Chia Cryptocurrency, Started By BitTorrent Creator Bram Cohen, Engaging In Obnoxiously Bogus Trademark Bullying

from the not-how-it's-done dept

It seems these days you can't mention anything to do with cryptocurrency without someone jumping in and insisting that cryptocurrency is a disaster for the environment. There are differing opinions on all of this, but a few years ago, BitTorrent creator Bram Cohen set out to build a more "eco friendly" cryptocurrency called Chia. The basic idea was that, rather than using a proof-of-work system -- which involves using up a ridiculous amount of computing power, it would use a proof-of-space system, looking at how much hard drive space you're allocating. After many years of development, Chiacoin finally launched a few weeks ago. And, to pretty much prove the old axiom that there's no such thing as a free lunch, while it may not be directly wasting CPU cycles, it's impacted the world differently: by destroying the global hard disc supply chain, driving prices for hard disks through the roof -- leading people to point out that even if it's not wasting electricity like Bitcoin, it may be wasting hard drives. Some may challenge the question of whether or not this is wasteful (those hard drives are doing something...) but there are multiple reports of running Chia on SSDs is wearing them out in ridiculously short periods of time -- even to the point that some SSD makers are saying that using their hard drives for Chia will void the warranty. Yikes!

All that said, this post is not so much about Chia's setup or its impact on the global supply chain for hard drives. It's about trademark bullying. You'd think that a company started by Bram Cohen -- someone all too frequently falsely accused of being responsible for music and video piracy from his BitTorrent days -- would be extra sensitive to coming across as an "IP bully" of any sort. And this is true of some of the other folks who work on Chia -- some of whom I know are Techdirt regulars.

But, for whatever reason, Chia Networks has decided to be an obnoxious trademark bully. Chris Dupres, another Techdirt regular, started a blog to cover news about Chia Networks and ChiaCoin called The Chia Plot. It's got a bunch of interesting articles about what's been happening on the Chia front.

And apparently the folks at Chia decided to threaten him with legal action.

Last week, "the head of IP for the Chia Network," Belle Borovik (who appears to be a recent law school grad), sent Chia a legal nastygram, insisting that the site violated Chia's trademark. Admittedly, the letter was at least somewhat friendlier that your typical cease and desist or threat letter. It thanked Chris for educating the public about Chia, and asked him to get a license to use the Chia name, which it offered up on a "royalty free" basis.

Chris,

I write to you on behalf of the Chia Network Inc. First and foremost, allow me to thank you for your efforts in educating and expanding the Chia community through your blog and discussions. We support open discourse and free exchange of information.

Still, it is important to Chia Network to protect its trademarks. Unauthorized use of Chia Network’s registered CHIA mark, or iits logos exposes community members to potential scammers, misleading and confusing them. Therefore, it is essential that all users of the CHIA marks, logos, or the Chia Network name obtain a royalty free permission to use the CHIA marks. Simply put, you may not continue using the CHIA mark in your domain name, or anywhere, without securing a written permission from Chia Network.

We must ask you to contact us immediately, and no later than May 28, 2021 by replying to this email, so that we may resolve this matter amicably, and you are able to continue to strengthen the community we all care about.

Except, that's not how any of this works. There is a very, very, very long line of cases, going back years, that say that websites about a trademarked brand, do not infringe on the trademark if they use the trademark in their URLs. Chris basically told them to pound sand, but did say he would clarify in his site's tagline that it was "an unofficial site." He also posted the legal threat and his response to his site.

And then, the Chia folks took away the "nicer" part of their threats, and... incredibly... became even more obnoxiously threatening and censorial. Beyond insisting that his changes were not enough and continuing to add to the false claims of trademark infringement, it also accused him of violating the GDPR by posting Belle Borovik's name in association with the letter that Belle Borovik sent to Chris. I only wish I were joking.

Dear Mr. Dupres,

It has come to our attention that your EU-registered website has recently engaged in a series of privacy violations under the General Data Protection Regulation Act (the “GDPR”) involving a Chia Network employee. To date, you have revealed our employee’s personal data, including their Name and Location, and aided in doxing behaviors of others directed toward this individual through your blog.

Despite this unbecoming behavior, you have reached out to us with the following inquiry regarding permissions to use the CHIA marks on your website:

I have added “unofficial” to the tag line of my blog to ensure that there is no confusion. Can you please confirm that this acceptable and that we are able to move on from here?

Unfortunately, adding the word “unofficial” is not enough to obviate the likelihood of confusion. Moreover, Chia Network cannot support violations of privacy laws, and cannot condone behaviors that target or endanger any member of the Chia community. This is precisely the reason for Chia Network’s vigilance in enforcing its trademark rights; the Chia Network guidelines make it easy for the community to remain connected, while maintaining a respectful and professional relationship with each other.

That said, Chia Network stands by its mission to support the Chia community, and is still willing to consider a relationship with your blog. Understandably, this can only happen if you remove all Protected Personal Information (“PPI”), including the doxing comments or references to any Chia Network employee, whether made by you or by others via your platform.

