuing the individuals behind fraudulent schemes via court (for damages or injunctions) might deter future misuse, even if the domain itself can’t be transferred.
Traditional Law Application
Traditional trademark law still applies in Web3. Using a brand name in a way that confuses consumers (even via a blockchain domain) can constitute infringement. Thus, a brand owner could sue for trademark infringement or dilution in a competent court, seeking an order to stop the abuse and perhaps damages. However, enforcing judgments is difficult if the defendant and the domain are beyond the court’s reach.
A U.S. court might issue an in personam judgment against a scammer (if caught) or attempt an in rem order on the domain, but if the domain provider isn’t subject to U.S. law, the latter is unenforceable. That said, an injunction against the person might pressure them to relinquish the domain (assuming they can be identified). Brands have also explored contractual approaches – for example, working with web browsers or blockchain explorers to block resolving infringing names, effectively “takedown by other means.”
Hybrid Enforcement Approaches
Some experts foresee semi-centralized solutions: perhaps industry associations or coalitions could create a voluntary dispute resolution system for blockchain domains. For instance, Unstoppable Domains’ “Protected Brands” program already preemptively blocks trademark-related names from public registration. Expanding such programs and encouraging all Web3 naming services to honor trademark holders (through something akin to the Trademark Clearinghouse for blockchain domains) could offer relief.
Another approach is leveraging technology integration – for example, browser extensions that flag known scam blockchain addresses, or wallet providers integrating warnings if a known brand’s name is used but not authorized by the brand.
Conclusion – Preparing for the Decentralized Future
Brand owners must stay ahead of this curve. The decentralized web presents exciting opportunities, but also significant trademark risks that cannot be ignored. By adapting traditional brand protection strategies to the Web3 environment – securing key names, monitoring blockchain activity, and being ready to act swiftly – companies can mitigate the threat.
Legal frameworks will eventually catch up (we may see UDRP-like policies or legislative changes to cover blockchain domains), but until then, vigilance and proactiveness are essential. As one commentary noted, “unless and until a standardized system is developed, trademark owners face an uphill battle… Right now, the best defense is a good offense”. In other words, stake your claim in the new decentralized naming frontier before others do it at your expense.