Editor’s Note
This article outlines the fundamental role of trademarks in identifying a business and building consumer trust. It introduces the concept of brand protection as the essential legal and strategic framework for defending a brand’s identity and value against infringement and misuse.
Trademarks are unique names, symbols, or images used to identify a business or brand and distinguish its products or services from competitors. Brands play a crucial role in building consumer trust and enhancing brand awareness. The legal and strategic steps aimed at protecting a brand and its reputation are collectively known as brand protection. This includes measures to prevent unauthorized use, counterfeiting, and trademark infringement to safeguard the brand’s distinctiveness and integrity.
Brand protection faces numerous challenges, with infringement and counterfeiting being two major issues. Counterfeit goods not only diminish brand value but also impact customer trust and safety. Trademark infringement in the online environment becomes more complex when counterfeiters can operate globally and anonymously on digital platforms. Additionally, navigating global regulatory frameworks requires well-planned strategies to prevent cross-border violations.
Today’s brand protection strategies incorporate technology, proactive enforcement, and legal action. Legal avenues, including intellectual property law and trademark registration, provide the foundation for protection. Technologies such as digital watermarking and blockchain offer advanced methods for authentication and traceability. Brands also conduct regular monitoring, investigations, and collaborate with law enforcement agencies to detect and swiftly address violations. However, due to the evolving nature of counterfeit activities, brand protection approaches require continuous improvement and adaptation.
Anti-counterfeiting software is one of the significant applications of blockchain in protecting brands and trademarks. Through blockchain technology, businesses can create immutable records of their products’ legitimacy. Each product can be assigned a unique identifier, allowing retailers and customers to instantly verify the product’s authenticity. This not only protects customers from counterfeit goods but also helps businesses maintain their reputation, ensure data integrity, and attract new customers.
Furthermore, supply chains benefit from the transparency and traceability provided by blockchain, enabling businesses to track goods from production to distribution. Blockchain helps businesses confirm product legitimacy and detect illegal or counterfeit goods circulating in the market. This not only protects the business’s reputation but also builds consumer trust by ensuring product authenticity.
Deploying smart contracts can also enhance brand protection measures through the automation of licensing and enforcement processes. These self-executing contracts are designed to perform specific tasks when trigger conditions are met. Smart contracts help brands protect their trademark usage rights, for example, by automatically penalizing unauthorized use or activating licensing agreements upon product sales. This reduces the need for manual enforcement procedures, optimizes brand protection efforts, and ensures compliance throughout the supply chain.
Immutability is a significant advantage, as blockchain creates unalterable transaction records, making it extremely difficult to forge or edit trademark information. This minimizes the risk of intellectual property theft or infringement while ensuring the authenticity and integrity of brand assets.
Additionally, public blockchains eliminate the need for intermediaries such as centralized authorities or registries, thereby streamlining the trademark registration process and reducing administrative costs. Self-executing contracts (smart contracts) can be programmed on the blockchain to automate processes like royalty and licensing agreements. This ensures compliance and minimizes the potential for disputes.
Blockchain also enhances transparency by providing stakeholders with real-time access to trademark ownership and usage history. Consequently, they can verify brand validity and monitor its usage across different markets.
Similarly, Non-Fungible Tokens (NFTs) provide unique digital representations of assets, allowing businesses to tokenize brands and securely verify ownership on the blockchain. By offering reliable proof of ownership and provenance, this technology strengthens brand identity protection, minimizing the risks of forgery and unauthorized use.
Moreover, as businesses venture into the metaverse, blockchain ensures seamless management and protection of digital assets in virtual environments. By using blockchain-based registries and smart contracts, brands can establish and enforce trademark ownership in cyberspace, thereby fostering authenticity and trust in digital interactions. In this context, NFTs play a crucial role, enabling the creation of branded virtual products and experiences with genuine value and exclusivity.
Firstly, stakeholders may not fully understand blockchain technology or lack awareness of how to apply it to trademark protection. Businesses might hesitate to adopt blockchain due to perceptions of complexity or unfamiliarity with the technology.
Furthermore, integrating blockchain technology into existing systems and processes can be difficult and costly. To apply blockchain effectively, businesses may need to restructure their infrastructure and make significant investments in new technology and specialized human resources. This poses a substantial barrier, especially for small businesses with limited budgets.
Implementing blockchain in brand protection is further complicated by scalability and interoperability-related issues. As blockchain networks expand, scalability problems may arise, leading to longer transaction processing times and higher costs. Additionally, compatibility issues between different blockchain platforms and traditional systems need to be addressed to ensure smooth integration and data sharing.
Moreover, the use of blockchain in brand protection is hindered by regulatory and compliance concerns. Many businesses must adhere to strict regulations related to consumer protection, intellectual property, and data privacy. Adapting to diverse regulatory frameworks and ensuring blockchain systems comply with applicable laws and standards can be a complex and time-consuming process.
LVMH, Richemont, OTB, Prada, and Mercedes-Benz collaborated to develop the Aura Blockchain Consortium platform, a blockchain solution designed to support product tracking and traceability across the luxury industry. Aura allows the details of each product to be stored on a public ledger, covering the entire journey from raw materials and production to distribution and the secondary goods market. The platform enables consumers to access product history and verify authenticity via the brand’s official app, contributing to enhanced transparency and protection of genuineness.
The Aura blockchain platform is built on Ethereum blockchain technology and utilizes Microsoft Azure to provide related services such as product care and warranties. For example, Hublot, a brand under the LVMH group, uses the Aura blockchain to verify the provenance of its goods. When a Hublot watch is sold to Customer A on Date X, this transaction is recorded on the blockchain. In the future, if that customer donates or resells the watch, the transaction information with Hublot will remain stored in the secure code of the Aura blockchain system. This allows the new owner to easily service the watch when needed.
The De Beers Group, a leader in the diamond industry, has deployed the Tracr blockchain platform at scale to enhance transparency and ensure diamond provenance. It is the world’s first distributed blockchain platform designed to trace a diamond’s journey from its source, providing immutable origin assurance and helping prevent counterfeiting. Tracr allows retailers and customers to obtain transparent information about the origin of each diamond.
The platform employs blockchain technology combined with Artificial Intelligence (AI), the Internet of Things (IoT), and advanced security technology to ensure data is stored securely and cannot be tampered with. Tracr operates in a decentralized mode, allowing supply chain partners to control access to their data and share information only with permission. This not only enhances data privacy but also ensures scalability and processing speed, with the capability to register up to 1 million diamonds per week on the platform.
BMW has deployed the PartChain platform, a blockchain solution designed to enhance transparency and traceability in international supply chains. The platform enables BMW to track the journey of components from their origin to manufacturing plants, thereby facilitating improved audit efficiency and process compliance. PartChain was developed with the goal of bringing suppliers onto a common blockchain system, helping to ensure supply chain data is securely recorded and consistently verifiable.
PartChain utilizes Hyperledger Fabric blockchain technology, combined with cloud services from Amazon Web Services and Microsoft Azure, to provide high scalability, processing speed, and security. During the pilot phase, the platform was applied to track headlights from a supplier for automotive lighting. BMW is now expanding the project to many other suppliers and deploying it across the company’s 31 production sites. BMW also has a long-term goal of using blockchain to trace the origin of critical raw materials, such as cobalt—a key component in electric vehicle batteries.
In addition to PartChain, BMW has applied blockchain in other projects like VerifyCar, collaborating with VeChain to develop an application that helps used car buyers verify information regarding mileage and maintenance history.
