IP Law Daily, TRADEMARK—S.D. Cal.: TRO request denied over ‘Casper’ name used with blockchain technologies, (Mar 29, 2021)

By Brian Craig, J.D.

A researcher in the field of cryptoeconomics failed to show that he would prevail in his false designation of origin claim against a blockchain research and development company.

The federal district court in San Diego, California has denied a request for a preliminary injunction and temporary restraining order sought by a researcher in the field of cryptoeconomics over the name "Casper" used with used with blockchain technologies and cryptocurrencies. The court concluded that the plaintiff researcher failed to meet the burden of showing he is likely to succeed on his false designation of origin claim against CasperLabs, LLC, a blockchain research and development company, where the researcher provided only minimal evidence of an agreement to transfer ownership of the "Casper" mark and no indication of what the precise terms were. Additionally, the court found that the researcher unreasonably delayed in bringing a claim despite being on notice of the defendant’s activities (Zamfir v. CasperLabs, LLC, March 26, 2021, Curiel, G.).

A researcher in the field of cryptoeconomics, Vlad Zamfir, filed a complaint against CasperLabs, LLC for false designation of origin under the Lanham Act and for unfair competition under California common law over the name "Casper" used with blockchain technologies. A blockchain is a distributed protocol that stores transactional records as a chain of "blocks," and each block cannot be retroactively altered without leaving evidence of the alteration. Blockchain technology is used for cryptocurrency exchanges, like Bitcoin, to enable peer-to-peer networks without relying on any single legal entity to own or administer the network. In February 2019, the researcher and CasperLabs entered into a research agreement over a new blockchain. The agreement was ultimately terminated in November 2019. On September 4, 2019, CasperLabs filed an application with the USPTO for the mark CASPER in connection with blockchain technology. On November 17, 2020, the mark was registered. On March 17, 2021, Zamfir filed the complaint and a motion for a temporary restraining order (TRO) and preliminary injunction. After considering the relevant factors, the court denied the motion.

Likelihood of success. The court first concluded that the researcher failed to meet his burden of showing he is likely to succeed on the false designation of origin claim. The court held that a plaintiff would only be likely to succeed on a false designation of origin claim if he can overcome the defendant’s prima facie evidence that it has the right to use the mark, whether by showing that the mark was fraudulently registered, that the plaintiff is the owner of the mark, or otherwise demonstrating the trademark registration is invalid or that the defendant lacks the right to use the trademark. Here, the complaint only alleges that the researcher and the defendant agreed that the defendant should seek trademark protection for the name "Casper." Although the plaintiff also asserts that the defendant had agreed to transfer the registration to him, the researcher provides only minimal evidence of such an agreement and no indication of what the precise terms were. Because the motion does not provide argument or evidence sufficient to challenge the prima facie evidence of ownership of, and right to use, the Casper designation conferred by the trademark registration, the court concluded that the researcher failed to meet his burden of showing he is likely to succeed on the false designation of origin claim.

Irreparable harm. The court also found that the researcher failed to show he is likely to suffer irreparable harm in the absence of the TRO, especially where the research unreasonably delayed in bringing the claim. A party seeking a TRO must present evidence that irreparable harm is likely in the absence of an injunction. A plaintiff must put forth actual evidence of irreparable harm in a Lanham Act case. The plaintiff pointed to evidence regarding the likelihood of confusion, but he did little to demonstrate any actual or threatened damage to his business reputation, difficulty marketing the products of his research, or difficulty securing sponsoring for his research. The court also held that an unjustified delay in seeking an injunction may undermine a movant’s argument of irreparable harm in the absence of a TRO. Here, the researcher’s delay in bringing the motion—waiting until less than a week before the defendant’s network launch and its affiliate’s token sale are set to begin—bolstered the court’s conclusion that the plaintiff’s lack of irreparable harm.

Balance of equities and public interest. Finally, the court concluded that even if the plaintiff raises "serious questions" regarding the merits, the balance of the equities and public interest factors do not justify the issuance of a TRO. The court again found that the researcher unreasonably delayed bringing the motion despite being on notice of the defendant’s activities. Thus, the balance of equities does not tip sharply in favor of the plaintiff. Because the plaintiff failed to show that the defendant lacks the right to use the mark, the court need not determine where the public interest ultimately lies. In weighing the relevant factors, the court denied the motion.

This case is No. 3:21-cv-00474-GPC-AHG.

Attorneys: Christopher A. Ott (Rothwell, Figg, Ernst & Manbeck, P.C.) for Vlad Zamfir. David Lee Kirman (O'Melveny & Myers LLP) for CasperLabs LLC.

Companies: CasperLabs LLC

Cases: Blockchain TechnologyInternet Trademark CaliforniaNews GCNNews