Once you have removed the doxing and PPI content from your platform, we can “move on from” there, with you obtaining a free license from Chia Network.

Sincerely,
The Chia Network Legal Team

That's uh, not how any of this works again. Chris again responded, pointing out how crazy this was, noting correctly that publishing the name of an employee who sends a threat letter is not a privacy violation (and noting that the site is registered in Canada anyway, and not the EU). Out of unnecessary courtesy, he still removed Borovik's name.

The latest is that Public Citizen Litigation Group's Paul Levy has stepped up to provide an official response from Chris to Chia Networks. And, if you're a long time reader of Techdirt, by now you should know that you basically never want to be on the receiving end of a Paul Levy letter. The letter is, in typical Levy fashion, worth reading. I was going to post just a snippet, but the whole thing is too good not to share:

Dear Ms. Borovik:

I write in response to your demands to Chris Dupres, contending that he has violated the trademark laws by using "The Chia Plot" as the name of his new web site about your company and by registering the domain name www.thechiaplot.net to be used as the internet address for the site. You contend that he needs your permission to use these names, that he needs to apply to you for a royalty-free license, and that, if he wants to resolve this situation on an amicable basis, he needs to submit his request to you immediately.

Dupres is not going to comply with your demand. Your company has no right to give (or withhold) approval for any and all uses of its unregistered trademark on web sites that discuss your company. What's more it is unreasonable for you to expect a journalist to ask for permission to use the company's name to talk about the company. Your attempt to condition his use of the name on his agreement to delete certain information from the site shows why no self-respecting journalist would give in to such a demand. See WCVB-TV v. Boston Athletic Associaton, 926 F.2d 42 (1st Cir. 1991).

Your assumption that Chia Network has a right to forbid use fits mark to denominate a web site as being about the company, or to demand the right to give or withhold such permission, is belied by longstanding precedent, set by series of cases decided by the federal courts more than ten year ago. Given the fact that your company is located in San Francisco, the decisions in Bosley Medical v. Kremer, 405 F.3d 672 (9th Cir 2005), and Nissan Motor Co v. Nissan Computer Co., 378 F.3d 1002 (9th 2004), are the most teling: Both cases squarely preclude the use of trademark law to stop Dupres's use of a web site posted at a domain name that uses your trademark as a site for non-commercial commentary about your company. Several cases in other circuits protect the right to use a domain name in the form www.trademark.com for a web site about the trademark holder against a variety of trademark claims. Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 527 F.3d 1045 (10 Cir. 2008); Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005); TMI v. Maxwell, 368 F.3d 433, 436-438 (5th Cir. 2004); Lucas Nursery and Landscaping Inc. v. Grosse, 359 F.3d 806 (6th Cir. 2004); Taubman v. WebFeats 319 F3d 770 (6th Cir. 2003).

Trademark law aside, the First Amendment protects Dupres's right to use your company‘s name to denominate, accurately, the subject of this web site. Any effort that your company made to invoke trademark law as a reason to shut down his site, or to alter its name, would be an invocation of government power that would be subject to First Amendment scrutiny and would violate the First Amendment.

You suggest that you believe that some of your customers might be confused by the name or domain name of the web site into believing that the site is sponsored by your clients. Just how gullible do you expect your potential customers to be? I daresay that even the proverbial moron in a hurry would recognize, immediately upon visiting The Chia Plot, that it is a web site devoted to journalism about your company rather than being sponsored by your company. Dupres's site expressly states that it is not affiliated with your company, indeed, it proclaims its independence.

Moreover, Dupres has helpfully provided viewers of his site with a prominent hyperlink to your site just as, for example, did the Shops at Willow Bend site at issue in Taubman, the web site attacking Bosley Medical Group at issue in Kremer, and the site condemning Jerry Falwell's homophobia at issue in Lamparello. As a result even if Internet users mistakenly looking for your company, rather than looking for information about your company, wandered onto The Chia Plot by name-guessing, they would be quickly disabused of any notion that the site belongs to or has the approval of your company. As this very letter is propagated around the Internet, readers will gain further information dissociating Dupres's news site from your own commercial site.

Finally, I note that one of your demand emails included the preposterous contention that Dupres violated European privacy rules by identifying you as the person who sent the demand email. Although Dupres took your name off his site as a friendly gesture, you have persisted in pursuing trademark claims that have no legal bass. Accordingly, your name will likely appear in stories written about your claims.

I am giving you until June 9 to retract your demand that Dupres stop using the word "chia" in the domain name for his web site and in the title of the site. Dupres is not willing to keep operating his web site subject to the threat of a claim for trademark damages. Consequently, failing a prompt retraction, a request for waiver of service could well be the next communication you receive on this topic

Whatever you might think of Chia as a cryptocurrency, it's silly legal threats -- both about trademark and (even more ridiculously) about the GDPR -- seem to raise questions about what the hell is going on over there...

Filed Under: belle borovik, bram cohen, chia, chris dupres, cryptocurrency, gdpr, hard drives, paul levy, trademark, trademark bullying
Companies: chia networks